If you’re with a big bank that requires you to carry a hefty balance in your checking to avoid a maintenance fee, is it time for you to move your money?
Financial institutions require a minimum deposit to open an account—whether that money is deposited into a savings or a checking so a minimum deposit for a checking account is not uncommon.
It’s this initial funding that establishes your account and relationship with the financial institution.
According to Forbes, you usually need to make an initial deposit between $25 and $100 to open a savings or checking account. For other deposit products, such as Certificates of Deposit or Money Markets, the minimum to open those accounts is higher and varies depending upon terms. The issue most consumers have with high minimums rarely involves these types of deposit products.
The frustration most people have is not about the initial minimum deposit. The issue is with the required minimum balance in the checking account to avoid the monthly maintenance fee; sadly, this amount has risen to unreasonable levels for some big banks.
Most consumers look for excellent value, which is why people bank at credit unions—typically, credit unions impose fewer fees or lower fees and offer competitive rates for both deposit and lending products.
We’ve recently had a few new members who switched from big banks because their minimum required balance increased to $1,000. This means if their checking account balances fall below $1,000, they will be charged a monthly maintenance fee.
Big banks are notorious for imposing big fees. Bank of America (BOA) was fined $250 million earlier this year for a series of financial violations, including junk fees.
According to Reuters, “Bank of America reaped hundreds of millions of dollars by charging multiple fees to customers who did not have enough funds in their accounts from February 2018 until February 2022, the CFPB said in a statement. Consumers could not reasonably expect or understand they would be hit with $35 fees each time the bank declined to pay a single transaction, regulators said.”
If you find yourself at the mercy of big banking fees, and you’re tired of high minimum balance requirements on your accounts or transaction fees at the teller line, it’s time to move your finances to your local credit union because, honestly, we look at banking differently. The Credit Union movement was founded on the principle of “people helping people,” not fee-ing members to death!
According to Investopedia, one of the top reasons to bank at a credit union is lower fees, “Credit unions are free to pass surplus money to members in the form of fewer fees, more services, lower interest on loans, and higher dividends on deposits.”
Fees are the cost of doing business, but for financial institutions with a conscience, there are limits. For instance, most credit unions are reluctant to raise fees, and before any new fees are imposed, they are scrutinized at all management levels.
If you’re already a member of a credit union, let me say, “Well done! You’re a financial genius!” If you aren’t, make sure to check your accounts; you might have lost $16 while reading this blog.
So, whether you’re just starting your financial journey or a seasoned professional with a great salary, avoid those high minimum balance requirements and hop over to your local credit union—it’s the right move for your money!
