If you are anything like me, you hate being taken advantage of financially. I have a low tolerance for individuals or institutions that try to “steal my money” (not literally). You know the ones I am talking about; those who deliver don’t deliver comparable return for the money I surrender. Every time, I realized I am being taken, I try to find a way to level the playing field. To me, it is like I am playing a high stakes poker match, where the winner shapes my financial life. Over the years, I have realized that I have been playing this game with banks, and I have always found ways to beat their system. The first and only time I bounced a check, I stopped. In my defense I had money in my savings. I thought they would take that money to cover the overdraft. At 18 years of age (or 19, cannot remember) I thought that was common sense, but, I guess I was wrong. It made more sense for them to charge the overdraft fee than to help a customer. When I realized that, more often than not, money in large brick and mortar banks do not earn respectable interest rates, I started using internet and smaller community banks. I specifically did business with the ones that gave higher interest rates on short-term savings. Well, the rules of the financial game have changed and now the banks are finding new ways to get your money.
On May 22, 2009, President Obama signed the credit card reform act into law. This new law meant that banks that issue credit cards had to eliminate a number of methods they used to separate you from your money that many law makers felt were unfair. Needless to say, banks are looking for ways to make up for the short fall due to credit card reform act. So, unfortunately for consumers, and worst for business owners, the banks are devising new ways to recover lost revenues. One way banks are doing this is by requiring a minimum balance on all checking accounts (consumer and business) to avoid “service fees”. So this means they want you to leave more of your money with them interest free. I say that is unacceptable, and it is time to fire them. Given the advancements in banking technology, there is no good reason for them to force you to maintain a minimum balance other than increasing shareholders profits.
Given that so many small community banks have met their demise due to the economic downturn, I say you start looking for a credit union. As a member of a credit union, you are the shareholder and the customer at the same time. This means significantly lower fees. There are a few steps you should take before choosing a credit union.
- Visit NCUA.gov to see what credit unions you are eligible to join. Also these credit unions will be NCUA insured so your money is protected up to a certain dollar amount (same as FDIC for banks at $250,000).
- Because credit unions have less brick and mortar locations than many large banks, consider the methods they have for making deposits and withdrawls. See if they work for your lifestyle. Do not be afraid of using the technology they put in place to make banking easier.
- If you use financial software to track your transactions and file taxes, make sure the credit union you use allows for easy download of your data into that software. Check your software for a list of institutions or ask a credit union representative.
I recently fired one bank I had a personal account with and I am in the process of closing a business account with another. I see no reason to give them an interest free loan just to maintain a fee free banking relationship. There is too much technology that makes banking easy and convenient to remain with institutions that continue to devise new methods to take my money.