Photo courtesy of Mark Strozier, via Flickr
Since I posted my Credit Union 101 primer a couple weeks ago, all this talk of switching from major banks to credit unions seems to have had an effect: first Bank of America backed out of its plan to charge debit card users a $5 monthly fee, then Chase and a handful of other banks followed suit. Even with these concessions, the bank backlash remains strong. Bank Transfer Day is still planned for November 5th, and plenty of blogs are giving advice on how to make the switch. Many attempt to answer the question, “What should I do if I’m not eligible to join a credit union, or if there are no credit unions in my area?“
Whether you want to dump your big bank for political reasons, or just because you believe it to be in your best financial interest, read on to discover a collection of alternatives for those who can’t join a credit union.
Bank with a Brokerage Firm
Laura of Nerdwallet notes that if you do your banking with a brokerage firm like Charles Schwab, you can avoid all monthly fees, get refunds for ATM transactions, and even earn a modest amount of interest on your checking account.
There are a few drawbacks, of course. Fewer locations means most banking will have to be done online. Also, this plan only works if you have a brokerage, such as a 401k or IRA. Finally, if you like credit unions because they’re non-profits, this solution is not for you.
Use a Rewards Checking Account
From that same article, Nerdwallet suggests trying a rewards checking account–that is, a checking account that offers interest and no monthly fees. While these are commonly found in credit unions, some are not, such as the one offered by PerkStreet Financial.
Use a Smaller Bank
A “small” bank could mean one of two things: It could mean a smaller “start up” bank like PerkStreet, or Nerdwallet’s other recommendation, BankSimple. These are small companies that promise a better customer experience and an end to monthly fees. However, they’re not really banks in the traditional sense. They partner with mid-size banks to get more favorable terms.
There are other options, too. In the comments section of a post on The Consumerist, user AD8BC recommends regional banks, like the Bank of Texas, which boasts no fees, no minimum checking account balances, and a snazzy mobile app to boot.
If you’re outside of Texas, try using the FDIC Bank Find tool to search all federally insured banking institutions in your area. In that list, you’ll likely find a few you haven’t heard of. That are probably the little guys, and you should look to them first.
Bank with the USAA
If you can’t find a credit union in your area, but you or a family member is in the Armed Services, you might consider banking with the United Services Automobile Association. Like a credit union, the USAA is technically not a corporation, so it conducts business differently than the major banks. Unlike a credit union, the USAA is classified as an inter-insurance exchange.
This of course means that their primary business is life and automobile insurance for service members. But they also offer popular brokerage and banking services. If you qualify, consider trying USAA Free Checking, which has no fees, and offers bonuses like interest on balances greater than $1,000, free checks and reimbursement for ATM fees.
Use a Direct Bank
A “direct bank” is any bank that has no branches. This typically means that all banking is conducted on the internet or over the phone. The idea is that the lower overhead will mean more competitive interest rates and other perks.
Ally Bank is a direct bank with a good reputation. Ally has no checking fees, no minimum balance, and unlimited refunds for using ATMs at other banks. If you want to ditch the major banks for political reasons, you may or may not be happy to learn that Ally (formerly GMAC) is majority-owned by the U.S. government.
Have your own tips for finding credit-union-like banking outside of a credit union? Please share in the comments.