COMMENTARY

Peter Burgess

Thousands of people flooded into credit unions and small banks over the weekend as part of Bank Transfer Day, an effort to prod depositors to abandon giant banks. But at least some of the big banks won't mind losing those customers.

On Saturday, the Boeing Employees' Credit Union in Seattle signed up a one-day record 659 new members. At the grand opening of a Randolph-Brooks Federal Credit Union branch in Pflugerville, Texas, the parking lot was so full that customers had to leave their cars across the street.

Many of the big banks are dealing with bad PR over the prospect of imposing new fees on customers. Local credit unions are taking advantage as they see a rise in new customers.?(Video: Fox News, Photo: Getty Images)

Dozens of people opened an account at the Texas credit union as a local disc jockey gave away prizes.

'They'll treat me like a good customer,' said Charlie Estes, 33 years old, who pulled his life savings out of J.P. Morgan Chase & Co., the largest U.S. bank as measured in assets. Representatives for J.P. Morgan declined to comment.

It won't be clear for several weeks how many deposits moved to credit unions—the member-owned cooperatives that can't sell stock and don't pay taxes—on Bank Transfer Day. But the sprawling, loosely organized effort got lots of attention, partly because of controversial plans by Bank of America Corp. and other large banks to charge customers for using debit cards. The big banks retreated after a widespread public furor.

Executives at large banks have shown few signs of worry that depositors might walk out the door. One reason: People who gravitate to credit unions tend to be unprofitable for giant banks because of the small balances they keep on deposit, low number of products they buy and the relatively high account-maintenance expenses at big financial firms.

Moebs Services Inc., a research firm in Lake Bluff, Ill., estimates it costs the giant banks about $350 to $450 a year to maintain a checking account. In contrast, smaller banks incur costs of $175 to $250 a year per checking account.

Banks try to recoup such costs by imposing overdraft fees and other charges. But new rules in the wake of the financial crisis limit some of those surcharges. The recent debit-card-charge mess was a failed attempt to close the gap.

Many banks also have done away with free checking accounts, unless customers maintain a minimum balance and meet other criteria. But with the average checking account containing $5,200, according to research firm Raddon Financial Group in Lombard, Ill., many customers can't avoid the monthly charges.

More than three-fourths of credit unions offer no-strings-attached free checking, compared with 45% of banks, says Greg McBride, an analyst with Bankrate.com. Deposits at banks and credit unions are insured up to $250,000.

Credit unions held just 8% of federally insured deposits as of June 30, compared with 70% for banks that have assets of more than $10 billion.

Credit-union officials say those figures understate their actual reach in terms of customer numbers, because most members at credit unions have small balances. Overall, U.S. credit unions have more that 91 million members, or nearly one in three Americans.

David Small, a spokesman for the National Credit Union Administration, a federal regulator and insurer of credit-union deposits, said many of the nation's 7,200 credit unions 'are in rural areas where there is no other banking option.'

Some bankers complain that credit unions have outgrown their status as a lender of last resort to poor and rural communities and should be forced to pay taxes just like for-profit banks.

'At a time when state and local governments are struggling with lower revenue, why should some of these credit unions be subsidized if they are not going to provide those services?' said David Locke, chief executive of McFarland State Bank in McFarland, Wis. The bank has about $500 million in assets but is having trouble competing with nearby credit unions, he added.

Credit unions are lobbying Congress to let them make more business loans. The current limit is 12.5% of assets. Raising the cap would allow credit unions to diversify their loan portfolios and provide more capital to cash-strapped companies, Mr. Small said.

Yet several large commercial credit unions, which invest money on behalf of their retail members, went bust after loading up on high-risk mortgages during the housing bubble.

Some bank customers said they are unhappy—but not enough to give up the conveniences provided by big banks. 'I'd love to change,' said Michael O'Donnell, a Bank of America customer in Boston. 'But the services they offer would be hard to replace.'

Corrections & Amplifications The National Credit Union Administration is a federal regulator and insurer of credit union deposits. An earlier version of this article mistakenly identified the NCUA as a trade group.