Tuesday, February 7, 2017

Divest from DAPL the Fun and Easy Way

Where do you want your money to go?

The Dakota Access Pipeline is back in the news after Trump signed an executive order smoothing the way to building it. A number of sources have reported on the banks that are supporting the Dakota Access Pipeline. These include the biggest banks in the U.S. and Canada. Most of us probably bank at one of these institutions in some fashion:


  • Bank of America
  • Citibank
  • Credit Suisse
  • HSBC
  • JP Morgan Chase
  • Morgan Stanley
  • Royal Bank of Canada
  • Wells Fargo


… and a number of other smaller banks. (Source: Snopes)


My wife and I have decided to cut ties with these institutions.


Our day-to-day banking is already all set. We used to be Bank of America customers, but in the past few years, we have moved all of our banking to a credit union. We're really happy with it. Credit unions tend to have better policies because they're member-owned and exist for us, the members, the actual people who bank there. We have two credit union memberships. We primarily use one we chose because it has a ton of great online features (I've never had any need to go to a branch, which is handy, since there are none around here). And we keep a nominal amount at a small local one, in case we need a local branch for some reason. (We actually haven't so far.)


But we still had credit cards from Chase and Bank of America. We had opened them for various reasons. One has great rewards. One is a store card for a store we use a lot. One is simply my oldest card, opened when I was in college, so it gives me a longer credit history.

We decided we still need and want to use a credit card; they offer rewards, make our budgeting simpler, and offers certain protections for online shopping and travel. So, we opened a new credit card account at our big online credit union. I initially said that I would close the other accounts by the end of January, but it's taking longer than I thought to get a handle on the recurring payments and returns--realistically, we'll close them by the end of this month, instead.


Process
It's not hard to switch banking institutions, but it can take some time to actually execute the process. Here are the basic steps:


  1. Research your options.
  2. Open the new account.
  3. Move the balance from the old account(s) to the new (or pay it off, for credit cards).
  4. Update recurring payments, such as automatic bill pay.
  5. Delete saved payment information for the old account from online stores.
  6. Wait about a month to make sure everything is moved over. There could be recurring payments you forgot about, or returns that haven't posted. (This is the step I'm on now.)
  7. Close the old account.


For more detail on this process, my old post How to Change Banks might be helpful.


Disadvantages
Before deciding to close our big-bank credit card accounts, we considered the disadvantages.
  • Inconvenience. That is, just the hassle of following the process above. Honestly, it is not really a huge deal.
  • Lower cashback rewards. The credit cards we're closing had between 1-5% cashback rewards, depending on the type of purchase; the new card offers a flat 1%.
  • Credit score hit.  I don't think this will have a huge impact on my credit score, but closing my oldest account does mean my credit history will shorten. Also, our credit limit will go down overall since the credit limit on the new card is less than the combined limit on the old cards (though I can probably apply for a higher credit limit on my new card after my other accounts close).


Overall we decided that these issues were not as important as the conscience boost for not banking with horrible people.


Other Advantages
Aside from the conscience reasons, we're looking forward to a few other minor perks for making the changeover.


  • Lower interest rate. Credit union credit cards almost always have a lower long-term (not just introductory) interest rate than those offered by for-profit banks. Typically this is offset by the lower rewards points. Since we pay off our bill in full each month, the interest rate isn't super meaningful to us, but it's still nice to have a lower one in case there's a month where we can't or forget to pay on time.
  • Less draconian late fees. The late fees are lower, too. In general, you're less likely to get slammed with bullshit fees at a credit union (You can compare fees by looking at the Fee Schedule, which should be available online for any bank or credit union without making an account there.)
  • Simplicity. Since all our accounts are now at one credit union (except the token local account), it's really easy to see all our activity in one place. Financial simplicity is something I didn't value much when I was single, but when you have two people trying to coordinate one set of finances, simpler is better.
  • Opportunity to review. The process of moving our recurring and saved payments to the new credit card is also an opportunity to decide which payments are truly necessary. It's good to do this every so often, and I feel like I never do as good of a job as I do when I'm changing accounts. It forces me to make a decision about each payment, instead of ignoring some out of boredom/inertia/forgetting.

If you've been on the fence about divesting from the big banks, I say go for it: it's not too hard and I have had a fabulous experience with credit unions so far! And don't forget to send a letter telling them just why you're breaking up with them.  

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