It’s kind of scary to open your first bank account. You don’t know where to go, what to do, and a lot of the times, you just do it because you have to. Some people choose national banks, some choose credit unions and some stuff all their cash inside of their mattresses.
I went with a national bank and ended up suffering tons of overdraft fees because I was ill-informed about banking processes.
So you don’t have to deal with some of the stress I’ve dealt with, here’s a breakdown of some of the most common banking options.
Most folks go with a national bank. This is your Bank of America, your TD Bank or Wells Fargo. They tend to be a one-stop shop and give you a ton of accessibility. However, they’re also associated with the most grief. That is because banks overall are for profit. This means that they unsurprisingly care more about making money than the wellbeing of their customers.
Local, community banks and credit unions hit the nail on the head more often with customer service. That is, after all, something they can put all their heart and soul into. They have less volume concerning customer base, and less overwhelming pressure to capitalize on profits. It’s more important for them to retain customers as opposed to gaining new ones. You also tend to get more leeway with private banks and credit unions. A local bank is more likely to help you with fees incurred by late payments and overdrafts. With most big banks, you get one so-called complementary fee waiver per year. That’s it.
This can be really frustrating, especially when those $35 dollar fees add up. Big banks don’t care about your spouse losing their job, or the sudden onset of medical bills from illness. Credit unions and private banks claim to care, and they make more effort to take care of you. They’re more likely to understand that life happens.
The difference between any bank and a credit union lie in the fact that credit unions are not for profit. This means that making money is not the first priority of the company. Members of a credit union are essentially shareholders of the union. If someone doesn’t like the way a credit union is operating, they can run for the board and have the opportunity to make changes.
A big barrier to entry concerning credit unions is a surprising government regulation. To be a member of a credit union certain requirements have to be met. You must be a part of a certain group, work a certain job or live in a certain area. The idea is that members of a credit union are coming together for a common goal. With a credit union, the profits go back into the said community or become member benefits like lower interest rates. On the other hand, you can walk into almost any bank with a small deposit and get an account that day.
Here’s one thing people don’t always think about, though: where is your money going?
Banks make their money off of interest, consultations and associated fees and national banks have their money in places that we all might not support. An example is the Dakota Access Pipeline which was funded by a litany of national banks. Withdrawing support, if possible, is a really effective way of boycott. Banks depend on long-term relationships in order to make their money, after all. This must be taken with a grain of salt because there is little ethical consumption within a capitalist economy, but this is something that many people can control. With this consideration, it may be more ethical to use a credit union if one is available to you, but access is not always equal.
I’ll be honest: I’m still with a big bank. Despite the grief I’ve gotten from using one in that past, it’s been overwhelmingly convenient for me to stay with them at the end of the day. This is why it’s really important to weigh your options before you commit to one. Once you’ve put your money in one place, it seems like a big hassle to move it on over to somewhere else.
Or, you know, you can just get a good alarm system and keep all your cash in your home. I know plenty of folk who don’t trust any kind of financial facility, and given the horror stories many have told, it makes a lot of sense.