Many people are looking for alternatives to traditional banks for a wide variety of reasons. Some people are tired of the high fees that they are being charged at their bank. Others are concerned about the customer service that they have received or the changes that have been made to their accounts. Whatever the reason, alternatives to traditional banks have been becoming more and more popular among consumers. Here are some of the best alternatives to traditional banks available.
Credit Unions
Credit unions are the most used alternatives to traditional banks. Credit unions are nonprofit, member-owned cooperatives designed to provide members with a place to hold their money until it is needed for some other use. The members generally share something in common, such as being a member of a particular labor union, college alumni association, employer, or community. In most cases, member’s family members are also allowed to open accounts at the credit union.
Storing your money in a credit union account is just as safe as storing your money in an account at a traditional bank The balance of the accounts at the credit union are federally insured just like the accounts at traditional banks. The accounts will also have comparable interest rates and terms to the accounts available at other institutions. At credit unions, fees and minimums tend to be lower than at commercial banks, while interest rates for savings and checking accounts tend to be higher.
Money Market Mutual Funds
Another alternative to traditional banking is the money market mutual fund. Most mutual fund money market accounts require a minimum opening deposit of between $500 to $5,000 and some require that you maintain a minimum balance in the account. In some cases, you can write checks against the funds in the account, but there is usually a limit to the number of checks you can write, either per month or per year, and there may be a minimum check-writing amount of $100 to $500, depending on the account.
The money market accounts offered by mutual fund companies tend to have higher yields than the money market deposit accounts available at traditional banks. Your chance of losing money is slim because mutual fund companies make it a practice to do what they must to make sure that they maintain a constant price of $1 per share. However, while bank’s money market deposit accounts are typically insured by the FDIC, accounts with mutual fund companies do not have that protection.