The Huffington Post is publishing articles asking people to move their money from the big banks that are too big to fail to smaller community based banks and credit unions. In my experience it is a good idea and I have few personal stories about it.
My College Loan Story
When I was getting ready to attend college, I needed to get a loan to pay for it. My local bank at the time was a branch of a larger bank. So I go to my branch and talked to one of the reps about college loan options.
I had been a member of the bank for many years. In fact it was my first bank. My mom had setup a kiddie savings account for me when I was like 10 years old and I had always used it for cashing pay checks and other checks.
The bank representative was nice and suggested a Guaranteed Student Loan. It was a product where the bank loaned me the money, the government paid the interest until I graduated, and if I defaulted the government would repay the bank and put me on the hook with them.
I applied and a few weeks later got a letter turning me down. I went back the branch and talked to the same woman. She said because my credit was bad I would need to have the amount of the loan IN my account before they would approve it.
Imagine that. In order to get a $2,500 loan for college I had to have $2,500 in the bank. Wow!
I ended up finding a bank in a nearby town that lent me the money and I closed my account with my bank soon after.
Check cashing problems
In college had two incidents cashing checks from other people. I had an account with another large bank since they had the bank concession at my college. One day I get a check from my Mom for spending money. I go to the branch and see a teller. She tells me if I cash it I had to deposit the full the amount and it wouldn’t be available until the check cleared since I didn’t have enough money in my account to cover the check.
“But the check is from my Mom, see the same last name…” I said.
I ended up getting $10 cash and having to wait for the rest.
A similar tune happened when my roommate wanted me to cash an American Express money order for him since he didn’t have an account. Same thing. No deal because I didn’t have the amount in my account.
“But it is an American Express money order…” It wasn’t like it was Fred’s Money Order or something dodgy like that.
Check card problem
I was at a different bank and out of school and check cards started to come on big. I had been at the bank for 6 years with checking and a savings account and hardly any issues except for an occasional bounced check but at the time I had been bounce free for about two years. I applied for a check card and a week or so later got a letter back turning me down.
I went to the branch to find out why and was told that on some occasions the card system might be down and they would honor transactions as a form of credit. Since my credit score was bad they turned me down. Six years as a customer with a decent record meant nothing for a card that was tied directly to a checking account. In fact any funny business with the card would have more legal problems since check fraud is worse than problems with credit cards not to mention the bounce fees they could make.
I even went to the manager and he put in a special request and I was still turned down. I left that bank after that for a credit union.
Bounce fee pile on
It was at the credit union that I had a bad experience after bouncing an electronic transaction.
I misfigured my account balance and missed it by $1. I then had seven consecutive transactions hit and bounce before they closed my account. I owed over $200 in fees and I was so mad they let six bounces go through I refused to pay the fees. They put me on the naughty list and I was not able to open another bank account – not even a savings account – anywhere.
After some study I would have to wait 5 years for me to drop off and then I might be able to at least open a savings account. So for 4 and 1/2 years I used check cashing places for pay checks and asked other people to give me cash or money orders rather than personal checks if they gave me money.
About six months before I would drop off the naughty list the credit union renewed my ding which started the clock all over again. UGH!
I gave up and decided to pay the fees and be done with it.
The ironic thing was when I went to pay it they had no current record of it since it had been so long. They had to add my account back into the system with the negative balance deposit the fees then close it again. Luckily they didn’t charge me a bounce fee for that.
I am at another credit union now and love it. They don’t give me any flack if an occasional overdraft happens. They ding me the fee but cover the check – had it happen only twice so far. They don’t keep trying to pay it so I get multiple dings.
I once had an unauthorized withdraw. Called them. They sent me a form by fax, I signed it and faxed it back and the withdraw was put back.
I had a large check to deposit and even though it was more than my account balance they let me have $100 cash immediately.
So I agree with the Huffington Post. If you can move your money to a community based bank or credit union.
Move Your Money