We’ve all been there. You get mistreated by your bank (Wells Fargo, for example) and you say, “Ugh! I want out of this horrible bank!” But then you realize that you’re with that big bank because you like having branches and ATMs without fees wherever you go. If you bank with Wells Fargo, you think to yourself, “I’ve got access to more than 12,500 ATMs and approximately 6,200 retail locations. I can’t give that up!” You think that there isn’t a better way.
I’ve got news for you: There is a better way. You don’t have to stay with Wells Fargo or whichever big bank you’re currently at. Plus, you can find much better interest rates. What’s my secret? It’s really not a secret at all. It’s the power of credit unions.
More Branches and ATMs
One huge argument I hear from people that reluctant to switch completely to a credit union is that they won’t have very many locations of their credit union to get to. While this is usually true of physical locations of a single company, it’s completely untrue in terms of shared branches and ATMs. The beauty of it is that no matter where you go, you always have an ATM or a branch to deposit and withdraw money from.
12,500 ATMs and 6,200 branches is good. 30,000 ATMs and 5,000 branches is better. If you think about it, why do you need to have in-person access to a personal banker when you’re on vacation? Another way to look at it is simply asking yourself, “Am I going to need to apply for a car loan or mortgage while I’m vacationing in Hawaii?” In my opinion, if you really need to have the option to apply for a mortgage while on vacation, you’ve got some major issues.
Banks Don’t Care About You and Your Goals
Have you ever been to a bank, like Wells Fargo, with an issue and had them treat you like you didn’t know what you were talking about? This happened to me not too long ago. My wife and I had a banking issue and I went to speak with a personal banker about it. We had an overdraft fee due to an expense we thought was a few days later. We’ve all been there. I never expected the bank to reverse it, but it was worth a try in this situation. But they told me to call customer service before talking with a personal banker, so I did.
Wells Fargo’s customer service told me that they wouldn’t reverse the fees, but that they had loans to offer me. Red Flag #1: If you tell your bank that you can’t afford some fee because of your restricted finances and they try to offer you a loan, you should tell them that you’re closing your account the next day and looking for another bank. It doesn’t matter how much money is in your accounts. If you clean out everything you have, they’ll get the hint. I was told to speak with a personal banker in the store if customer service didn’t do anything. So I did.
I told the personal banker that we didn’t have a budgeting issue, but that our issue was just remembering when this certain bill would automatically take money out. Again, we’ve all been there. I let him know I was an economics major with a very extensive knowledge about personal finance. What did he do? He talked to me about budgeting, personal finance, and telling me to talk with my wife about a business account for her photography business as well as combine our two accounts. He treated me like I was very stupid and had the tone that one uses when they want you to bow down to them.
Red Flag #2: If a personal banker anywhere, bank or credit union, wants to treat you like this, be firm with them. I didn’t want to tell him that I was leaving Wells Fargo and that I didn’t want to combine my account with my wife until we switched. He was lying to me to get my wife into a business account with a service fee double what he told me. I really can’t stress this enough: If you’re being lied to at all by a personal banker, call him out on it when you find out and tell the manager.
So what makes a credit union better in this situation? I don’t think the credit union would’ve reversed my overdraft fee. But had I said that it wasn’t a budgeting issue and that I had a very extensive knowledge of personal finance, they would’ve just said, “Okay, let me know if I can help you with that later.” They also would’ve been much nicer to you because, in some (if not all) cases, credit unions are owned by its members. So customer satisfaction is extremely important to them. They wouldn’t have been so pushy as to lie to me about products they offer either.
Credit Unions Have Better Interest Rates (Accounts)
Have you ever noticed that big banks only offer you 0.05 percent APY on any of your accounts? It might be of interest for you to know that some credit unions offer 1.35 percent APY on checking accounts that are actively used and checked. In case you didn’t know, APY (Annual Percentage Yield) doesn’t reflect the increase in your account each month. It’s how much you would have earned in interest over 12 months, in theory. Keeping this in mind, the interest you earn in a month is the APY divided by 12. So that 0.05 percent APY from Wells Fargo only earns you 0.00416 percent each month. The credit union rate I mentioned, Oregon Community Credit Union’s remarkable checking interest rate, would earn you 0.1125 percent each month.
To put this into some perspective: Let’s say $100 sat in your Wells Fargo and Oregon Community Credit Union accounts because you didn’t know how to do the math and wanted to see the difference earned in interest. After one month, your Wells Fargo account would have $100.04 and your Oregon Community Credit Union account would have $100.11. So what? 7¢ difference, right? If you make it a habit to only have $100 in your account, sure. But most people deposit their $500 paychecks into their checking accounts. If you had $1,000 in your account, then the Oregon Community Credit Union account would have $1,001.12 in it.
While my examples don’t show you much, imagine that you had $5,000 in savings (what some people have after some point after college). By using this checking account as a faux savings account, you could wind up with $5,067.92 in your account by the end of the year. Makes sense as to why they call this checking account “remarkable,” doesn’t it? If you started out with $5,000 in savings an decided to deposit $100 per month on top of that, you would have $6,275.35 at the end of the year. It makes you excited to put money away each month. Don’t you think that big banks should make you this excited to put money into your accounts with them?
Credit Unions Have Better Interest Rates (Loans)
Have you ever noticed how high of an interest rate big banks tack onto your mortgage or auto loan? A great auto loan rate is below 5 percent. Oregon Community Credit Union offers members with great credit scores 1.99 percent on a new auto loan. Gee, it almost sounds stupid to go anywhere else. What’s funny is that it’s similar when you look for a mortgage. There’s almost always a better rate at a credit union.
Consumers Can Pressure Big Banks
Something that I find funny is that so many people complain about big banks, but they rarely do anything about it. They say, “Well, there’s nothing I can do about it.” But the truth is that there is something that can be done. I guarantee that if enough people left big banks for credit unions, the pressure of people taking their money out would force them to increase interest rates, treat people better, and make other changes to bring people back.
Don’t believe me? Then answer this: Why do McDonalds and Burger King seem to copy each other? In short, they see that the other business is getting money that they could be getting. So they copy the idea and try to compete. Take KFC and Popeye’s for example. KFC had the $5 boxes and then Popeye’s copied them. But KFC got the idea from either Taco Bell or Subway. My point is that fast food is competitive and always trying to drive the price down on certain items so that people buy more.
There are enough banks and credit unions to have this kind of competition. Remember when free checking was scoffed at with disgust? If not, then you might be younger than I am or you weren’t paying attention. Once service fees on regular checking accounts were introduced by one bank, people left their banks for that bank. Suddenly, we saw more banks offering free checking. History has proven that banks will cave to enough pressure. Let’s get that pressure back on them.
Do you like your bank? Why or why not? Answer in the comments below!