Simple Steps for Regular People

Battling big banks or huge corporations? Irritated at their policies, pricing and fee structures? What can each of us possibly do that might make a difference?

Making a difference can happen only with accumulative effect. This occurs when you and I do small acts in concert with millions of others. Here’s an example: close your big bank relationship and open a new relationship elsewhere.

Three alternatives pop to mind. My preference is to build a total financial relationship with a credit union in your community. They offer all consumers loan products the big guys do, plus they have electronic banking, checking accounts, credit cards, debit cards and much more. The ‘more’ is often in the form of a person who actually cares about you and meeting your needs.

Most people don’t know about credit unions so here's a little background. They are financial cooperatives in which depositors actually own the institution. They are member-owners. You elect the board of directors. Interest paid on your deposits is usually higher than banks (savings, IRAs, Certificates of Deposit, etc.). You pay low or no fees compared with banks, and service pricing is lower than banks almost always. Interest rates charged on credit cards and loans are also low to bank markets. So you win in three ways: low cost, personal ownership and higher rates of interest paid to you on deposits. The national motto of credit unions is “Not for profit; not for charity; but for service.” Believe it.

A second alterative is to build a banking relationship with a local community bank. They operate with local interests in mind. They provide business loans for local businesses, they help develop the local economy for diversity and financial stability, and they do all of this after studying the local community in detail. They are not taking local dollars and shifting them to other regions or states. They retain investments in local markets to strengthen them. Also, their consumer pricing policies are similar to credit unions although they usually are higher.

The third option is a locally or regionally owned bank with a home office in your own community. They have much of the same positives as the community banks but their dollars are likely to bleed out to larger markets unconnected to the welfare and growth of your own local economy.

If consumers at big banks moved their relationships away from them to the three options mentioned above, you can be sure that Bank of America, Citibank, Wells Fargo and Chase Morgan will take notice. They can’t help but notice! Think of a billion dollars a week moving out their doors to smaller institutions. Bank pricing would change quickly. Meanwhile there is much to learn about your new relationship with your new institution.

I have had a primary financial institution relationship with credit unions since 1965. They have financed all of my autos; most of my mortgages; most of my credit cards and other specialty loans. Meanwhile they have my checking and savings. I am retired so I have no IRAs or other retirement accounts in a depository institution.

I’ll suggest other practical steps we individuals can take to counter the corporate mentality so prevalent in our nation today. Taking these steps brings power back to the consumer. It also reminds the larger institutions just where their power comes from. Us.

October 25, 2011