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To Bank Local, Or Not to Bank Local

By
Services for Real Estate Pros with Rentec Direct Property Management Software

big bankSo nearly twenty years ago I setup my first banking relationship with a small local credit union.  Granted I was 14 at the time and it was really my parents that set it up for me, but I think there's something to be learned from this.  As I ventured out on my own I decided it best to use a big well known bank such as Wells Fargo to bank with.  I was thinking it provided me more security for my assets and a bigger bank knew what they were doing better, right?

I've recently come to some conclusions which are pushing me to re-think my decision.  Granted a lot of this has to do with the current credit crunch, and banks just tightening down in general; however, here's what I've found.

My big bank sucks!  Not only that, they are expensive.  And not only that, they treat their customers like dirt.  I walked in the other day to cash a 3rd party check, as I had done on many past occassions.  Whenever there was any question about who I was or what the bank was going to do for me, a teller might call over the manager, who had visited my business a year prior and knew me well.  I also maintained balances in all my accounts well enough to cover the check if for any reason it didn't clear.  Well my story starts right here.  The teller said No.  It wasn't a "I'll check", or a "Let me get approval for you", it was a flat "no, we don't do that any more".  Naturally, having done this many times previously I asked to speak with her manager.  It was also an urgent matter.

Here's where the second bit of change comes in.  The manager I knew and liked was no longer there.  The new manager says "the teller is telling you the fact, we don't do that anymore".  I pointed out I had enough funds to cover any problems, and reminded them I could take my banking elsewhere.  It didn't matter, they refused to serve me.  Keep in mind, I'm a very long term customer at this point who has not once ever bounced a check or had even a single late payment with this bank.

It must have been within a week after this issue that I got a letter from the bank.  I really wasn't expecting anything, but upon opening it my 2nd bit of big bank news arrives.  It went something like this:  "the credit card you have with us is going up to to 18% interest".  Wow, are you kidding me?  I maintain decent balances in my accounts for money you can then use for investing and loaning.  The bank then pays me virtually nothing in interest.  I think Wells Fargo currently pays right near .2% interest; it might and probably is even lower.  All this and for a person who has excellent credit, and has never ever ever had a late payment to them or any other bank, they are raising the rate up nearly 10 points.  Why?  Simple answer is they are greedy, and because they can.

So my days of doing business with this bank are certainly numbered, especially since I discovered an alternative.  Taking a lesson from my parents twenty years ago, and having heard local radio advertisments for them for years, I decided to step into one of our hometown local banks.  Here's what I found:

money management1. The 3rd party check is no problem, so long as I have the balance to cover them until they clear.

2. The same people have worked at this bank for 10-20 years.  They don't have high employee turnover such as my old bank.

3. They pay me to put my money there!  Currently they are paying 1.5% on money just sitting in a checking account, which honestly is the most convenient place for it for me for ultimate liquidity.  They pay more on CDs and other savings vessels too.

4. The people are friendly and want to help, in contrast to Wells Fargo's policy of quoting corporate scripture.

The only downside thus far about banking local are a couple conveniences which I've come to rely on over the years.  This is making the transition take a bit longer.

1. Their ATM doesn't accept deposits.  They do take deposits at the teller or nightly drop box.  So now I print a deposit receipt from my favorite property management software, and just drop an envelope in the night drop box. 

2. I haven't been able to successfully tie my bank accounts in with my personal finance software.  I am told it is possible; however, it's clearly not as easy as it was with the old bank.

So to you AR members.  Where do you bank?  Big faceless policy driven bank, or a local one?

--- about the author ---

Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, and Rentec credit reports

John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Nathan,

Where you decide to bank is drive by convenience, service, price, products, and personality. There is no "one size fits all". Your demands on a bank are different than mine. I do not do property management. I deposit few checks. No cash. I write few checks. I use the ATM almost exclusively. I pay most of my bills on-line. My renters (I have none.) don't write me bad checks. I don't know if I have ever had to negotiate a 3rd party check.

My choice for a bank fits my needs. It may not fit yours - or those of numerous other who have commented. But your bank - and their banks - may not work for me, either.

Good exchange of information, but not the stuff that will drive my decision about where I will bank.

John Juarez, REALTOR

Windermere Properties of the East Bay

John@CarlMedford.com

510-673-0686

Nov 09, 2009 04:34 PM
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

Hi Nathan,

I bank at a big bank but have not been happy with them for some time but unfortunately every thing we have is with them including a student loan for my son that I regret getting through them.  Our first try at our re-fi turned out terrible.  My son had his identity taken and they were awful with him.  I should have moved everything out then.  The people in our local branch are very nice to me, but apparently all other areas of the bank are not connected.  I was surprised that they did not look into our history with the bank itself to see what kind of customers we have been for over 30 years. 

I'm ready to go local but am not sure I'm ready to give up some of the conveniences of being able to move money to my kids who are in other parts of the country at this point.

Thanks for your post! 

Nov 09, 2009 06:43 PM
Anonymous
Ali Ghassemi

I have a local credit union account with Apple Federal Credit Union and a checking account with Wells Fargo....The fees that are charged by AFCU are insane including ATM fees, I wouldn't have a problem with the ATM fees except there a total of maybe 20 AFCU ATM machines in the entire Northern Virginia....I have NOT been impressed wiht the local credit union.

The impact of having 120 banks fail year to date in the US is immense...most of these banks were small size local banks...this ultimately hits you and I in the pocket as tax payers...There are too many banks in the US that should have never been established at the first place.

Nov 09, 2009 07:36 PM
#72
Farida Touma
Real Living Great Lakes Real Estate - West Bloomfield, MI

I've never been impressed with the service(or lack thereof) and exorbitant fees at big banks thus I've banked with a credit union for 37 years and have been very pleased. Although they are in our area, it is a bit of a drive to get to them so I do my deposits and small withdrawals through an ATM. I have a second smaller account with a local bank that is a couple of blocks from me just in case I need to cash a check or withdraw more cash than the ATM will allow. 

Nov 09, 2009 11:51 PM
Anonymous
Carley Mann

We bank with a mid-sized bank and have had some of the same issues, not wanting to cash a 3rd party check, turn over of employees, etc.  It is very frustrating to not at least be notified by mail, email, something to let us, the customers, know that changes have been made.  We are looking into making a move as well to our local bank.  Our company already banks with this bank and they have a great relationship with everyone there from the tellers to the managers.  Relationships make a big difference!

Nov 10, 2009 12:39 AM
#74
Jo Lyman, CRS, CNE, SFR, e-PRO
Key Realty - Toledo, OH
Key Realty

Great post, Nathan!  ...not to mention from the vantage point if one gets into trouble through a job loss or medical problem.  Guess who will work with you better?  You're right!  The Local Bank or Credit Union!  For those of us who have had to work with big banks for Short Sales or Foreclosures, give me a small local establishment anyday! - Jo Lyman

Nov 10, 2009 01:44 AM
Clark Blackwell
Crescent Bank & Trust - Woodstock, GA

Nathan, Thank you for your personal and compelling post about why big banks don't deserve your business. Though I'm a community banker, I can honestly say I'd never consider doing business with a megabank even if I changed careers. One of the respondents mentioned Remote Deposit Service as a benefit to staying with the big bank. Not a good reason, my friend. My $1Billion community bank has been offering RD for years, and many smaller banks presently offer the service.

The only way community banks will be able to survive the Obama/ Reid/ Pelosi onslaught is to gain market share from the big banks through a grass-roots groundswell of support from US citizens. I ask everyone to begin "voting with our feet" just as you did. Like they say about class-action lawsuits, the surest way to get a big business's attention is to hit them in the bottom line.

Do it.

Close your accounts at the big banks today and let them know loud & clear that they don't deserve the privilege of using your money ONE MORE DAY.

Clark Blackwell, US Community Banker, Crescent Bank, Woodstock, GA

Nov 10, 2009 04:51 AM
Steve Andrascik
Lake Mead Area Realty - Boulder City, NV

Nathan, I gave up on banks a long time ago. I do all banking possible with the local credit union. They pay interest on checking accounts, do not charge if I write a check and provide on-line banking for virtually free.

Boulder City Steve

Nov 10, 2009 05:16 AM
Jena Heth NMLS #232765
Mountain West Financial #166497 dba Diversity Home Lending - Grants Pass, OR
Making Homeownership a Reality since 1990

Nathan,  I love your artical.  I have 7 accounts with Chase and I plan on changing all of them to a local bank.  thanks for you great insite.  Jena

Nov 10, 2009 07:10 AM
Connie Wildasinn
MetroCal Brokers - Bixby Knolls, CA

loved your blog.. I own a brokerage and Chace has decide that they will no longer cash my agents commission checks over 3,000 and for that privy they will charge the agent $6.00 ... their responce ...'they can open an account here'... would you? I am in the process of takig my business elsewhere... no more big corporate anything... out with franchise, big corp fat heads and off to home town world.. I am done here!

Nov 10, 2009 07:36 AM
Anonymous
Annie Catalano, C21 Sea Coast, Carlsbad, CA.

WOW.....I could have written your exact post except for a couple of changes here and there!My b on Craigslist and deposited the cashiers check the next day at our CHASE bank. Then the buyer was emailing my husband weird requests after that. My husband told the buyer when the check cleared, he would ship the item. I suggested he go to the bank and explain that the buyer may have given him a bad cashiers check (as Craigslist said this can happen). I was out showing houses and my husband called and said the bank manager told him he was a crook and what he did by depositing that check was the same as committing murder and that the bank was going to freeze all our accounts and even his business account. And if after further review, my husband would not even be able to have a business account in the state of CA. anymore!......What?....my husband barely uses the computer, he is a hardworking man and has never engaged in any criminal stuff at all. I drove to the bank after my showings and asked to see the manager. I asked him what he had told my husband. He admitted that he had told my husband that...and that all of us customers ran the risk of this happening to us if the bank feels we have committed fraud. I said, what??.......do you realize he came in here to talk to you about it?....ask questions?...and you threaten to ruin him and his business and say that what he did was akin to murder???...he calmly said "yes"...so I got right in his face and said "don't you EVER accuse my husband of murderous conduct...you have lost your mind MR. Banker.......and walked out...and the guy still works there...hooray for CHASE BANK!!! they hire loony-tunes for workers. Credit Unions are where its at now!!...big banks=big headaches

 

 

Nov 10, 2009 07:46 AM
#80
Mark Watterson
Salt Lake City, UT
Utah Real Estate

I bank with one of the big boys (Chase) who pulled my credit line.  I have great scores and have never been one day late.  They wanted me to requalified again after having the line of credit for two years and I refuse too.  They are currently on my s**t list.

I also bank with a large regional bank and most likely will be moving all my account there.

I won't pay fee no matter where I bank.

Nov 11, 2009 01:26 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Everytime a local bank has been bought by a national bank they've changed the rules and made it more impersonal ! You need to create a banking relatioship with a branch mngr. who will value your business and help you obtain lines of credit for investing !!!

Nov 11, 2009 09:19 AM
Mark Velasco
West Shores Realty - Whittier, CA
Top Producing Broker Associate

Wow Nathan. Times are changing fast. Banks are only looking at the bottom line.

Nov 11, 2009 05:19 PM
Mark Moen
Realty Executives Experts - Elkhart, IN

I worked at Chase Bank and did not bank there due to privacy from fellow employees.  I wanted to cash my paycheck and went to a local branch had all the proper ID including my employee security card and the teller stated no account need thumb print.  There I stood with all the credientials, a security card that the teller is not authorized to have so I resigned my position imediately.

My business accounts where with a local bank which was next to my office, US Bank came in and bought them out.  Fees went up service went down, all managers where released with new management.  Nightmare of time, required new checks did not offer to pay for them while the ones I already had became useless, this cost me close to $1200 to replace for trust account and operational account.  Cancelled my credit card for new reason other than they stated I was in risky proefession, real estate brokerage.  My credit card with low limit was paid monthly when carried balance, my operation checking carries a balance of 500 times the limit of the card and I own my own office outright.

Moved back to a small bank, competition is needed to correct the insanity caused by the big lenders.  Also found that the mortgage loan officers as well as committee have made good loan transactions making real estate sales a bit smoother.  I am not only findng that the residential transactions to be smoother but I find the bank more agressive with investors who own a portfolio of real estate helping them purchase more investments.  It pays to have a personalized mortgage banker.  Furthermore it brings power back to the community. 

Thomas Jefferson stated that banks are more dangerous to liberty than standing armies.  Do not have the quote handy but I believe he meant strong centralized banks.

Nov 14, 2009 01:32 AM
Dana Devine
Charles Rutenberg Realty - Apollo Beach, FL

I use to work for Wells Fargo..12 years ago when I moved to FL i went to the smalle community bank...I had to drive to the next town....only 5 miles away...to open an account....but being in the mortgage biz and seeing how BOA and the other big banks screw borowers I was not getiing a bank acct with a big bank.....BOA and the rest don't care...

Nov 15, 2009 10:52 PM
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

I was with you all the way (because I'm sick of my big bank) until you said that banks raise their rates because they are "greedy".  Why is it that when other companies look to minimize costs and maximize profits that they are "greedy" but when we as realtors do it we are just "savvy" and "entrepreneurial"?  How would you like it if your next client called you greedy for asking for a 7% commission, or if an agent called you greedy when you inquired to find out if that 1.5% co-brokerage commission is reciprocal or not?

Just because they are big companies doesn't mean they are greedy.  They have the same fiduciary obligation to their shareholders to make big profits that you do to your clients.

 

Dec 02, 2009 05:14 AM
Nathan M
Rentec Direct Property Management Software - Grants Pass, OR
President (Rentec Direct)

I'm going to have to respect your opinion, but completely disagree with ya Matt.  Citi/Chase/AMEX, probably many other banks are indeed greedy and proof is in the fact that they are raising interest rates on their card holders to astronomical values.  I got a rate increase to 18%, and keep in mind I've never had a late payment and have A+ credit.  I've heard of others getting interest rates around the 50% rate.  That is pure and simple greed, no other way about it I'm afraid.

Dec 06, 2009 01:30 PM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

The one reason I'm going to stay with a big bank is for online security.  They have the funds to invest in the latest security software/hardware/malware, etc. while smaller outfits might not be able to. 

Jan 02, 2010 07:29 AM
Nathan M
Rentec Direct Property Management Software - Grants Pass, OR
President (Rentec Direct)

@ Carla

Interesting enough, I was told that the big banks are actually less secure.  They may have the money; however, making changes is immensely difficult for them.  Much more-so than small nimble banks.  An example of this is that banks are required to have 2 factor authentication.  My small bank has it and adopted it really quick to comply with whomever made that rule.  My big bank (Wells) for instance, has not and all it takes is a username and password to login.   I understand Wells pays fines for not adopting the new security standards instead of making their site more secure.  So, makes me wonder.  Who is more secure after-all?

Jan 07, 2010 04:15 AM