0:03 Ever notice how TV commercials for big banks go really hard on the shmaltz?
0:13 Loving families, cute babies, sweet old retired people, micropigs on leashes.
0:18 It’s almost as if they’re trying to distract us from something…
0:22 Oh, you mean like how in 2016 Wells Fargo admitted to creating 3.5 million fake accounts
0:29 for customers to collect extra fees, and charged over 570,000 people for auto insurance they
0:35 didn’t need, resulting in over 20,000 customers going into defaults?
Big banks
0:41 And then there’s the now infamous practices of Citibank, Lehman Bros, AIG and other Wall
0:45 Street giants of bundling toxic “junk” assets and repackaging them as AAA super-safe
0:51 investments, which led to a near collapse of the international money system that ordinary
0:56 people are still hurting from.
0:57 And most Americans feel that big banks are rewarded rather than punished for risky and
1:02 predatory behavior.
1:03 Bank of America received tens of billions in bail-out funds in 2009, only to turn around
1:09 the very next year and pay $35 billion in executive bonuses!
1:14 Not surprisingly, our trust in these institutions is low.
1:17 A recent gallup poll showed that only 27% of Americans have confidence in banks.
1:22 But this is not a new phenomenon.14th-century poet Dante placed money-lenders in the 7th
1:28 circle of hell, below violent murderers and blasphemers!.
1:31 So, being suspicious of big banks is nothing new, but what can you do?
1:35 You’ve got to stash your cash somewhere, and who can get through life without ever
1:40 taking out a loan or using a credit card?
1:42 Thankfully, you do have options.
1:45 Alternatives to big banks have been around for a long time, and if you haven’t looked
1:47 into them yet, it might be time.
Alternative banks
1:58 One good alternative is a local community bank.
2:01 Their fees and charges can be lower than national chains, and you can be pretty sure they won’t
2:05 use your money for risky bets or Wall Street gambles.
2:08 Community banks also tend to make investments in the immediate region, helping to develop
2:13 projects and businesses that create jobs and improve spaces in your hometown.
2:18 There are over 52,000 community bank locations nationwide and you can find ones in your area
2:24 by checking out the ICBA’s website.
2:26 Then there are banks that have no physical location whatsoever: Online-based banks like
2:30 SIMPLE and CHIME usually have lower fees partly due to having no brick-and-mortar expenses.
2:35 They also tend to have no account minimums, don’t charge overdraft fees, and ATMs are
2:40 fee-free at over 30,000 locations.
2:43 Both local banks and online-based banks still typically offer FDIC protection on up to $250,000
2:49 worth of deposits per person and account type.
2:53 So for most people, they are just as secure as the big national chains.
2:57 You could also choose to ditch banks all together, and open up an account at a credit union.
3:03 Credit unions allow you to make deposits and withdrawals, take out loans and credit cards,
3:08 and enjoy most other services you might expect from a bank.
3:10 But unlike banks, credit unions are all non-profit entities.
3:15 Any profits made by the credit union are returned to you in the form of reduced fees, higher
3:20 savings rates, and better loan terms.
3:22 This is because credit unions technically don’t have “customers”–they have “members”.
3:27 Everyone who keeps their money at a credit union is seen as a part owner of the institution.
3:33 And they usually all share a common bond - perhaps they all live in a particular geographic location,
3:39 work in the same industry, or are all alumni of the same university.
3:43 One member’s deposits end up becoming an auto or business loan for another member.
3:48 Teamwork!
3:49 Credit unions offer FDIC-like protection through the NCUSIF, and most credit unions are part
3:54 of a national shared-branch network which allows you to bank at thousands of other credit
3:59 unions just like they were your own.
4:01 So depending on your credit union, you could have access to even more ATMs and branches
4:06 than with a big national bank.
4:08 Maybe this all sounds great to you, and you’re ready to say sayonara to your big bank, but
4:13 there are a few drawbacks to consider before making the switch.
4:17 Because of their size and scope, big banks are better at international banking and lending.
4:22 Making a withdrawal from abroad or getting a loan in another country can be a tall order
4:26 for many local banks and credit unions.
4:28 So if you do a lot of travelling or have a cross-border business, sticking with a big
4:32 bank can make your life easier.
4:34 Also, smaller banks and credit unions usually can’t compete with the big banks’ digital
4:39 offerings.
4:40 So if things like banking apps, budgeting software and online accounting tools are important
4:44 to you, be sure to inquire about the technological support they offer.
4:49 Even though these advantages come from big banks’ huge size, in their ads they often
4:53 go out of their way to portray themselves as homey, familiar, even rustic.
4:58 It’s as if they’re saying that little local organizations are more trustworthy.
5:02 So, if you find these commercials persuasive, maybe you should check out the smaller organizations
5:08 in your neighborhood.
5:10 And that’s our two cents!