Loyalty to a Bank

A friend recently told me how proud they were to have been a Wells Fargo Customer for the last 15 years. Knowing that Wells Fargo is not competitive, I showed her the interest rates at her bank as well as their fee structure and then compared it to a local credit union. Now that loyalty felt more like she was getting taken...

Had she simply been at the credit union vs. her bank the $1000 she had would have made $61.37 per year instead of the 0.50 that she made at Wells Fargo. We can make more than that picking up change in a parking lot!

As far as banks are concerned Wells Fargo is one of the least competitive banks as far as taking care of their customers. Most banks fall into similar categories.

I know what you are thinking, “BUT I’VE BEEN THERE FOR SO LONG!”

This is irrelevant. It is a simple process to change direct deposit information and to switch over your accounts. You work hard for your money; don’t let the banks take it away without a fight. Don’t be lazy, make the switch.

The bottom line is banks have no loyalty to you, so you should not be loyal to them. I don’t care how friendly your banker is or how cute the teller is at the counter, if your bank is charging you fees and not paying a competitive interest rate on your checking and savings accounts, it is time to find another financial institution.

What to look for in a new bank/credit union:

-          Do they charge monthly fees?

-          What is their interest rate?

-          Do they charge ATM fees or have other hidden charges?

-          What is the minimum balance for the account?

Fees: Majority of credit unions do not charge monthly fees, maintenance fees, and refund ATM charges. If your bank has fees THEY ARE NOT COMPETITIVE.

Interest Rate: Wells Fargo pays… I’m sure their rate is around here somewhere. Oh, it’s buried under loads of fine print. You may have guessed why… THEY ARE NOT COMPETITIVE.

Minimum Balance: Some accounts only pay interest if you have a certain amount of money in the account. Be sure to check what the minimum is to ensure your money is making the maximum amount of interest. If they want something crazy like $2500 to pay you any interest, you guessed it, THEY ARE NOT COMPETITIVE.

So where should you bank?

These are my recommendations in order of preference based on the interest rates/benefit to customers:

People’s Community Credit Union
Twinstar Credit Union
Addison Avenue Credit Union
iQ Credit Union

(I am not a representative for any of these establishments however I have had accounts at all 4 CU's listed)

Note. You do not see any big banks such as BofA, Chase, or even COLUMBIA CREDIT UNION (That one is really popular for some reason even though they ARE NOT COMPETITIVE).

Want me to review your bank or credit union? Send me the link to their site in the comments box below and I’ll be happy to check it out for you.

How I Made $445 Out of Thin Air in 4 Months (Financial Experiment Update)

Am I magician? No. Am I really good with money? Yes.

Here’s how I did it.

I used a credit card offer to write myself a check for $5000 (This was a balance transfer offer, not a cash advance as the rates are usually better this way)

I put the money into a brokerage account and invested in an Exchange Traded Fund that correlates with the economy (SPY). Then I let it ride.

The overall position is up $605, I subtracted $150 for the 3% fee from the credit card company for the 0% loan for 12 months (5000 x 0.03 = 150). I subtracted another $10 for the commission to make the trade and buy the shares.

*I wouldn’t recommend doing this if you don’t have the money to cover losses you may incur or the time to check your account every few days. Once you have followed my other strategies and have money saved this is a great way to capitalize on some opportunities out there.

It doesn’t take money to make money, but having money makes making money a whole lot easier. So start saving today!

What I Do With My Tax Return

Come tax season I see a lot of frivolous spending in the community. Rather than see this as an opportunity to get ahead people see it as unallocated money that they can use for whatever.

Our society makes this seem like the norm, which encourages others to do the same. The reality is, not everyone takes a shopping spree during this time. So I thought I’d share what I will be doing with my tax return.

Step 1: Complete taxes using online software.

This saves me close to $90 instead of having a “tax professional” plug it into this same software for me.

Step 2: E-file taxes and elect to get my return through direct deposit. This ensures I get my money back as soon as possible and reduces the amount of “float” time.

Step 3: Leave money in my interest bearing Loyalty Checking account at 2.05% (http://www.peoplescu.org/) where it generate me more income.

Receiving unexpected money means you can reach your financial goals that much quicker. Take advantage of this opportunity to get yourself ahead. We are still in a recession and every dollar counts.

“But everyone spends their tax return,” is no longer a viable excuse ;)