By Brenda Weathers Hargroves
I’ve heard people, both young and old, say they don’t trust banks.
What we must keep in mind is that banks operate like any other business. While they provide a service, their goal is to stay in business by making money. And you must do the same. That’s right! Your relationship with a bank is a business relationship – one which you, too, must manage to your advantage.
Let me start off by saying this – banks don’t take your money. They promote practices that encourage poor money management habits; however, they also offer ways to maximize your funds. To their credit, banks endorse and advertise both of these activities equally. It’s up to you to choose wisely.
The Pros – Establishing a relationship with a bank is a smart money move for several reasons. Banks offer a safe place to house your money that guards against theft, loss and fire. A friend told me about a recent fire that destroyed all of a family member’s personal belongings, including several thousand dollars stored in his home. The ability to access those hard earned funds quickly and easily in an emergency such as this sure beats watching your money go up in smoke. Should your bank experience a fire, the Federal Deposit Insurance Company (FDIC) insures deposits up to $250,000.
Banks offer their clients services such as lower interest rates and savings programs. They also provide resources and tools on their website to help customers become fiscally responsible. And while I know it’s hard for younger generations to imagine, people still write and receive checks. Cashing one at your bank costs less than at other check-cashing services.
The Cons – Traditional service/maintenance fees are a nuisance, but understandable. However, I believe one fee, in particular, is nefarious. Overdraft fees are a systemized pitfall that places people in a bind which is difficult to overcome. Let me give you an example. I know a young woman who desperately wanted to save for a house. Her monthly earnings were more than her expenses, yet every reporting period her phone app showed a negative account balance. This went on for a long time until one day she took the time to print her bank statement. She discovered close to $300 in overdraft fees for that one-month period alone. Imagine the total amount of charges she paid prior to her discovery. After making a few adjustments, she eliminated this spiraling debt and started saving this amount instead of giving it to the bank.
How Can You Avoid Overdraft Fees and Other Cons? The young lady mentioned above wished to accomplish a goal. She experienced a self-actualization moment that forced her to investigate her circumstances and the act differently. It would have been much more beneficial had she not gotten herself into the situation in the first place. Which brings me to this point: if you are not doing so now, attempt to get control of your personal finances. Establish financial goals. Create a budget to determine and manage your income and expenses. Take nothing for granted. Make time to understand how the financial institutions you do business with work so you can learn the ways to minimize associated expenses.
It’s never too early to master these skills, so while you’re at it, teach good money management habits to your children. I instilled saving into my godchildren when they were young. I distinctly remember watching one of my goddaughters, who at that time barely reached the countertop, stretch to hand the bank teller money she wanted to deposit into her savings account. Today, she’s a master at managing her money.
One Last Point – I suggest establishing your account with a credit union instead of a traditional bank. When you join a credit union, you become a member, not a client. This status affords a more user-friendly experience with fewer/lower fees. And you benefit from all the services traditional banks offer, including the same amount of deposit insurance.
I have a long-standing relationship with a bank that is trying to force people to go digital. They have limited service hours and closed the drive-up windows. Whenever you go inside, one teller station is available for help. The credit union I bank with recently built a new facility in my area open longer hours (7am-7pm) and has numerous drive-up stations. I’m just saying…
So, tell me. Where do you bank? How well do you manage your money? The ability to successfully master this skill will place you in a position to take advantage of many opportunities, especially those with a limited lifespan.
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