Posted by: Kristina Flores, Director of Marketing
With the recent buzz around Bank Transfer Day and its support of the credit union movement, we felt the need to provide some education on the subject. So, here’s a little bit about what it all means.
What is it and why was it started? Kristen Christian, a 27-year old Bank of America customer, deemed November 5, 2011 Bank Transfer Day – a day that encourages bank customers to take their cash out of big banks and put it into smaller banks and credit unions instead. The creation of this day can be traced back to the Durbin Amendment – an add-on to the Dodd-Frank Wall Street Reform and Consumer Protection Act. This amendment was signed into law by President Obama on July 21, 2010 and allows the Federal Reserve to regulate debit card interchange fees of financial institutions with over $10 billion in assets. The final rule limits debit card interchange fees to a maximum of $0.21 per transaction.
What does that really mean? A debit card interchange fee is the cost a retailer or merchant pays to accept your debit card. When you swipe your debit card, the above noted $0.21 is paid by the merchant or retailer and split between the financial institution that provides the card, and the payment technology company (VISA, Mastercard, Discover, etc). Prior to the $0.21 cap the average interchange fee was $0.44. Therefore, some financial institutions in response to this loss of income have begun implementing monthly fees of $3-$5 for consumers who use their debit card.
While we do believe there are several sides to every story, ultimately we cannot ignore a cause that supports credit unions! Durbin Amendment and debit card interchange fees aside, credit unions are a smarter choice for far more reasons than what this amendment has brought to light. Credit unions have been a powerful alternative all along and especially through the financial crisis. We should get some credit for the smart decisions we have made from the beginning – it’s simple since they are the principles we were founded on.
If you are reading this blog, you are likely already a member of our credit union or another. So we encourage you to tell your friends and family to join the movement and find out why credit unions are the smarter choice. Here’s a website to help you explain the benefits (or learn them for yourself) and find a credit union near you and/or your friends and family. Of course I can’t forget to mention that Prospera has a referral program – you and your referred friend and/or family member both receive $25 when they open a new Prospera checking account. In honor of Bank Transfer Day we’ll double it to $50 if you refer a checking account that is opened between October 31 and November 12, 2011. (All the same guidelines apply.)
