I never used to think twice about what bank held my money. Citibank had the closest branch, so it was a no-brainer.
The problem with no-brainers is that, by definition, you don’t think about something, that sometimes, you really should.
I wasn’t all that happy with Citibank, as they tended to sneak fees in there every once in a while. One time, I noticed that I had been paying a new $6 monthly fee for three months. When I called to ask what was up, they said they had sent out a notice about the change in terms. As if anyone even opens those.
Luckily, I put up a stink and they reverted me to my previous terms by switching something or other around, but it left a bad taste in my mouth.
Banks exist to make money from you, not for you.
The problem with banks is that, surprise, they do NOT exist to help you save and manage your money, as one might think. Banks are businesses. Big businesses. Think about it.
Like any business, banks have a product—money. They have consumers they sell that product to—you. They have owners and shareholders—not you (unless you own their stock). They exist solely to make a profit for the owners and shareholders, off of, you guessed it—you.
How do they do this? By giving out high-interest loans. By charging you fees up the wazoo.
In order to make a profit, on average, they need to take in more interest and fees from you than what they pay out to you in interest and dividends. It’s like a casino. The odds are always in favor of the house.
No wonder they keep cranking up fees. No wonder they push credit cards and loans. No wonder the last time I went into Citibank to close my account, the teller asked me if I would be interested in taking out a personal loan at “great interest rates.”
Credit unions exist solely to serve you.
After putting the thought in, it dawned on me that the post-consumer thing to do was to move my money to a credit union.
In contrast to banks, credit unions are NOT businesses. They are non-profit organizations. They are owned and democratically controlled by the members, which just happens to be—you. They exist not to make a profit from you, but to serve you.
That means when you walk in the door of a credit union, you are generally treated a lot differently. You’re not a customer to make money from. You’re an owner to keep happy.
That’s exactly what I discovered last week at my local credit union. I had been charged two overdraft fees because money that I had deposited into the ATM was placed on a four-day hold and wasn’t available when a few checks of mine went through.
The teller nicely explained that money deposited on the weekend at the ATM gets held, but if you go into the branch, there’s no hold. She also told me that she couldn’t remove the fees, but that she would check with her manager and get back to me.
The next morning, I got a friendly call saying that the fees had been reversed, with an apology for the hold on my funds. There’s some customer service for you. Or rather, owner service.
Credit unions are local.
Our focus has been turning toward supporting our local economy wherever we can. Credit unions are a part of that local economy. Ours has only four branches, serving just the citizens of our county.
In addition, credit unions are intended to support community development. Ours gives out scholarships to local students, gives grants to local non-profit charities, sponsors local school, and partners with local community organizations such as food drives that serve local families.
Credit unions are insured.
Credit unions are insured, not by the FDIC, but by the National Credit Union Administration. The NCUA is, like the FDIC, a federal government agency. It insures your money to at least $250,000.
Credit unions generally have better interest rates.
Because they don’t need to make a profit, but only make enough to cover operating expenses, and because non-profits are exempt from federal and state taxes, they can generally offer the best rates. I actually make money on my checking account, as opposed to being charged a fee for it. Imagine that.
They also tend to offer lower interest rates on home and car loans. Just don’t do that. Debt is a bad idea. Even from a credit union.
Credit unions have ATMs everywhere.
Some people think they won’t be able to get their money from ATMs because they don’t have branches around the US. In fact, like most credit unions, ours is part of a shared branch network. When I put in my mom’s address in a small town in Illinois, I was able to find several close credit unions where I could deposit and withdraw money.
That doesn’t really affect us. We just use debit cards, and so we rarely need to withdraw cash from an ATM. But it’s good to know I can if I need to.
Okay, so our credit union has a crappy online system.
Credit unions get a bad rap for having outdated online systems. This happens to be true for ours, too. What we are able to do is access our account info only and manage it in You Need a Budget software, which I’ve recommended before.
Our credit union has become part of our post-consumer living and path to financial independence. Instead of having multiple accounts all over the place, we have just one joint checking account and one joint savings account at our local credit union. I highly recommend it for having a much better picture of how much money you actually have and just for simplifying everything. Think of it as decluttering for your money.
We have our investments elsewhere. More about minimalist, post-consumer investing soon.
Sorry for the image-free post. Lot of words and not a whole lot to show. So here’s Celeste in a tree, for the heck of it.
Because, you know, money doesn’t grow on trees. Not very much in banks, either.