You’re interested in moving your money to the most responsible banks possible. That’s great! This is a fairly complicated task, and it’s easy to put the cart before the horse and wind up quitting in frustration. Follow the steps below to achieve your goals with the least number of headaches possible.
1) Determine why you want to change banking providers.
There are a variety of reasons to assess the impacts of your banking provider, and shift your dollars to those banks which are making the most responsible investments and lending decisions. Consider the following questions about your banking provider(s):
Are there environmental issues, such as carbon emissions from fossil fuel infrastructure development, which tie to companies you’d like to ensure your bank divests from and does not lend to?
Are there socioeconomic issues, such as local community investment, lending in low- and moderate-income areas, which you’d like to ensure your bank focuses upon?
Are there offerings you would like to be available to you at your bank, such as carbon offsets, credit cards whose “cash bank” can be sent to charities, or lower interest rates for environmentally responsible purchases (e.g., fuel-efficient cars)?
Once you understand the issues that are critical to you, find out information regarding whether your current bank is involved in the activities you’d like to promote or discourage.
Two such popular topical causes include removing money from banks that are funding the Dakota Access Pipeline and banks that are financing fossil fuel infrastructure development around the world.
Before you move your money from where it currently resides, follow the next few steps to ensure you have as few hiccups in the process as possible. It’s worth the effort.
2) Identify a more responsible banker, based on your goals.
First, you can determine the banks with whom you should stop doing business with, and find a bank has not been identified as participating in practices or causes you seek to avoid.
If the Dakota Access Pipeline project or fossil fuel infrastructure lending are critical issues to you, simply avoid ALL of the banks listed by #DefundDAPL as funding the Dakota Access Pipeline or that score poorly on the Rainforest Action Network’s Fossil Fuel Finance Scorecard.
It would not be helpful to pull your money out of one fossil fuel infrastructure lender and replace it with another undertaking the same lending practices. Take your time to identify the best alternatives.
There are a few different search options for going beyond the “bad actors” and finding more responsible banks. Banks can demonstrate that they have made socially- and environmentally-responsible investment and lending decisions by disclosing certain data. Some of this can be found simply by visiting a bank’s website or downloading their corporate report.
There are also tools available that will provide comparisons of different banks based oncertain practices. For example, the National Community Investment Fund tracks mission-oriented banks around the United States, provides data on the percent of 1) a bank’s branches located in low- and moderate-income communities and 2) a bank’s lending occurring in low- and moderate-income areas. The NCIF’s Bank Impact search tool allows for consumers to compare banking options in their area along these attributes.
You can also consider putting your money into a credit union. Credit unions are non-profit-making money cooperatives whose members can borrow from pooled deposits at low interest rates. Find a Credit Union in the United States, Canada, or Europe.
3) Prepare to move your money around.
Before you pull your money out of your existing accounts, there are a number of logistics to be taken care of. After all, you don’t want your rent or mortgage check to bounce, do you? Address the following tasks to keep things from falling through the cranks, and winding up with late fees, checks bounding, or important debts not being paid on time:
Make a list of all direct deposits, automatic-payments, and a list of uncashed checks you’ve written. Make sure these payments have been changed over and open checks have been cashed (or re-written) before closing your current account.
While you’re at it, determine if any of your regularly occuring payments can be minimized. We were reminded that we were paying for video streaming services we hadn’t used in months.
Gather the appropriate documents for opening a new bank account (e.g., two forms of ID for personal accounts, identification and corporate information for business banks accounts)
4) Open your new accounts!
It’s finally time to open your new account! Sometimes, this can be more of a hassle than you might expect. You’ll need all parties that you want listed on an account to be present in order to open it. For personal accounts, each of you needs two forms of identification and either blank checks or cash to deposit into the account in the minimum amount required. You’ll need to fill out forms, and provide information such as your home address and Social Security Number.
Pro Tip! Be sure to call the bank and make sure the person who opens accounts will be working the day you plan to show up. I made the mistake twice of showing up when I assumed that person would be there, and they had taken the day off on both occasions. At larger banks, they will almost always have more than one person who can help you open an account. This isn’t always the case at smaller banks.
For Business Checking Accounts, come prepared with Incorporation Documents, EIN, Corporate Resolutions, and–for 501(c)(3) charities–the letter of tax exemption notification. Here’s a more complete list of documents needed for business banking.
5) Close your old accounts.
Once you have a new account to use, you can start rapidly shifting money into this account and prepare to close your old account.
If you have direct deposit for your paychecks, switch it over to your new account. Keep in mind, processing this change can take up to two pay periods, so check with your HR Department to make sure you know what to expect.
Once you have the appropriate available balance in your new account, switch your auto-payments over to your new account.
Make sure all checks you’ve written under your old account have been cashed.
Now you can close your old accounts!
Pro Tip! When you open a new account, the your first several deposits may be frozen for as many as 10 business days. Make sure you account for this in your timing of moving money around and paying bills/making transactions under your new account.
6) Make a big deal about closing your accounts.
You’ve decided to move your money from one bank to another for important reasons. Make sure your old and new banks know why, and share it on social media. Letting banks know why you are pulling your money out of their institution can be a great catalyst for them to change their behavior.
Send letter to bank letting them know why you removed your money. The DefundDAPL team has created a contact list for most major banks. They’ve also developed a sample letter template that can be modified to meet your needs.
Share your activities on social media, and when possible, tag the old and new banks and explain why you changed banks.
Submit your information to data repositories, such as the Dakota Access Pipeline Divestment Tracker to ensure that your actions are counted in the collective impact.
Let organizations know when you’ve used their resources. For example, if you used the Rainforest Action Network’s Fossil Fuel Finance Scorecard to determine your old bank’s fossil fuel investment and lending practices, let them know via social media. Demonstrating use in the market will help organizations such as theirs prioritize future endeavors and even obtain additional grants for similar projects.
A note on credit cards.
Similar to switching bank accounts, it can be easy to put the cart before the house and start closing accounts before it strategically makes the most sense, causing you headaches in the process.
You always want to OPEN new accounts first, especially if you carry a balance on your existing lines of credit. Closing lines of credit is very likely to lower your FICO credit score, and you want to open accounts while you have the highest possible score in order to obtain the best interest rates and offerings.
Your best bet for a lender in this situation is going to be using a Credit Union, as the vast majority of consumer lending banks are also lending to projects such as fossil fuel infrastructure development and the Dakota Access Pipeline. Find a Credit Union in the United States, Canada, or Europe.
Once you have a new account open, you can transfer your existing balances to your new line of credit. NOW you can close your old lines.
If your credit card balances are too high to transfer over, consider still opening the new line with a Credit Union or other responsible lender, using it as sparingly as possible, and paying down your old balance as quickly as you can so you can close those accounts.
Follow the same steps about making a big deal of closing these account to lenders, on social media, and to any resource provider who helped inform your decisions.
That’s all we’ve got! Happy re-investing!