Photographer: David Paul MorrisBLOOMBERG NEWS
This article is part of the #RealMoneyMoves series: actions everyday people can take to align their money and values. Follow Morgan for more like this.
Do you know where your money spends the night?
It’s easy to forget sometimes that banks don’t just keep your money in the back in some secret vault with an Indiana Jones-style obstacle course at the entrance (though that could be a great marketing ploy). Large banks actually only have to keep 10% of their accounts around, whether in cash or a deposit with a Federal Reserve bank.
That means that yes, there are some vaults around that probably do have some pretty cool security systems, but it’s not like your cash is just waiting for you. Its likely loaned out to other customers, which is part of how the bank makes its money.
So what is your money funding? The answer is, it depends, and it’s really hard to know unless your bank is extra-committed to transparency, or really proud of its loans and thus wants to share that with customers as part of their marketing pitch.
Most banks are not so proud, and for good reason. For instance, as CNN recently reported, banks like Wells Fargo and Bank of America hold millions of dollars of debt for private prison companies, meaning that if you bank with one of these institutions, you could be unwittingly supporting family detention. Similarly, the Financial Times noted investor concern over banks like CitiGroup, BNP Paribas and Wells Fargo funding the Dakota Access Pipeline project slated to destroy indigenous land.²
Compare this to the stories that New Resource Bank (now part of the Amalgamated bank family), the originator of the phrase, “ Do you know where your money spends the night? ” tells of its investees. Their clients range from Alter Eco and Indigenous Design’s fair trade products, to Veritable Vegetable, an organic produce distributor, to green real estate projects like the Basecamp Hotel. No wonder you can find these on the homepage of the bank — these companies are definitely more photogenic than the images we’ve seen lately of children locked up in privately owned detention centers. As Neil Sedaka taught us, Breaking up is hard to do.
We are creatures of habit — and may have had the same bank since a parent or loved one helped us open an account as a child. We may think that customer loyalty actually means something to our financial future. And we know changing banks would take some degree of time and headache.
But, like any breakup, sometimes we’re just ready for a change. We’re tired of the random fees that seem to magically show up. We’re tired of having eight security checks before we actually talk to a banker. We’re tired of seeing our bank in the headlines (just google “Fake Account Scandal, Wells Fargo” and see what happens—or add “Lied to Federal Government” if you want to get extra saucy). We want to know where our money actually spends the night.
So what do you do once you’ve passed the point of no return — and are ready to break up with your bank? A few steps here:
- Plan your rebound. Ok, this is generally not considered wise with real-life breakups, but in this case, you actually do need to jump from the arms of one bank to another to ensure all your needs are fulfilled. That means finding a community bank or credit union that serves your needs (here’s one way to do that) and starting the most basic account possible to make sure you have somewhere to park your assets.
Make sure to do some research to ensure the bank can fulfill your particular needs. Do you love walking into a bank branch? Or would you prefer to bank exclusively from your phone? Do you care a lot about online access? Some community banks have all these bells and whistles… some don’t. This is in part a chicken and egg problem — the more customers they have, the more they can grow their services! But presuming you’re clear on what your needs are, there should be an institution that can fulfill your requirements for the perfect rebound.
- Hold that breakup convo. The good news is that unlike most breakups of your life, this one is likely to be relatively painless and impersonal. The recipient of your breakup call will be sitting in a call center somewhere, and likely is economically incentivized to simply resolve your issue as soon as possible and get off the phone. From that perspective, you should feel you’re doing them a favor by ripping the band-aid off and getting to the point.
Here’s what my breakup conversation looked like. Seriously, best breakup ever.
BigBank Representative: What can I do for you today?
Me: I’d like to close my accounts.
BigBank: OK, ma’am, no problem, I can do that for you. Can you please tell me why? Can I convince you to stay?
Me: I am concerned that BigBank is supporting businesses that do terrible things like mining, fracking and supporting human rights abuses. I don’t want to be a part of that, so I’m moving my money to a community bank. Can you please write that down in the notes for your supervisor?
BigBank Representative: Um, oh. I can put that in my notes. Is there anything I can do to convince you to stay?
Me: Yes. Can BigBank improve its social and environmental policies to be a better global citizen? If not, then I cannot continue to support them.
BigBank: I’m sorry ma’am (pregnant pause). I can help you close the account. Where would you like me to send the check or wire?
Me: Please send to MyFavoriteCommunityBank, routing number xxxxx, account number xxxx.
BofA Representative: OK. This will be executed within 48 hours and your accounts will be closed.
Once you get past the emotional attachment and any related fear — the actual process itself is extremely short; 30 min to research a new bank and open an account, 5 minutes to breakup with your old bank.
We leave you with a new(er), more improved break-up song for you and your big-name bank—because we know you’re strong and ready for a change. Get to it!