Busting 4 Widely-Believed Banking Myths
Knowledge is power, and power is money.
And when it comes to your money, finances, and fruits of your labor, your first priority should always be to make sure that it’s safe. And how do you do that? With accurate and trustworthy information – knowledge.
Sure, you can stuff your money in a luggage bag and bury it in the yard and end up sleeping with one eye open for the rest of your life or deposit it at a bank or credit union and sleep comfortably at night.
Unless you have a finance degree, it can be difficult to fully understand the ins and outs of banking. However, you don’t really need to understand everything as a consumer, you just have to understand enough. Enough to make informed decisions regarding your finances.
To help you, we’re here to clear up some common misconceptions surrounding banks and their services. These misconceptions have spread from one mouth to another due to misinformation – you can avoid this by reading the list below.
1.Online banking puts your information at risk.
While identity theft is a rapidly expanding criminal enterprise and thieves are hard at work developing new ways to take and use your personal information, banks and credit unions are actively innovating with new encryption software and multi-factoring authentication that provides additional safety and security to your online accounts.
There’s no complete fool-proof way to make sure that your bank account will never be compromised but the belief that you’re more at risk when using online banking services simply isn’t true.
To add another layer of security, you can make sure that you have a unique user ID and password and that you only access your accounts from a secure computer and connection.
2.Larger banks are safer than smaller banks.
There are many reasons to choose a bigger and more established bank over a smaller community bank. Bigger banks have more branches, perks, and ATM locations. They also tend to be ahead of the curve when it comes to new technology.
However, big banks and smaller banks have one important thing in common. The FDIC actually extends just the same protection of up to $250,000 per depositor regardless if it’s with a bigger bank or a community bank.
One big difference between the two banks is that community banks provide a more personalized approach with their customers, perhaps given its small population. As opposed to bigger banks with more customers and less personal one-on-one time with each teller.
3.Debit cards have the same theft protection as credit cards.
No, they don’t.
For one, debit cards and credit cards have completely different functions, perks, and benefits. This also applies to the level of protection each one has. Unlike the debit card, credit cards are covered under the Truth in Lending Act while debit cards are under the Electronic Funds Transfer Act.
What’s the difference between the two?
The Truth in Lending Act states that if your credit card is stolen, your only liability is limited to $50 for unauthorized charges. However, with the Electronic Funds Transfer Act, you can be liable to pay more than $500 if you fail to report the loss of your debit card immediately.
4.Credit unions don’t have many advantages over traditional banks.
Have you ever checked out a credit union? No?
That’s not surprising given credit unions may be the most misunderstood financial institution. Many believe that they don’t offer the same services that traditional banks do. However, as a matter of fact, they do – just in different ways.
Instead of being owned by a board of shareholders, credit unions, as their name suggests, are member-owned and operate on a non-profit basis. Their system allows them to provide better interest rates than traditional banks. They also provide reimbursement for fees charged using a foreign ATM. Getting a mortgage loan or getting approved for a credit card might also be easier if you have a credit union account.
However, these perks may only be limited to people who fit their criteria such as their place of home and work.
Now that we’ve cleared that up, you are now more informed to make a sound decision for your finances. Knowing the facts from the myths will guide you away from money mistakes and towards success.