Bridging the gap between saving money and investing
There is a website that is encouraging people to make one of their New Year’s Resolutions be moving their money from the large banks to community banks. They use It’s A Wonderful Life to make their point:
Here, one woman explains why she is making the change:
Do you think that this is a good financial resolution to make for the New Year? Does it make a financial difference where you keep your money?
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Ditto on my credit union not having made subprime loans. My credit union is fairly large (member numbers, deposits, assets) for a CU. I belonged to a smaller one that had to close. No one lost anything, though, nor did the depositors’ insurance have to kick in.
Its not the size of the bank or credit union, but its general health, the deals it offers, its ATM network, etc. Also, it takes two to tango with this – if you constantly run overdrafts and have other bad fiscal habits, well, moving your money to the magic bank or CU is not going to help much.
Disclosure: I have my money spread around into several banks, including two community banks; I have direct deposit with Chase (nee WaMu). Chase is incredibly convenient for me work, home, and travel. I know their fee structure and never cross it. However, I don’t have much more than 1% of my money with Chase.
I have been using a local CU for years. They have always bent over backwards to help whenever there is a problem. I have had one of their people tell me that I should move my money from one kind of account to another to reduce fees, tell me how to do what I want to do with my accounts instead of what makes them the most money. My only problem has been that they could not make a 30 year fixed mortgage for less than $100,000 – they offered a good deal on a 15 year mortgage instead. As the reason I wanted the 30 year was to get the payments low enough that I could easily make them on social security I had to go to a big bank for my mortgage.
[...] New Year
I wonder what would happen if this movement succeeded. Would the too-big-to-fail banks fail? Would they need another bailout?
My local credit union and local back only offer low interest CD’s (2.5% for 2.5 years) to rollover my Fidelity IRA into. With the stock market on the rise, my Fidelity mutual fund pays better. If the stock market gets close to where it was, I will definately move my money to less risky investments at that time. In the mean time, I’ll keep checking my options with other local banks.
I stick with our small town bank that came out of the back thing as one of the top 100 banks! We have a great branch manager that knows her customers, knows us, and when we have needed a loan, has figured out a way to get us one at the best price.
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I never would keep my money with a big bank, to begin with.
Though, I have said many times – not every small community bank or CU is going to be a better deal than the big guys. Moving your money to a “smaller bank” does not make a lot of sense, on its own. Moving it to a “better bank” does – and often the smaller banks and credit unions will win. For example, my CU did not do the subprime loan thing and has been doing extremely well. While other local/small banks have collapsed under the weight of subprime loans. It pays to do your homework.
I generally stick with Credit Unions for more flexibility, better customer service, lower fees, and higher interest rates. I also have kept money in online banks – though right now I am 99% CU. I have never seen anything appealing about an account with any of the “big guys.”