Caught in a Wells Fargo web? Here’s how to get untangled

Except that millions of Americans are second guessing their decision to bank with Wells Fargo, not much has changed since the Consumer Financial Protection Bureau announced the massive fake accounts scam perpetrated by Wells Fargo on its own customers. Predictably, a few proposed class action lawsuits have been filed by Wells Fargo customers, shareholders, and former employees alike.

Americans expressed outrage over the first highly publicized banking scandal in a few years, and observers on both sides of the political aisle cheered Sen. Elizabeth Warren’s (D-Mass.) much-deserved verbal spanking of Wells Fargo CEO John Stumpf during a Senate Banking Committee hearing.

That video never gets old.

Industry analysts say that the Wells Fargo scandal has damaged the bank’s reputation, but there is no indication that a mass exodus has occurred among the bank’s customers.

Why not? So-called “stickiness.”

When a company — any company — has a customer so deeply entrenched that an extraction is complicated, lengthy, costly or intimidating, the customer has more incentive to stay than to leave. And that’s problematic.

But it’s not unfixable. When the news of Wells Fargo’s fraudulent account scheme broke, I vowed to leave Wells Fargo for a local credit union. Wanting to feel empowered, and not just moving on — but moving up — I researched the benefits of credit unions to find out what it would take to live up to my word and tell Wells Fargo, “Buh-bye.”

Here’s what I learned.

What’s a credit union?

If you’ve never belonged to a credit union, you might not know what one is. That’s right, I said belong. Credit unions are not-for-profits that serve their members, and if you open an account with a credit union, you become a member. As a not-for-profit, credit unions don’t have shareholders, so its decisions are made with the interest of the membership in mind. Credit unions are also cooperatives. So if you’re a member, you’re an owner. They don’t have to keep earning money, they just have to break even.

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What’s in a name?

You may have noticed some credit unions have particular names. Each credit union is either state or federally chartered, and has a particular field of membership. For example, the world’s largest credit union, Navy Federal, is only open to active and retired members of the Armed Services, reservists and Dept. of Defense civilian employees and their families. Some other credit unions extend membership to a geographic region, such as Boeing Employees’ Credit Union, which serves current and former employees of The Boeing Company and their families, as well as residents of Washington State. Sometimes your affiliation with a school or place of worship can render you eligible for membership in a credit union. Therefore, you’ll have to do some minimal research to determine which credit unions you’re eligible to join.

Make a plan.

Not unlike the diet you say you’ll start on Monday, you have to put your bank departure plan into action and commit to it. “There is a perception among consumers that the process of changing financial institutions takes a long time, and so people don’t make it a priority,” says Todd Pietzsch, a spokesman for Boeing Employees’ Credit Union (BECU), one of the nation’s largest. “In reality, it takes about 30 to 45 days to move direct deposits, then automatic payments, and monitor the balances of both accounts during that period.”

“Getting that ball rolling is well worth it,” says Lynn Heider, a spokeswoman for Northwest Credit Union Association, a trade group representing credit unions in the Pacific Northwest. “The average household saves hundreds of dollars in fees every year over retail banks, and that alone makes the decision a no-brainer.”

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Discover the benefits.

For the vast majority of consumers, credit unions offer banking services comparable to those of traditional banks. Whether you’ve been a retail bank customer because that’s what your parents did, or because of a convenient branch location, there’s a common perception that you’ll have to give something up to leave a retail bank for a credit union.

“Not true,” explains Pietzsch. “While credit unions tend to have fewer branches than big banks, they belong to a co-op network, which offers members access to 5,000 shared branches and 30,000 surcharge-free ATMs throughout the country. Credit unions have also embraced mobile technology, so online banking is equally convenient.”

My discussions with credit union leadership revealed some unusual practices. Unusually awesome.

“At BECU, if a member’s credit score goes down, we never raise the rate on their loan,” Pietzsch explains. “But if their credit score improves, we annually review their account and if they qualify for a lower rate, we automatically lower their rate, where they’ll be locked in. We recently lowered rates on our credit card, personal loans, auto, RV and boat loans for over 40,000 members, saving them millions of dollars over the life of the loans.”

Huh. When was the last time your financial institution voluntarily saved you money?

Many credit unions even sweep monthly statements for fees charged by bank ATMs and refund them back to their members.

A different approach.

“In the for profit world of banking,” Pietzsch says, “banks ask how programs will benefit stockholders. The major difference in credit unions is looking to see how decisions will benefit the membership. That perspective drives our culture.”

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Funds placed in credit union accounts are not insured by the FDIC; instead, funds up to $250,000 per account are backed by the National Credit Union Administration, an independent agency of the federal government. In that respect, the two types of institutions are similar.

What’s not to like?

With branches near home or work, a national co-op of branches and ATMs and industry-tested mobile technology, there seems little reason to stay another month with Wells Fargo. And the customer service relationship model embraced by credit unions seems to suggest I won’t be hounded by staff to open a credit card, or any other unwanted account. The no-pressure banking environment would be a big — and welcome — change.

“Consumers should always be looking to credit unions as an option to save their family money and increase community engagement,” Heider offers. “Don’t wait for the next fee increase or banking scandal to consider making the switch.”

It’s like she knows it’s coming.

We all do. Now’s the time to get out of the way.

To learn more about the benefits of credit unions in your area, visit

Would you consider giving your banking business to a credit union?

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Jessica Monsell

A writer and natural advocate, Jessica joined our consumer advocacy effort following a decade of work on behalf of air crash victims at one of the nation's largest plaintiffs' law firms. She has lived in Europe and Asia, but now calls Charleston, S.C. home.

  • sirwired

    Additional Fun Facts:
    – Every credit union member MUST have a savings account there. Period. And this account must always have money it it that you cannot withdraw without terminating your entire relationship with the CU. However, it’s usually some piddly little nominal amount, like $5, so this isn’t exactly a high bar to cross. (One CU I’ve joined, First Tech, even made the deposit themselves on my behalf when I opened a credit card.)

    – For many credit unions, the “membership” requirement is pretty loose. For instance, one of the larger CU’s, Pentagon FCU, takes you through a long list of qualifications (work in the Pentagon, member of the military, etc.), then, at the end, asks if you’d like to join the National Military Family Association for a one-time donation of $10 (or whatever it is today.) “Membership” does not, in fact, require any family members to be associated with the military, just payment of that fee. (And it’s totally worth it; they consistently have the lowest auto loan rates outside of incentive financing; currently 2% for a five-year new (or nearly new) car loan, 3% for used.)

    – The branch issue really isn’t a problem either, even without co-op branches. I have a “local” credit union that I use solely for things like Notary services, cashier’s checks, the occasional need for rolls of coins, etc. And then for my normal day-to-day banking, a CU that doesn’t have a branch for several hundred miles from me. With mobile banking, and the ability to get cash at any grocery store or from fee-free ATM’s, not even check deposits or cash withdrawals present any difficulty whatsoever.

    Frankly, I’m not sure why anybody would use a regular bank at this point for consumer day-to-day banking. There is precisely zero upside to their fee-heavy, poor-rate, horribleness.

  • AJPeabody

    Regarding Wells Fargo, it now appears that honest workers who did not join the 5300 fraudsters were at severe risk of being let go for failure to produce. It’s a great way to select for dishonest workers.

  • Jeff W.

    Some more additional fun facts, building on sirwired’s post.

    – Membership can be indeed be very loose. In same cases, being a resident of a particular county is sufficient. You don’t have to work for a large employer either. Many small companies affiliate with a larger company’s CU.
    – Many CUs have just as strong of an online and mobile presence as the banks. I can deposit my check by taking a picture on my cell phone too. Or scan it with my computer and upload the image to their website.
    – My CU also has a free coin counting machine. Another interesting perk that is disappearing.

    If your nearest CU branch is not close to you, check to see where the nearest free co-op ATM is located. You can go online for that. I have two close to me, a smaller local bank when I have after-hours needs and the Costco.

  • Rebecca

    I agree credit unions are generally better than banks; I admit I have accounts at Navy Federal. However, I just closed my Wells Fargo accounts after reading not only about the ridiculous number of unauthorized accounts, but also the fact that executives received large bonuses based on hitting those so-aggressive-they’re-not-actually-possible sales goals. And threw a bunch of folks living paycheck to paycheck under the bus and terminated them. That really upset me.

    But I switched to Fidelity, as I had just said here a couple days ago. It’s nice to have most everything in one place, and they also have no fees. In fact, they refund (the next morning) any ATM fee at any ATM. So it’s impossible to be charged an ATM fee. They also don’t charge for things that all banks and the vast majority of credit unions charge for, like if someone writes you a bad check, overdraft fees, etc. They automatically transfer money to your checking account without charging a fee, so you don’t need to worry about making a large debit card purchase. They also don’t have a stupidly low limit on daily ATM or debit card transactions, as many banks and credit unions do. Again, I don’t work for them, never have. Just was really surprised by the quality of the accounts they offered.

  • Mel65

    I’ve been a member of our credit union since 1983. Every car loan, mortgage, etc.. we have is through there. At one time, I even worked there as a teller while in college. I also worked for Bank One (now Chase) and we were required as employees to have an account there for our pay and all I can say is, I will NEVER again bank with a bank. The fees, the way they handled accounts to maximize fees and overdrafts, etc… made me sick and angry.

  • Rebecca

    Likewise. I worked for a local bank and a huge bank. The local bank was significantly better until they were taken over by an expanding, progressively larger bank. I didn’t last long after the takeover. You’re correct. As a heads up to everyone, they aren’t legally allowed to require you to have an account at their bank to receive pay anymore, and they also can’t pay employees with an account sooner than an employee using a different bank (because they tried that too).

  • Rebecca

    The part about executives keeping their bonuses for literally impossible sales goals, which no bank anywhere could ever honestly achieve, and firing a bunch of folks mostly living paycheck to paycheck really gets me. Then, on top of that, the honest employees entered a toxic environment every day where they’re berated for not making goals that are only possible by committing blatant fraud. And resisting committing said fraud. When I saw that smug executive testifying, I literally went the very next morning and closed my accounts. I brought my almost 1 and almost 2 year old to the bank, normally I’d wait for my husband to work from home and go during their naps!

  • S363

    Having been a member of my credit union, Elevations Credit Union in Boulder, CO, for 43 years, I’ve long wondered why everyone doesn’t join one. All my kids and grandkids have accounts. Elevations is the result of the merger of several others over the years, and is presently open to membership to virtually everyone in the state. If one doesn’t qualify in any of the numerous other ways, one can donate $15 to their foundation to join. It has 11 branches, good online access and a good mobile app, from which, among other things, one can deposit a check by taking a picture of it. I’ve never paid a penny in service charges during my membership.

    The only downside is that they pay a whopping .05% (yes, that’s 1/20 of one percent) interest on savings. I therefore have surplus funds in savings at Ally Bank. Ally pays 1%, which is not exactly exciting but 20 times the rate at my credit union.

  • S363

    After reading this I was intrigued by Fidelity, so I went to their website to have a look. After ten minutes of looking I’m unable to find out what interest they pay on their Cash Management Account. If they’re so reluctant to tell what the rate is, I surmise that it’s not very good. Rebecca, perhaps you can tell us what rate you get.

  • jmtabb

    A little bit proud that i have accounts at both of the credit unions mentioned in this article – my very first savings account was with NFCU and it is still my go-to credit card. And I married into the BECU family and happily do my everyday banking with them.

    That said, I still (reluctantly) have work I do with a large for profit bank – a business account. Credit unions usually aren’t set up to handle international wire transfers (they need to use a correspondent bank which can add fees), forward/future currency purchases and stuff like that. But that’s an issue for businesses, not individuals and even then doesn’t affect that many businesses. Everyone ought to be checking to see if a credit union would work for them.

  • cscasi

    Fidelity currently pays .06% in their Government Money Market Fund (SPAXX). Of course the rates are not all that great, but tht is the way it is these days.

  • Rebecca

    Thank you! I will say I don’t leave a huge sum in the cash management account. It’s more for money flowing in and out, which is why it works really well for me.

  • Fishplate

    For 25 years, I’ve had all my accounts at a credit union 700 miles away. As long as the local grocery store has a fee-free ATM, I’m good. Everything else could be done by mail or phone. Now that I can deposit checks over the Internet, there’s even less reason to deal with the “local” bank – which is anything but local.

  • Peter Varhol

    So here is my problem with a credit union. I travel internationally, I say BoA, or Citi, or whatever, and anyone in the world nods. I say PCFU, or DCU, and I get blank looks. Sometimes you just need a well-known bank.

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