Using A Small Bank

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Make it Rain – Bank of America
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The above clip is from The Daily Show. First it very effectively–and hilariously–demonstrates the problem with the credit crisis and then it has a devastating segment about how ruthless Bank of America is at charging fees on credit cards. Basically, Bank of America comes out looking less reasonable than a loan shark. (Skip ahead to 4:56 if you just want to watch the Bank of America segment).
The Daily Show is talking about Bank of America’s credit card, but I want to talk about my experience with it as a bank. Bank of America is one of several big banks I used when I was younger. At the end of my time with them, I was constantly being charged fees. I was charged to talk to a teller in person, if I called the banking line more than a six times in a month, and one time for exchanging some rolled coins for cash.
The last straw happened like this: We deposited a paycheck on a Friday. On a Saturday, we bought something–I don’t remember what, but it was covered by the paycheck. Bank of America held the paycheck until Monday but pushed the purchase through first so that we were technically overdrawn on our account. Then they charged us a $50 fee for being overdrawn.
Of course, we should never have been overdrawn. We put the money in the account and THEN we purchased something. But Bank of America would not refund the fee, so I marched down and took every penny of my money out of that bank. I haven’t been back since.
That was 7 years ago. These days, I use a local bank. Since switching over, I have never once been charged a fee that I felt was unfair. I can talk to as many tellers as I like. I can call the company whenever I need to. And my checking is free–really.
Not every small bank is as good as mine. You have to look into how convenient they are–do they have enough ATMs? Can they accommodate online banking?–and how stable they are–how long have they been in business? Are they FDIC insured? But assuming that we are talking about a normal, small-to-medium-sized bank, I think they are a better choice than a big corporate bank like Bank of America or Chase. Here’s why:
1. The Money Stays in the Community. People who live around you are more likely to be dealing with your money. That means that by putting your bank into your community, you are enriching where you live. Local jobs, local money. Personally, I would rather my money stay in the place I live than have it go to Wall Street where some banker will put it in commodity trading where it can help perpetuate a system I find unstable and immoral.
2. Fewer fees. Of course it depends on the bank, but you are not as likely to be nickled-and-dimed by a local bank as by a big one. Why? In order to compete, small banks often focus on customer service, which means fewer fees.
3. Conservative Practices. You really have to prove your income to get a loan at my bank. But on the flip side, during the banking fiasco last year, there wasn’t even a hint of my bank struggling. No layoffs, no branch shut downs, nothing. A well-run small bank tends to take fewer financial risks because they can’t afford them. So when times are rough, they keep going. This is good for peace of mind.
4. Friendlier. The girl who opened our account still works at my branch, which means she has been there for at least 7 years. I see her sometime when I go in. And if I wanted to say hello to her, I would not be charged for the privilege. You will not find this kind of thing at your Bank of America mall kiosk. Not that there aren’t nice people working at those banks, but the bank doesn’t care about them sticking around and they don’t care if the customer likes them.
Banking is complicated and obviously, I am not a financial expert. However, it angers me to see big banks mistreat people. If that’s how they are going to be, let’s all take our business elsewhere.

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