Have you seen that recent commercial from one of the Big Four banks that’s constantly on the TV? Young girl comes home with her first paycheck, the family is super excited, she wants to deposit it, nobody has time for that so she takes a picture of it with her phone, boom it’s deposited and her grandma is proud?
I loathe that commercial. I despise it. That poor girl worked hard for her money only to have her money sit worthlessly in a Big Four bank account doing absolutely nothing for her. Thanks a lot evil bank for blatantly stealing from this girl and rubbing it in everyone’s face in this “heartwarming” moment. This is not heartwarming, this is robbery, and this girl, like most, just doesn’t understand anything about everybody’s friend, compound interest.
Compound interest is how the rich get rich. Instead of working for money, money works for them.
Compound interest is just that, interest on interest on interest. Your money just so happens to grow over time. Now of course you need a lot of money to simply live off of interest but that’s no excuse for putting your money in a bank account that will give you 0% interest like the Big Four bank from that commercial and then they turn around and charge someone else 7% interest loaning out your money. Can you tell me how much interest you’re getting from your bank right now?
A few years ago there was talk of a massive movement to run far, far away from these titans. The Move Your Money Project‘s goal was to get people to switch to credit unions and smaller banks. Credit Unions typically provide not only more interest for their members but they provide a kinder overall banking experience. Since they aren’t in the game to make a profit, they can be in it for their members. The movement didn’t really gain too much steam though and years later we still have the big banks getting bigger.
This is a bank. You’re giving them your money so that your “gold doubloons” are not sitting at home in a chest under your floor boards. The bank, in turn, lends it out to others to make HUGE profits. So when they give you ultimatums such as “make a monthly transfer and we won’t charge you a maintenance fee” on YOUR money, that crap is ridiculous. I’m loaning you my money; you’re darned right you won’t charge me anything extra. And Mr. Bank, as a matter of fact, you should give me a larger slice of your pie. Give me more interest.
If you don’t want a credit union, there are other options. Leave the brick and mortar banks altogether. Stop losing your interest so your bank can advertise their business by putting a bank location at every street corner. Online banks provide some of the highest interest rates that you will find anywhere. At the time of this writing, Capital One 360’s savings account gives 0.75% and Ally Bank’s savings account gives 0.87%. The Big Four give 0.01% and that’s only if your money is in the right account. Otherwise you could be getting 0%.
So again, make sure your money is working for you as much as it can. Sure maybe you won’t make millions but at the end of the year, maybe that’s an extra toy for your child or an extra dining out experience you can share with your family. Or you could let it compound for 20-30 years and watch it really grow. If that’s the case, I wouldn’t necessarily leave it in any bank as that may not be the wisest move either. However the most important fact about all of this is to open your eyes. I’m not talking about complicated estate planning or any difficult investing moves. This is simply choosing a bank that is truly better for you. Make sure you’re getting the money that’s yours and you’re not letting the fat cats get any fatter. It’s always time to trim the fat.