As Americans lose patience with the overweening greed on display at certain gargantuan banking institutions, a lot of people are talking about moving their money out of megabanks into small community banks or credit unions. I moved my money to a credit union years ago…and thereon hangs a tale.
From the moment I graduated from college, I did business with banks. I’d never heard of credit unions, and when I did get wind of their existence, I didn’t understand what they were. I imagined they had something to do with labor unions.
Throughout our twenty-year marriage, Ex-DH and I kept our checking and savings accounts at what was then a statewide bank, founded by one of Phoenix’s early movers and shakers. We had a successful and mutually beneficial relationship with this bank, whose founder’s daughter was a classmate of Ex-DH’s at Stanford. But as time passed, things slowly deteriorated.
Shortly before we divorced, I came into a $40,000 inheritance. Naive as I was about personal finance at the time, I had no idea what to do with this money. I knew it should be invested, but I didn’t know where or how. I also knew I should keep it sole and separate from the marital community.
Incredibly, when asked what I should do with the cash, our personal banker advised me to invest it in seven-day CDs.
Yes. Forty grand got stuck in extreme short-term CDs earning something less than .5 percent—make that lots less. It sat there for over a year, as events progressed.
Once I was out of the marriage and free to get a grip on my own finances, I began to understand how astonishingly stupid this arrangement was. So I made an appointment with the same personal banker, whose services followed me into singlehood, to discuss what I should do with the inheritance and also how I should handle the alimony that now was coming into my account. She advised me to invest $30,000 in a municipal bond, on the theory that it was a conservative, safe place to park the cash, with the added benefit of tax-free proceeds.
That proceeds were minimal, that this strategy could tie up 30 grand for ten years? Nevermind…
As time passed, the bank was acquired by the now-defunct First Interstate Bank. Shortly, getting through to a human being grew well-nigh impossible. My old personal banker was replaced by a crew of CSRs, none of whom knew much about anything and all of whom seemed to be trained in the high arts of stonewalling.
First Interstate began to make various small errors. Because my math leaves a lot to be desired, it would take hours of anguished puzzling to figure out what went wrong, and still more cerebration to confirm in my own mind that an error had occurred on the bank’s part and not on mine. Each time this would happen, I would have to jump through flaming hoops to reach a person and then would have to do battle to prove some transaction—often one that cost me money in the form of various gouges—was the bank’s mistake. Even going in person to the main downtown office would result in a long wait to speak to a representative and a complicated discussion to get the point across, an activity that often resulted in no action.
Meanwhile, I learned that one of Ex-DH’s ex-law partners’ ex-wives had established a practice as a financial counselor. She specialized in advising single women. When I went to her to learn more about how to handle my finances, she advised me to cash out the municipal bond and invest in a mutual fund.
Before the bank was engrossed by First Interstate, I had arranged for the bank to keep the municipal bond, since as a new divorcée my life was pretty transient and I was concerned that the bond might get lost as I moved around. (As an example, I spent three months traveling on foot through the outback of Alaska and Canada, sleeping on the ground, hiking, and hitch-hiking.) Now, when I asked to have the bond, the CSR with whom I spoke said it would be FedExed to me.
They dropped it in mail.
And predictably, it disappeared. Weeks later, no bond had surfaced. When I called, I found out they had put it in the USPS and lost it!
Yes. First Interstate lost a $30,000 bond!!!
And what did they propose to do about it?
They informed me that it was my problem, and I would have to go to the Postal Service and try to get them to find it.
Only after I complained to the federal banking commission and threatened to call the U.S. attorney general did a bank vice-president appear at my front door with the bond in hand.
About at this time, First Interstate was agglomerated into Wells Fargo. By then I had quite enough experience with large national banks, and so I moved my money to another bank, a small local institution with a branch near my house.
Before long, this bank began to falter. It also was consumed by one of the steadily bloating national megabanks, which promptly closed the nearby branch.
SDXB (Semi-Demi-Exboyfriend) had been lobbying me for quite some time to move my accounts into a credit union. Finally I began to pay some attention. By now I was working at Arizona State University’s west campus, which housed a credit union in one of the buildings. As a university employee, I was qualified to join (so, it develops, is just about anybody…).
So I opened an account. And to my great surprise, I encountered service very similar to the service Ex-DH and I got when we did business with a quaint local institution and he was a heavy hitter at one of the most prominent law firms in the Southwest. But this service was available to everyone, not just to a few elite customers! Call on the phone, and a human being answered. The car loan the credit union offered far underpriced anything available anywhere else. They even had a broker who would help you buy a car and insulate you from the horrors of having to do battle with car salesmen. Mistakes? What are those?
That service continues to this day. Although they now have a phone tree, it’s pretty easy to break through it, and their online help is prompt and accurate. Online banking services: awesome. ATMs: available everywhere, at no charge, thanks to deals with a network of credit unions. Solvency: excellent, because credit unions refrained from issuing bizarre loans to borrowers who obviously couldn’t pay. Deposit insurance: through a separate federal agency that is in no danger of being drained dry by the current spate of bank failures. Costs: almost nil—no checking account fees, no gouges for cashing checks, no costs unless you bounce a check.
What a wonder.
I would never do business with a bank again. Credit unions are the only way to go.
Image: Elembis, An Assortment of U.S. Coins. Public domain. Wikipedia Commons.