This Reuters blog post by Felix Salmon reviews a question received from one of his readers regarding the big banks and what consumers can do to level the playing field. Here's an excerpt of that question:
If customers were to take their deposits from the large banking institutions and place them in cooperative banks and small regional banks, this would have the same affect of leveling the playing field. What are your thoughts on this matter? Big banks offer pitiful interest on money that they lend and they charge exorbitant fees which contribute significantly to their profit, so it does not even make sense to do business with them (although I understand the advantages - more ATM's, theoretically more services, etc.)
Felix is pessimistic about the impact consumers can have, but he does recommend credit unions. However, he describes two issues with credit unions that make it difficult for consumers: 1) few credit union choices, and 2) too inaccessible and inconvenient.
Qualifying for Membership at Your Local Credit Union
I think the situation is better than what he describes. From my experience most people in the US can qualify to join several credit unions in their cities. In the past, most credit unions restricted membership based on employers. However, this has changed. Many credit unions now have community field of memberships in which you can be eligible if you live, work, worship or attend school in certain counties or parts of the counties. CUNA's database of credit unions makes it easy to find credit unions near where you live. This page also has a locator tool that takes into consideration not only your location, cut also your employer and other affiliations.
Qualifying for Membership at Nationwide Credit Unions
In addition to local credit unions, there are many credit unions that you can join without even residing close to any of their branches. Often you can qualify by joining an association which is open to all. Once you are a member of that association, you can join the credit union. The associations often have small yearly membership fees, but once you're a credit union member, you typically don't have to maintain the association membership to keep your credit union membership. This might seem a little unfair to the banks since credit unions receive tax breaks, but I'm more worried about the powers of the giant banks than this issue with the credit unions.
I list several of these "nationwide credit unions" in my weekly summaries. Many have a long history of offering very competitive rates.
Convenience and Accessibility
The other issue that concerns people about credit unions is the lack of convenience and accessibility. The mega-banks will often have branches on every block of your city. It's true that credit unions don't usually have that many branches. However, credit unions have developed a way to compete on this issue. Many are part of a CO-OP Network and a Shared Branching network. The CO-OP Network gives you access to many more ATMs and the Shared Branching network allows you to conduct basic banking transactions at any credit union in the network. The CO-OP Financial Services is an example of a surcharge-free ATM network and the CU Service Centers Network is an example of a Shared Branching network.
So we can do a lot today to reduce the powers of the giant monster mega-banks. It probably won't solve the too-big-to-fail issue, but it can help, and it can also help us save more money.