How to Break Up With Your Big Bank

Even before the bank bailout, it was tempting to imagine our nation’s biggest banks were run by a collection of Montgomery Burns impersonators; greedy weasels ready to ruin their own grannies for a buck. And fine, even if you didn't go to the bank expecting to see Mr. Burns sitting behind a mahogany desk plotting your personal financial demise, a new campaign run by Arianna Huffington through her site, HuffingtonPost.com, is hammering the point home.

The campaign, apparently hatched by Huffington and some pals around a dinner table, is simple: She is urging consumers to close their accounts at the nation’s mega-banks -- including Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) -- and replace them with accounts at small community banks or credit unions to “send a message” to the banks.

She has enlisted everyone from Craigslist founder Craig Newmark to comedian Bill Maher to address the masses about the idea, which has the merit of good clean revenge if enough people get on board.

Anger aside, the practical issue is that the big banks have hit their customers with new fees, increased existing fees, and added pitfalls that trigger fees and penalties on their checking accounts, while their savings account interest rates remain risibly low.

But enough moaning. Beyond revenge, are there real rewards if you move your money, or not?

It appears there are a couple of ways you can do yourself some good here. In short, they are:
 

• Move your money to any one of a number of places that will give you a better deal than the big banks, or,
  
  
• Keep your money where it is, but avoid the behavior that triggers the big banks’ most egregious behavior.

How to Move Your Money

There are a surprising number of choices out there for basic checking and savings accounts, and most are better than the one you’ve got if you bank with the big guys. Moreover, you might find that it’s a foot in the door for other financial products, such as a credit card with a lower rate.

Take a look at any of these:

Community banks: A quick search at Bank Rate Monitor’s checking account comparison feature can give you a good idea of the community banks that are available where you live.

For example, entering a Manhattan zip code in search of “non-interest” checking accounts turns up the usual big bank suspects, and smaller alternatives such as Queens County Savings Bank and Hudson City Savings Bank. Both of these smaller banks offer checking accounts with no monthly fees on zero balance. Citibank charges $7.50 a month and Bank of America charges $8.95. All have ATM surcharges, but the smaller banks have smaller fees.

If you compare costs for interest-earning checking accounts, the differences are even greater. You would have to keep $15,000 in a Chase account at a lousy 0.01% rate of interest to avoid monthly fees from kicking in. At Hudson City, the minimum is $1,000, and the interest rate is 0.75%. Even if your balance drops below the minimum and the monthly fee kicks in, it’s $8 compared to $25 at Chase.