If you know anything at all about personal finance, you know that big banks are financial institutions for big suckers. Right now, with interest rates at, a little bit over zero, everywhere, it isn’t as easy to tell, but big banks have never been good deals for average customers. Big banks are good deals for big money.
Are you big money?
Here is an easy way to tell. What interest rate do you get on your CDs and other accounts? If you get the posted rates, then you are not big money. If you get a rate negotiated by you and the bank manager because you business is so valuable, then you might be big money.
Credit Unions Are Better Than Banks – Always
There are numerous studies that show free checking is disappearing from big banks. Everyone already knows this, but until someone goes out and actually crunches the data, you don’t have a news story. Now, we’ve got a story and a money headline. Only 38 percent of banks offer no-strings, free checking. However, nearly 72 percent of credit unions offer free checking. By the way, this story NEVER changes. Credit unions are always better than banks for the average customer.
Wells Fargo has some of the highest fees, highest loan interest rates, and lowest savings and CD rates. So, how do they stay in business?
It turns out that the same people who pour over finance magazines and financial articles will shop around for almost everything, except their regular bank accounts. Unfortunately, most people pick their checking account bank based upon who has the most ATMs in the area. That is always a big bank. Those ATM fees aren’t just money makers, they are a negative incentive to use someone else. Sure, you could get a much better deal on your checking account with someone else, but then we’re going to charge you $2.00 every time you use our ATM.
Ironically, even though your local credit union’s name probably isn’t on the side of a lot of ATM machines, there are probably just as many ATMs you can use for free in your area. That’s because credit unions belong to various networks that offer free withdrawals at lots of ATMs. For example, one of the biggest credit unions in Denver is Bellco Credit Union. While you won’t find Bellco ATMs all over Denver, you will find ATMs inside of every 7-11. And everyone of those ATMs offers free withdrawals to Bellco ATM cardholders.
Getting Better Checking Accounts
Checking accounts are what is known as “sticky” in the financial industry. Once someone has their checking account with you, they are likely to be your customer for a very long time. People set up direct deposit, they have automatic payments, they have their checking account linked to their financial software, and so on. Changing checking accounts takes a lot of effort, so most people just don’t bother, no matter how good of a deal they could get somewhere else. That’s why it is important to get your checking account right in the first place.
Here is today’s easy, no-brainer, personal financial advice: Get a free checking account at a credit union, then go through all the effort to switch. You’ll save more money down the road than you will calculating credit card balance transfer offers.
If you don’t want, or can’t find (you aren’t trying) a good credit union, you can also sometimes get decent free checking with your brokerage account if you have some investments.
Is Free Checking Really Gone?
Of course, a big headline isn’t necessarily the whole story. A lot of banks offer a free checking account if you meets certain qualifications. Many accounts are free if you maintain a minimum balance, or if you have direct deposit setup.
In fact, the study mentions that another 24 percent of credit unions offer conditional free checking like this. Add those in, and you get 96 percent of credit unions offering some form of free checking. Find out what the conditions are and determine how easily you can meet them. If it is no effort, then that credit union is just fine. If you don’t think you’ll make it, without fail, every month, then find another credit union. There is almost certainly one in your area with a free checking account that will work for you.