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Unhappy with Big Banks? You could Move Your Money

A t Barclays headquarters in the City, the bank on Friday revealed billions in profits and hundreds of millions in bonuses to be shared among an elite pool of traders and directors. But down at ground level – and a world away from the marble and glass of the executive suites – there was a very different picture, as more than 50 customers queued outside a nearby branch, ready to close their accounts and cut up their cards.

Campaigners are hoping this trickle of rejection will turn into a flood as the public vents its frustration against Britain’s banks in the best way it can – by moving its money.

The Move Your Money campaign is a child of the Occupy Wall Street movement, which captured the imagination of the broader American public with a simple but compelling slogan: “Invest in Main Street, not Wall Street”.

It claims to have led to more than 10 million people moving their money to local financial institutions, with a “Bank Transfer Day” in November seeing more than 40,000 people switch.

Move Your Money launches in the UK in March with the catchphrase “Bank on something better” in the belief we can all take concrete action to create a more stable and ethical banking system. “We’re all angry about the cuts, about what’s happening to schools and libraries and so on, given the wheelbarrows of cash that have supported the banks,” says Ed Mayo, head of Co-ops UK.

“At an individual level, you can’t do everything to put an unfair economy right – but you can do something. Move Your Money is the new Fairtrade. It is the campaign for our time.”

The National Union of Students has joined, and is encouraging local student unions to junk accounts with the big five banks in favour of more ethical alternatives, such as the Co-op or Nationwide building society. It’s an echo of the hugely successful 1980s boycott against Barclays and its operations in apartheid-era South Africa.

So far, just over 2,000 people have signed a pledge on moveyourmoney.org.uk, to “register your vote against business as usual”, but organiser Louis Brooke says it’s still early days, with the site open just four days.

In March, a series of events will try to keep the campaign in the public eye, including a nationwide petition. And it’s not just crusty protesters threatening to move their overdrafts – the campaign says it’s close to persuading even some Tory MPs to take the pledge.

1. Ethical Banks

Why should I switch? Because you’re appalled at bankers’ bonuses, salaries and stock options. Because their trading and lending practices have left the western world’s economy in ruins. Because you’re fed up with your money financing arms dealers and dictators. Oh, and they also stung you for £25 last month when you went a few quid over your overdraft limit.

Move Your Money says: “The banks failed badly, but despite receiving the biggest taxpayer-funded bailout in history, nothing much has changed. Banks continue to pour money into socially useless lending and risky speculation, leaving us exposed to more crises, commodity bubbles and instability.”

It uses ratings compiled not by Moody’s or Standard & Poor’s, but Ethical Consumer magazine to rate the banks. Barclays earns an “ethiscore” of just 0.5 out of 20 (Standard & Poor’s gives it A+). But it gives 13 out of 20 to Co-operative Bank, 15.5 to Triodos Bank and 16 out of 20 to Charity Bank. It also likes Unity Bank, a specialist in accounts for organisations, not individuals.

What do they offer? The only ethical bank offering a current account is Co-operative, although several building societies also have deals. Co-op’s standard account offers the usual facilities at no fee if you stay in the black. Its ethical commitment is now 20 years old, covering human rights, the environment, international development and animal welfare.

Triodos Bank commits to lending your money only to businesses that make the world a better place – from wind farms to housing projects. It promises total transparency, allowing depositors to view where it has lent money.

Charity Bank finances social enterprises, charities and community organisations, and promises a “financial return and social impact”.

Which one should I go for? Ethical Consumer says “none come close to the Co-operative” for “clarity and ambition” in ethical banking, and names it a best-buy for an ethical current account. Co-op scores highly on customer satisfaction. It came second to First Direct in the annual JD Power survey in 2011. It was also named best current account provider 2011 by MoneySupermarket. But its cash Isa pays a lowly 0.5% interest, although it has a fixed-rate Isa paying 3% at affiliate Britannia. The good news is that Which? rates Charity Bank’s ethical cash Isa, paying 2.5%, a best-buy, while Triodos pays 2% on its cash Isa. Top-rate Isas pay only 3%, so switching means savers lose little to salve their conscience.

2. Credit Unions

Their progress has been hindered by restrictions that have limited take-up, but new rules introduced last month should allow them to provide a more effective alternative to banks on the one hand, and expensive payday lenders and loan sharks on the other. For the first time, credit unions will be able to pay people interest on their savings. And they will no longer have to prove that all the people able to join have something in common.

There are just over 400 credit unions in the UK. They are regulated by the Financial Services Authority and covered by the Financial Services Compensation Scheme (FSCS), so the first £85,000 of a member’s savings are completely safe. Some do go bust – about seven went under last year, and at least two have collapsed so far this year. They tended to be small players, and most people get their money back via the FSCS within seven days.

What do they offer? Core products are savings accounts and loans. However, around 25 (including Bristol Credit Union and London Community Credit Union, which serves the residents of London’s Hackney and Tower Hamlets) offer current accounts, and a handful (including Glasgow Credit Union and Scotwest, which serves those living or working in the west of Scotland) offer mortgages. Quite a few offer insurance products, cash Isas and prepaid cards.

Credit unions pay a “dividend” rather than interest. However, being able to pay interest should give a huge boost to the movement.

On the loans front, they can sometimes offer best-buy rates for people looking to borrow smaller sums. Some credit union loans charge borrowers no more than 1% interest a month on the actual amount owing – an APR of 12.7%. By law, you can’t be charged more than 2% a month on the reducing balance (an APR of 26.8%).

Which one should I go for? Unfortunately, the rule changes don’t mean you are allowed to join any credit union you like. A credit union open to people living or working in one London borough, won’t be able to open its doors to the whole of London. But the system will be much more flexible than it is now.

To see if there is one you can join, use this search facility. Input your home and work postcodes, the name of your employer, and whether you belong to any groups, such as a trade union. I had a go, and it suggested eight credit unions (I live in north-east London and work at the Guardian’s offices in King’s Cross). However, I was ineligible for six; that left Waltham Forest Community Credit Union or Haringey, Islington and City Credit Union.

3. Building Societies

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