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Secrets Banks Don’t Want You To Know (Part 1-3)

This is the first part of a 3-part article on secrets banks don’t want you to know.

Almost every red-blooded American stashes their extra cash in a bank or credit union account. We have been taught that leaving dollar bills lying around the house is risky compared to locking our funds away in a financial institution.

But are bankers worthy of our trust? After all, they are people who put on their pants one leg at a time, just like the rest of us. They have their good days and their bad days. Some of them were A students in school, while others were more duncey.

Everybody’s got to eat, and bankers are no exception. Banks reward employees who bring in and retain customers. The key to that success is customer confidence.

Javelin Strategy & Research indicated in its “Trust in Banking” report that “Banking is fundamentally an industry of trust.”

Javelin went on to identify two parts to the trust equation:

  1. Reliability, meaning “the institution’s ability to carry out what it has promised either explicitly or implicitly, which could include convenient locations and good mobile apps.”
  2. Goodwill, which is “the non-tangible belief that an institution prioritizes its constituent’s interests.”

Most of us know what makes a trustworthy friend: honesty, integrity, and a good nature. Do bankers fit this bill?

The answer, in a nutshell, is that some do and others don’t. The existence of “unfriendly” financial administrators should come as no big surprise since they work for corporations with shareholders who must be satisfied by the fiscal bottom line. Bank employees must balance friendly qualities with capitalistic profit-making in order to stay in business.

So what do insiders say about banks and the people who run them? Here’s a small sampling of three shocking truths. You might want to sit down before reading further:

  1. Banks are out. Credit unions are in.

Banks have customers. Credit unions have members. This makes a huge difference when it comes to quality of service, ethical behavior, and getting a good deal.

According to seasoned financier Sarah Titus, “Some of the biggest most well-known banks in America are nothing more than frauds.”

Banks reward employees who sell enough products to meet a quota and fire those who fall below the mark, even as little as 20 percent. “Banks don’t care. Why should they; they can hire someone else to fill that spot in a matter of days,” wrote Titus.

A credit union, on the other hand, is a member-owned financial cooperative. The members control the credit union and not the other way around. Credit unions believe people should help each other by providing credit and other financial services at truly competitive rates.

Credit unions share profits in the form of dividends. Most credit unions require an initial member to deposit a modest amount – perhaps as low as $25 – into a “share” (savings) account. The share account earns daily compounded interest or a dividend that is paid directly into the account, usually on a monthly or quarterly basis.

Combined interest rates for credit union savings and checkings account can be as high as 2.65 percent.

Compare that to the 0.01 percent (one-HUNDREDTH of one percent) savings account interest rate offered by Bank of America, Chase Bank, and Citizens Bank and others.

The national average interest rate for bank checking accounts is 0.06 percent and 0.09 percent for bank savings accounts.

This means that bank interest rates fail to keep up with the cost of living since the rate of inflation in 2018 was 1.9 percent. Keeping your money in Big Banks will erode your earning power, day after day.

The National Credit Union Administration regulates and enforces compliance rules for all U.S. credit unions. “The National Credit Union Share Insurance Fund provides members of federally insured credit unions with up to $250,000 in insurance coverage,” according to their website. This protects members if the credit union fails and becomes insolvent.

  1. Beware the bank fees.

Punitive bank fees have gotten out of hand for us consumers. But it’s good news for profit-driven financiers. CNN Business reported in February 2017 that “America’s three biggest banks – JPMorgan Chase (JPM), Bank of America (BAC) and Wells Fargo (WFC) – earned more than $6.4 billion last year from ATM and overdraft fees.”

This information was confirmed by Standard & Poor’s Global Market Intelligence. The staggering amount translates to over $25 in fees per year per American adult.

Banks love to raise their fees, and no one is stopping them. In 2016, JPMorgan earned an additional 22 percent from their ATM fees alone. They did this by raising ATM fees by a mere 50 cents at the end of 2015. The fee applies to transactions made at a non-JPMorgan Chase ATM machine.

Bankrate  reported in October 2018 that, after 14 years in a row of higher ATM fees, the average “out-of-network” ATM fee in the U.S. averaged $4.68. “That’s 36 percent higher than it was in 2008.”

Out-of-network ATM fees include two separate charges: one from the ATM owner because you’re not their customer and another from your own bank.

To be continued in Part 2 – right here at!

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