THE B WORD: BANK

Many people are reluctant to use banks. In some cases, the distrust of banks goes back several generations. This article will discuss some myths about banking, why putting your money in a bank is a good idea and alternatives for when a commercial bank does not work for you for whatever reason.

Why Some People Don’t Use Banks

Many people feel that they can “fly under the radar” or be untraceable in some way if they don’t have a bank account. This is a myth. In this internet, surveillance camera, post-9/11 day and age, there is literally no way to hide yourself or your money from government agencies, child support orders and debtors. Rather than carrying all your money in your left sock, put it in a bank account and make payment arrangements to clear your debts and arrearages. Yes. Your debtors can go into court and attach (take some of) your assets. But if you make payment arrangements ahead of time, you can pay them on an agreed upon schedule. If you have a bank account, you can also pay them electronically.

Many people don’t want to use banks because they feel their money is safer if they keep it themselves. This is also a myth. Hiding your money in your house, backyard, mattress, etc., leaves you open to theft. If your house is burglarized, if you are forgetful, or if you have to move out in a hurry, you may lose all of your family’s funds. You are one bad Thanksgiving dinner guest away from losing your savings. In case of a fire, flood, or natural disaster, your money may be looted or destroyed. If your funds are in a bank, you can retrieve the funds with your debit card and/or the proper ID, even if, God Forbid, your home is no longer standing.

Benefits When You Use a Bank

There are several, including:

Using direct deposit (electronic transfer) of your funds, into your bank account. Funds from your paycheck, social security checks and/or tax return checks, will be available immediately. The full amount of the check will go into your account without a 1%-3% deduction from your local check cashing spot.

You can transfer funds in between your accounts and to other people, online, by phone and at the ATM. You can wire money from your home, online.

You can use your bank debit card to purchase items and services in person and online. The process of purchasing airline, bus and train tickets, commuter rail passes, rental cars, and hotel rooms can be streamlined with your debit card.

You can pay your utilities, rent, tuition and other reoccurring bills electronically. The payments credit to your accounts immediately without a transaction fee.

Your money is safe and available in case of robbery, burglary, fire or natural disaster.

You are creating a relationship with a banking institution. Should you need a home or business loan, a line of credit, investment products, traveler’s checks, etc., you have established yourself as a “customer.” The services of that bank are now available to you.

Choosing a Bank or Credit Union

There are many types of banks to choose from. Each bank has different incentives and features. Some have high fees, but many services, hundreds of branches and ATMs all over the city. Some have lower fees, only one local branch with several ATMs. Some banks have “packages” where you can eliminate or reduce your bank fees by setting up direct deposit or automatic bill pay with your account.

A Word on Credit Unions

Credit Unions are non-profit banking institutions owned by their members. Credit Unions are opened by churches, civic organizations, state and municipal employees. Many are open to family members of current members. If you are trying to put your funds in a smaller more personalized banking institution, ask around and find out if your house of worship, employee group, union or family members have a credit union. You may be able to join. The advantages of joining a credit union include lower fees, higher interest rates and more individual attention, better customer service.

Choosing a bank or credit union is a consumer issue. Make sure you choose one that meets your needs in terms of location, access to your money through ATMs, and customer service. Go in, sit down and talk to the customer service people. Research using friends, family and the internet. This is an important decision. This is where you will be keeping your money.

Trouble In My Way

If you cannot open a traditional bank account, you may want to consider opening an online account. Many large commercial banks have an online component. You are able to open a checking and/or a savings account online and receive a debit card by mail.

There are also banks that are completely online with no brick and mortar branches. Internet Banks process transactions through the mail, apps, phone and the internet. Because the overhead costs of running such a bank are greatly reduced, these banks pass the savings on to the customer.

ChexSystems

ChexSystems is a credit reporting agency specifically for bank accounts. If you bounce a check and do not make arrangements to resolve the issue, the bank may report to ChexSystems. When you try to open an account at a new bank, the new bank may use the ChexSystem reporting to determine whether they will allow you to open the new account.

Just like a traditional credit report from Experian, Equifax and TransUnion, you can request a copy of your ChexSystems report, review it and dispute errors. However, the best course of action is to try to resolve the issue with the bank where the bounced check occurred. Try to make a payment arrangement and get the matter cleared up. It will save you a lot of trouble, going forward.

Happy New Year!
Let’s Be Careful Out There