Customer service is a key reason many people switch financial institutions. While finding a bank or credit union that responds quickly to inquiries can be valuable, customers should remember that bankers are business acquaintances, not friends. Bank employees' loyalties rest with their companies, not their customers. Here are a few things that a friend might tell you, but your banker won't. (For more, check out 5 Steps For Dealing With Your Banker.)
IN PICTURES: Top 7 Biggest Bank Failures
- They Want All of Your Money
Banks benefit more than their customers do, when they have all of an individual's funds in one place. They will tout the importance of easy transfers and the convenience of keeping your savings, your checking account and your mortgage in one place. But, particularly for people who use online banking, it makes more sense to shop around for the best financial products and loans. You'll get better terms if you shop, and you can still easily make transfers if you need to. Check out the interest rates on some online rewards checking and savings accounts, and you may find yourself doing all of your banking online. (For more, see Online Banks: Lower Costs And Little Sacrifice.)
- Mortgage Rates Are Negotiable
When you approach your lender to request a mortgage refinance, you may receive an instant quote for a new interest rate. Your lender won't tell you, though, that you can shop around for loan rates at other institutions, pay points or simply ask about alternate loan products to compare rates and perhaps find a better deal. Within three business days of applying for a loan, your lender must give you a good faith estimate. Make sure you take that estimate and check out programs with at least one other lender.
- Selling Credit Protection is One of Their Goals
Bank employees are trained to sell. They encourage customers to open additional accounts and they sell credit protection along with credit cards, even though this type of insurance is generally unnecessary and expensive. Rather than rely on credit protection, it makes more sense to have an emergency savings fund, disability insurance and life insurance. (For more, check out 15 Insurance Policies You Don't Need.)
- Bank Employees and Financial Advisors are Not Equal
Some customers assume that bank employees are trained to help their customers make financial decisions, but many are overworked, underpaid and under-trained. Like other big employers, banks are cutting their bottom lines by reducing staff and hiring less-experienced employees. If you need to ask advice at a bank, first ask for the qualifications of the employee.
- Online Account Information May Be Inaccurate
Many customers rely completely on their online bank statements, rather than using the old-fashioned method of putting pen-to-paper, to reconcile the bank's statements with their checkbook register. In some cases, your account balance will show deposits that are not actually available yet, such as out-of-state checks that take days to clear. When you use your credit card, sometimes a hold is placed on funds for days before the creditor actually charges you. Be careful to know your actual balance so you don't get hit with overdraft fees, or can't get cash from the ATM when you need it.
- Some Fees Can be Waived
Your bank won't tell you this, but (sometimes) it is willing to waive a fee or two, such as an overdraft fee or even an ATM fee. It never hurts to ask. (Learn more in The Ins And Outs Of Bank Fees.)
- Your Bank Can Pay Itself Back from Your Accounts
If you incurred an overdraft fee or are repaying an overdraft loan, the bank has the right to pay itself as soon as you deposit money into your account. You might think you have control over your funds, but actually your bank does, in some cases.
The Bottom Line
Whether you are banking with a big national bank, a credit union or a community bank, you need to take the responsibility for your own money. While some small financial institutions offer freshly baked cookies on Fridays, that little perk won't make up for some of the less savory practices. Consumers need to shop for their own cookies, and for the right banking services, so they know exactly what they are getting. (To learn more, check out our Banking Tutorial.)
For the latest financial news, see Water Cooler Finance: Rising Markets And Buffett's Successor.