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Economic protestors' debit card choices more powerful than bullhorns

by Broderick Perkins

(10/10/2011) Federal Deposit Insurance Corporation-insured institutions reported a net income of nearly $29 billion in the second quarter of 2011, but the banking industry is weeping about reams of regulatory reform and costs to comply with debit card regulations.

Meanwhile, taxpaying citizens caught up in the political rhetoric and showmanship of economic protest may be overlooking a more effective and immediate way to effect change -- by actually changing -- their bank.

Banks net income second quarter represents an increase of $7.9 billion (37.9 percent) from a year earlier. This is the eighth consecutive quarter that industry earnings have improved year-over-year. More than half of all institutions (59.6 percent) reported improved earnings compared with a year ago, according to the FDIC.

If you want big-and-getting-bigger banks to change, hit them where it hurts most -- right in the vault.

Leave your big bank accounts for credit unions and smaller banks that don't gouge you with fees, high interest rates and other costs.

You do have a choice, along with that right to protest.

American Banker Association president Frank Keating complained in early September on Fox News about the lack of regulatory enforcement contributing to massive mortgage failures, but a month later was whining about regulatory caps on debit card charges and how banks were socking it to consumers to get back at the government.

"Recently a number of banks have announced new fees for bank services. Make no mistake about it — these fees are the direct result of government price fixing that has fundamentally altered the economics of offering a debit card," said Keating in a prepared statement.

Take that, Uncle Sam!

While your government is trying to protect you from exorbitant fees that helped bring the economy to its knees, the banking industry responds by finding another way to bust your financial chops and pull a neener-neener on the Feds.

Keating can't have it both ways and neither should you.

Stick with your big bank and quit complaining or express your right to shop around and actually shop around.

In the prepared statement, Keating was addressing caps on debit card fees. Debit cards are typically attached to your checking account and big banks aren't the only ones offering debit cards and checking accounts.

Take credit unions. Please.

Credit unions are thriving because they are not in the business to make a profit, but to serve members. They serve members who pool their money to get a decent return, in the form of savings interest and competitively priced loans and other products.

At credit unions, the fundamentals apply: Credit unions take in deposits. They use the money to make loans. They charge more on those loans than they pay on deposits. That's smart business.

Generally, it is the lack of the profit motive that kept credit unions out of harms way during the mortgage meltdown. They had no incentive to get involved in the subprime racket, no reason to sell and repackage loans as toxic investments and no need to otherwise venture into untried and untrue investment schemes.

Credit unions hold most loans to maturity and return the interest to members in the form of competitively prices interest-bearing checking, savings and CD accounts, which come with rates that often beat bank rates, according to the National Credit Union Administration.

Don't expect to be coddled at a credit union. You may need to actually save money with them to get free checking and other perks. Some credit union checking and debit card accounts do come with fees, but the unions add to your ability to shop around.

Don't think because you aren't employed in a certain industry, aren't a member of a union or trade group or don't have affiliations you can't join a credit union. Most people can find a credit union they can join for checking and debit card accounts and other services.

Also, don't overlook smaller banks. ConsumerAffairs.com offers some examples.

Instead of using money to bombard you with national television network and internet ads, smaller banks use revenues to offer lower rates, fewer charges and more personable service.

The key is, instead of (or at least, along with) sitting down or hanging around in protests that strain already thinned police forces, get off your duff, shop around and immediately use the power you have to effect change.

You already know how long it's going to take dysfunctional legislative bodies to change the system.

Much more practical than the blare of a bull horn, comparison shopping power is the kind you can take to the bank.

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