Do you know the difference between a bank and a credit union? What about the types of fees that you might be charged related to having an account? Here you can learn about different institutions that can keep your money safe and potentially help you build on what you already have through earning interest.
Your money is protected against theft and fraudulent charges and is insured by the Federal Government.
Banks and Credit Unions have many tools to simplify your busy life like check cashing, online bill pay, access to credit cards and loans.
Having a good relationship with your financial institution provides a path to needed products like loans, financial planning, and financial education.
Using check cashing services and prepaid cards can often cost $200 to $500 per year. This is significantly more than most banks charge for a checking and savings account.
Truth: It’s actually a lot cheaper to use a bank or credit union. Most people who use a check cashing service end up paying about $200 in fees every year just to get their money. Prepaid cards have fees that are usually about $200 a year as well. Even the most aggressive checking account at a bank costs about $150 a year and most banks and credit unions have much lower fees.
Truth: Going to the bank can definitely be intimidating. It can feel like bankers are looking down on you or trying to confuse you. Websites like this can help you arrive at the bank with more confidence. Also remember that the reason they make you jump through hoops is because they are required to keep your money safe; they do that for everyone! If someone had a safe that was “customer friendly” because it didn’t require a combination, would you keep your money there? Payday loan staff are very friendly and service-oriented, but that is because they are trying to sell you something with a tremendous cost.
Truth: Let’s be honest here, yes, if you have a garnishment against you, the government can petition to have a portion of that money withdrawn from your bank account. And, yes, many banks charge fees for services like money orders or overdraft protection. In some very specific circumstances traditional banking may not be right for you. But as mentioned in the first myth, banking fees are typically far less than fees for check cashing or payday loans. And traditional banks offer federally backed security for your money. If a thief breaks into your house and steals your cash you will probably never get that money back. If a thief breaks into the bank and steals your cash, it will be replaced.
Truth: There are many programs to help people with a poor banking history get back on track. Check out our resources for “second-chance” checking accounts. Once you have a bank account, many banks offer secured credit cards to customers with poor credit to help build credit back up. Banks want more good customers, and they offer programs to help you become one.
Truth: This may be true of some banks with high minimum balances, but many banks offer accounts with very low minimum balances. It is actually people who make less that can benefit most from traditional banks which offer lower fees, more flexible account options like online banking, and programs to help you budget and save.
Truth: Checking and savings accounts with traditional banks come with insurance to protect your money. Though banks do hold important information about you they take your security very seriously. Most data breaches occur through retailers, not banks. That said, it is important to select a bank carefully, always check that a bank is insured with FDIC or NCUSIF. Pawn shops, payday lenders and check cashers are required by law to keep records of your transactions. These services can also be breached by hackers. You are not opting out of government oversight by using these services and you are putting your money’s safety at risk.