How Do I Switch from My Bank to a Credit Union?
Dear Lifehacker, I'm thinking about switching from my bank to a local credit union. What should I be on the lookout for when I make the switch? Is there anything I should know ahead of time, and how do I go about making the change?
Signed,
Fed Up With Big Banks
Photo by Paul Baker .
Dear Fed Up,
We know what you mean. Saturday was Bank Transfer Day , and even though Bank of America backed down on its debit card fees , many people are just sick and tired with their bank for whatever reason, whether it's high fees, poor customer service, or something else. Credit unions do offer a member-supported, smaller alternative that can provide competitive interest rates on savings accounts, loans and mortgages. Credit unions are also well known for great customer service. That said, there are a few things you need to know before you jump ship.
If it's convenience you're after, see if your employer or any local government or public organizations in your community have credit unions with open membership, or membership that you're eligible for. Many credit unions have opened their doors to the public, but there are still plenty that only allow employees of the patron organization and their families to join. Previously mentioned NerdWallet and credit union finder A Smarter Choice can both help you find a credit union based on your preferences.
Photo by NASA Blueshift .
Find a Credit Union That's Convenient . One of the drawbacks to switching to a credit union is that you give up the idea of having a branch on every street corner or an ATM almost anywhere you go. Most credit unions have a handful of branches in select regions, and their customer service lines are often staffed with real people, which means you might be stuck with limited phone support hours. That won't make much of a difference if you do most of your banking online and use your credit or debit card for your purchases, but it can definitely be a pain if you need a cashier's check or need to walk into a branch for services.
If you find yourself stopping by your bank a few times a month, or even once a month, don't choose the credit union with no branches or ATMs within 50 miles of your home or office, even if it comes recommended by friends. Many credit unions participate in ATM networks like the Co-Op Financial Services network and the Alliance Onenetwork so patrons can use any ATM in the network without paying fees to get their money, which can give credit union patrons access to more ATMs than any commercial bank. The same applies for branches—many credit unions share branch locations and allow you to bank with partner credit unions at any partner location. Unfortunately, even though these networks exist, it will be up to you to find them once you're a customer. You'll have to do your homework to find out where you can go to access your money without paying for the privilege.
Make the Change On the Phone or Online . With the exception of identification requirements, you can sign up for and set up accounts with most credit unions online. You can also call the credit union's customer support line and let a banking rep walk you through the process on the phone. Many credit unions go out of their way to make managing your account online easy, partially as a way to account for limited hours and fewer branches. It works in your favor though: it means you can do ACH transfers, apply for a personal loan, or open a new account at any time of day, whenever you think to do it.
Photo by m.prinke .
Remember Switching Banks is a Process, not a To-Do . As tempting as it may be to stroll into your bank, flip your bank managers desk, demand your money, and give them a piece of your mind, it's a bad idea. Switching banks is a process that can take several days, especially if you have automatic bill payments and automatic deposits set up. Consider taking out just enough money to get your new account set up while you transfer your automatic deposits and payments to your credit union account. This way, if something unexpected happens and a bill you forgot about tries to hit your old account, you won't be hit with an overdraft fee or penalty, and you don't run the risk of the the bill's issuer complaining to you that they haven't been paid.
Once you're confident that all of your automatic payments and deposits are headed to your new account—usually after a month or so of paying attention to your old and new accounts—you can withdraw the last few dollars from your bank and bid them a not-so-fond farewell.
We hope that helps. There are pros and cons to switching to a credit union from a big bank, but speaking as someone who has accounts with both, I'm far more likely to go to my credit union for a car loan or a mortgage than my regular bank. Once you've experienced the difference in personal attention and customer service, you may actually grow to like your bank. If it's the financial products that matter to you, you'll enjoy the competitive rates and low fees that a credit union has to offer. As long as you go into the switch aware of what you're giving up in exchange, you'll be fine. Good luck!
Love,
Lifehacker
Signed,
Fed Up With Big Banks
Photo by Paul Baker .
Dear Fed Up,
We know what you mean. Saturday was Bank Transfer Day , and even though Bank of America backed down on its debit card fees , many people are just sick and tired with their bank for whatever reason, whether it's high fees, poor customer service, or something else. Credit unions do offer a member-supported, smaller alternative that can provide competitive interest rates on savings accounts, loans and mortgages. Credit unions are also well known for great customer service. That said, there are a few things you need to know before you jump ship.
Things to Check Out Before You Switch
Choose the Right Credit Union for Your Needs . Before you pick a credit union, think about what's prompting you to change. We've talked about why you should switch in the past, but consider what's making you do it. If it's lower interest rates on credit cards, car loans, or mortgages, make sure to check out those rates before you sign up. If it's customer service and low fees that you're interested in, make sure to talk to your friends to see where they've had positive experiences. Compare the financial products between the credit union you're looking at and your bank. Make sure you're really avoiding fees, and the credit union's interest rates are actually better for you.If it's convenience you're after, see if your employer or any local government or public organizations in your community have credit unions with open membership, or membership that you're eligible for. Many credit unions have opened their doors to the public, but there are still plenty that only allow employees of the patron organization and their families to join. Previously mentioned NerdWallet and credit union finder A Smarter Choice can both help you find a credit union based on your preferences.
Photo by NASA Blueshift .
Find a Credit Union That's Convenient . One of the drawbacks to switching to a credit union is that you give up the idea of having a branch on every street corner or an ATM almost anywhere you go. Most credit unions have a handful of branches in select regions, and their customer service lines are often staffed with real people, which means you might be stuck with limited phone support hours. That won't make much of a difference if you do most of your banking online and use your credit or debit card for your purchases, but it can definitely be a pain if you need a cashier's check or need to walk into a branch for services.
If you find yourself stopping by your bank a few times a month, or even once a month, don't choose the credit union with no branches or ATMs within 50 miles of your home or office, even if it comes recommended by friends. Many credit unions participate in ATM networks like the Co-Op Financial Services network and the Alliance Onenetwork so patrons can use any ATM in the network without paying fees to get their money, which can give credit union patrons access to more ATMs than any commercial bank. The same applies for branches—many credit unions share branch locations and allow you to bank with partner credit unions at any partner location. Unfortunately, even though these networks exist, it will be up to you to find them once you're a customer. You'll have to do your homework to find out where you can go to access your money without paying for the privilege.
How to Make The Switch
Ask for a "Switch Kit" to Make the Transfer Easy . Since credit unions thrive on the patronage of their members, and in most cases are more than happy to help you make the switch from a big bank, many of them have pre-made "switch kits" to help. They usually include all of the forms, identification requirements, and other paperwork you'll need to take to your old bank and fill out for the credit union to make the transition as smooth as possible. Even if they don't have a kit, they likely have some kind of package to make setting up a new account and getting your pay deposited and bills charged simple and easy.Make the Change On the Phone or Online . With the exception of identification requirements, you can sign up for and set up accounts with most credit unions online. You can also call the credit union's customer support line and let a banking rep walk you through the process on the phone. Many credit unions go out of their way to make managing your account online easy, partially as a way to account for limited hours and fewer branches. It works in your favor though: it means you can do ACH transfers, apply for a personal loan, or open a new account at any time of day, whenever you think to do it.
Photo by m.prinke .
Remember Switching Banks is a Process, not a To-Do . As tempting as it may be to stroll into your bank, flip your bank managers desk, demand your money, and give them a piece of your mind, it's a bad idea. Switching banks is a process that can take several days, especially if you have automatic bill payments and automatic deposits set up. Consider taking out just enough money to get your new account set up while you transfer your automatic deposits and payments to your credit union account. This way, if something unexpected happens and a bill you forgot about tries to hit your old account, you won't be hit with an overdraft fee or penalty, and you don't run the risk of the the bill's issuer complaining to you that they haven't been paid.
Once you're confident that all of your automatic payments and deposits are headed to your new account—usually after a month or so of paying attention to your old and new accounts—you can withdraw the last few dollars from your bank and bid them a not-so-fond farewell.
After Switching, Get Involved to Make the Most of Your Experience
Credit Unions are generally not-for-profit, and they're always member-owned, but remember, they're still in this business to make money and stay afloat. They may introduce changes and fees that may not be popular, and it's up to you to speak up when you're unhappy. Thankfully, when you bank with a smaller organization, the decisions that you make matter more and you have more room to negotiate with banks on interest rates, lines of credit, and other changes. If you get a letter in the mail saying your credit card's interest rate is going up, a few phone calls or a well written complaint letter will usually set them straight and get you back on track. Also, because you're a member and a customer, you're just as responsible for the health and well-being of the credit union as you are entitled to stellar service and competitive financial products.We hope that helps. There are pros and cons to switching to a credit union from a big bank, but speaking as someone who has accounts with both, I'm far more likely to go to my credit union for a car loan or a mortgage than my regular bank. Once you've experienced the difference in personal attention and customer service, you may actually grow to like your bank. If it's the financial products that matter to you, you'll enjoy the competitive rates and low fees that a credit union has to offer. As long as you go into the switch aware of what you're giving up in exchange, you'll be fine. Good luck!
Love,
Lifehacker
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