Every time there’s some new complaint about how banks do business someone suggests going to a Credit Union. Of course, this presupposes that everyone has access to a Credit Union. I’ve checked several sites that list available Credit Unions and every one in my area requires that I be a member of some group to which I can’t possibly belong (like being a state employee) in order to open an account. It’s starting to get like the people who jump into discussions about computer viruses to suggest that you buy a Mac, or use Linux instead of Windows.
(Note: This is not intended to be a complaint against Bosda in particular. It’s just one of those things that I’ve been noticing more and more lately, and I thought I’d take the opportunity to say something about it.)
Banks are in business to make money, the more the better. Around 1980, I bought a CD that paid 20%!. I have no idea what they were charging to lend money, but it had to be more than 20%. So of course, they could pay 10% on savings and still turn a tidy profit. Now CDs pay something like .5% and the banks are hardly lending anybody anything, so they have to find their profits somewhere. At first, in order to encourage merchants to accept debit cards there were no interchange fees. They saved an enormous amount of money by encouraging people to stop using checks. Checks were (and remain) very expensive for them to process. There is no more cost to process a debit card transaction than that of moving a few electrons around. No human intervention necessary.
When I lived in Illinois (over 40 years ago) there was, as mentioned above, no branch banking. Also the Fed allowed no banks that operated in more than one state. The result was a plethora of local banks, especially in Illinois, but also everywhere else. There was real competition and banks worked to keep depositors. Now there are gigantic banks and you often have little choice. Another thing is that people have automatic deposit and withdrawal arrangements and changing them is a PITA. I have a BoA account that has just one automatic deposit (Social Security) and no withdrawals, but even so I am reluctant to change it. But I will cease to use the debit card. Incidentally, I read in the NY Times that they are poised to introduce a raft of new fees. Maybe I will change after all. Incidentally, that account began as an account with a small local bank near my son’s house in Redmond, WA, and ended up with BoA. My wife had an account with a smallish local bank in Miami that she inherited. Many mergers and acquisitions later, she now has one with Pony Express. When they threatened to put a $12/month fee on it (with no credit for the $70,000 in CDs she had with them) we threatened to close it and cash the CDs. They quickly found a “different kind of account” with no fees. Amazing what a few complaints will do when there is $70,000 in deposit at stake. (Just to be clear, the original announcement of the $12/month make totally explicit that other accounts could not be counted towards the $1000 minimum balance required to avoid the fee.)
Free markets are fine so long as they remain free. Cf. Adam Smith on that subject. The people who claim to be free-marketers and disciples of Smith have obviously never read his claims that only government intervention can keep free markets free.
Banks that notice business usage of private accounts have the right to close your account.
If they discover your behavior when they’re in a nice mood, they’ll let you open a business account first.
Posts on the now-defunct forums of the American Banking Association indicate that these account closures do, in fact, take place.
Few things would be more annoying for me during my peak season than the bank killing my checking account.
As an Amazon seller, any new checking account I switch to will result in Amazon holding my funds for up to 15 days. Not good. At all. I could make payroll, but I’d have to shut down my wholesale purchases for a week.
Don’t co-mingle. First thing my mom told me when I set up a business at age 19.
You will find that many credit unions, if you call, will exempt people working, living or worshipping in the same county as the credit union.
Cite:
Rules:
**GenFed membership is now open to anyone who:
Resides, works, attends school, volunteers or worships in Lorain County, Ohio.
Resides, works, attends school, volunteers or worships in Summit County, Ohio.
Resides, works, attends school, volunteers or worships in Erie County, Ohio.
Resides, works, attends school, volunteers or worships Medina County, Ohio.
Resides, works, attends school, volunteers or worships in Williams County, Ohio.
Resides, works, attends school, volunteers or worships in Paulding County, Ohio.
Resides, works, attends school, volunteers or worships in Marion County, Illinois.
Resides, works, attends school, volunteers or worships in Jefferson County, Illinois.
Resides or works in Shelby County, Indiana.
In addition to the those above, employees and their families of the business listed on our Company Lists under ‘Join GenFed’ are eligible for GenFed membership.
How to Qualify for Membership
GenFed Financial membership is also available to employees and employee families of GenFed partner companies and organizations. If you work for a GenFed partner company or are an immediate relative of or living with someone who does, you may also qualify for membership. See a full list of partner companies by clicking on the ‘Participating Company List’ to the right. Additionally, GenFed membership is available to anyone who lives, works or worships in a county where we have a branch and Erie County, Ohio.
**
I’ll check that out and keep it in mind if I ever start having problems with my bank. When I moved down her a few years ago I checked out banks in my area because I wasn’t going to be able to keep using my Chicago federal credit union account unless I wanted to all my banking by mail. SunTrust had free checking because I was over 55, and they had an office walking distance from where I was going to be living, so I went with them. I got a notice last week that they were eliminating the free checking and charging $7 a month unless I either had direct deposit or maintained a balance of $500; since I mainly use the account for cashing checks, paying utility bills, and having access to an ATM when I need cash, I decided to just drop the $500 into the account. They’re also doing the $5 per month if you use your debit card, but since I prefer to use a charge card to a debit card that’s not an issue with me.
It might be worth giving them a call or just trying o sign up via their online form. I did this with Navy Federal CU even though I didn’t technically qualify. The lady spent several minutes questioning me until we found some tortured connection between my current employer (local government) and the type of work I do (we sometimes do IT support work for the Feds). I never would have guessed that I qualify just from lookign at the stated list of qualifications on their web site.
So then I went to their web site and walked through the sign-up process and they never even asked me for military ID or anything. I transferred the required $50 via an e-check and I had an account in about 20 minutes.
I’m guessing many credit unions want more customers and will try to get you in any way they can.