Why we’ve abandoned big banks: No service for small business and, oh yeah, many are in trouble

For years, we thought that most banks were about the same and the thing that distinguished them was how many ATMs they offered and whether they charged you for checks and other services. When we moved to Seattle in the mid-’90s, we amended that to include nice, local community involvement and customer service – largely thanks to our first personal banker here, Ryan, who set us up at the Ballard neighborhood SeaFirst and made our migration from the East Coast painless.

Since that day, we have stuck with local banks. When SeaFirst was gobbled up by Bank of America, we almost immediately felt the difference in corporate climate. After checking their reputation, we ditched BoA for Washington Mutual, which at the time advertised a bunch of horse-riding grandmas who were saving their citizens from out-of-town banks. Free online bill pay (albeit with certain minimum balances) and series of fantastic bankers (most recently the irrepressible Lindsay at the branch down the street from our home office) sealed the deal.

Alas, as you probably know, WaMu made some bad loans – more than their share, really – and were bought out by Chase. Not remembering how bad out-of-town banks had been to us, we thought we’d give Chase a chance and enjoy their expansive network of nationwide ATMs. But then they started in with the letters demanding that we, in essence, re-apply for our home equity line of credit.

A few things to set this up:

  1. We have always paid our bills on time and kept our debt low, paying off projects we charged to our line of credit in their entirety twice since we started using it.
  2. WaMu had, without asking, twice increased our line of credit far beyond what we’d ever reasonably need for home improvements. If they did this for everyone who had a line of credit, it’s no wonder they went out of business.
  3. Our house, thank goodness, is worth more than we paid for it – so even with the larger line of credit, we’d have been covered.

Our read on Chase (hindsight being 20/20) is that we never had a chance. They said that they wanted us to document our small business income to justify our line of credit, but they never listened to us, did not request specific additional documentation and filed several appeals on our behalf without our consent and involvement. In short, we were railroaded. They froze our line of credit and sent us a letter that, if you read between the lines, told us we were free to take our business elsewhere and, oh yeah, don’t let the screen door hit you on the way out.

We asked around on Facebook and nearly all of our friends recommended going with a credit union over a bank. Considering all of the problems banks are having these days, this actually seemed to make sense. We’d always avoided credit unions because they tend to have few ATMs and fewer branches to visit when you need to make deposits or talk to a banker.

But, if you dig beneath the surface, the situation is pretty good for credit union customers. BECU was once only for Boeing employees,  but is now available to all Washington state residents. They have agreements for free ATM access on the Co-op Network and you can visit a number of sister credit unions to make deposits and talk to a teller. There’s one of these a short walk from our house, right next to a community center where our son spends many afternoons. So most of our concerns about access to cash and a convenient place to deposit our checks have melted away.

BECU so far has been very supportive and moved our line-of-credit loan very cleanly and efficiently. We have to go a little further out of our way sometimes and we’re still learning where to find all of the fee-free ATMs, but for us it’s worth it to have our money someplace we trust and believe in. BECU is a not-for-profit, so they’re not motivated by greed—just to provide the best value and service for their customers.

If only more businesses shared this philosophy.

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