Nowadays, doing your part to improve social and environmental standards has become more mainstream and a lot easier to do. After all, you can now fight deforestation right from the comfort of your own home — a major plus for those who enjoy partaking in more subtle forms of activism. But did you know, enacting social change and protecting the environment is also as simple as choosing the right bank?
Whether you own your own business or have a steady nine-to-five, it’s safe to say you’d like to be the judge of where your hard-earned dollars go. Big banking institutions like Wells Fargo, Citibank, JPMorgan Chase, and Bank of America don’t just safely store your money, theyalso use it for loans and to invest in a wide variety of corporations and other projects. Unfortunately, these investments aren’t always ethical, and many of these institutions tend to ignoreenvironmental and socialissues in order to rake in the highest profits. The good news is there are responsible banks out there, such as credit unions or smaller, local banks, that put people — and the earth — before profit. But before we get into that, let’s first explore three things your bank could be funding using your money.
Environmental Degradation
By now, you may haveheard about the Dakota Access and Keystone XL pipelines. After they were previously stalled by the Obama administration, Trump expedited their approval earlier this year, sparking public outrage and protests on behalf of environmental groups, activists, and Native Americans. The Dakota Access pipeline (which is now operational) was set to carry crude oil across the Midwest and through a contested portion of the Standing Rock Sioux Tribe’s reservation— running straight through a sacred burial ground and threatening the reservation’s water supply. Backlash over the pipelines extended to the financial institutions backing them, leading the cities of Seattle, Washington and Davis, California to pull $3 billion and $124 million, respectively, from Wells Fargo— a major lender to the Dakota Access pipeline. The Keystone pipeline’s massive 210,000-gallon oil leak that occurred earlier this month isfurther proof of how much of a burden the extractive industries are on the planet and how necessary it is for big banks to stop funding such environmentally destructive projects.
Wars and Weapons
It’s no secret that some financial institutions in America (and overseas) are investing in companies that produce weapons of war. Sadly, war is quite lucrative. Arms-producing and military service companies like Lockheed Martin and BAE Systems are bringing in billions of dollars each year and guess who’s investing in them? Big banks. In a report of over 390 financial institutionsthat have funded nuclear weapons since 2013, Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo ranked in the top 10 of highest investors — a major reason to divest from unethical banks!
Private Prisons
Police brutality, mass incarceration, and harsh sentencing laws have madecriminal justice reforma hot topic lately. But another issue that’s been lost in the headlines is for-profit prisons. The GEO Group and CoreCivic, two of the largest privatized correctional companies in America, have been able to stay in business all thanks to— you guessed it— big banks. Private prisons allow these companies to directly profit off of mass incarceration. Such an incentive for for-profit prisons to keep inmates imprisoned for longer periods of time can lead to a slew of ethical issues. Private corrections companies no doubt have more reason to lobby for harsher sentencing laws, making them a prime example of why criminal justice reform initiatives are so desperately needed and why big banks should stop funding such companies.
Where Should You Keep Your Money?
Thankfully, ethical banks do exist in the form of credit unions and community banks. Credit unions are locally managed and member-owned banks that typically have far better interest rates and lower loan rates because they’re not run by outside investors looking to maximize profit. Credit unions are also far more transparent than bigger banks by holding annual meetings for members to attend and by giving members access to regularly updated financial reports. Of course, becoming a member of a credit union is a tad bit more difficult than walking into a bank and opening an account. Eligibility for a credit union account typically involves living or working in the same city the credit union is located, but eligibility may vary.
Community banks are another terrific alternative to big banks because their primary goal is to serve their local community. Community banks support the local economy, are involved in local causes, and genuinely care about their customers’ needs. In order to find the right bank for you, don’t be afraid to ask questions! After you’ve settled on whether or not your chosen bank will meet all of your financial needs, ask if they’re investing ethically. Find out whether the financial institution has invested in fossil fuels or if they support renewable sources of energy. Are they funding any projects that aren’t socially responsible? Although switching banks may seem daunting (here are a few helpful tips on how to get it done!), at the end of the day you’ll feel good knowing your money isn’t funding unethical ventures.
Have you tried switching to an ethical bank?
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FAQs
- Your money is safe. ...
- Your money is protected against error and fraud. ...
- You get your money faster with no check-cashing.
- You can make online purchases with ease and peace.
- You have access to other products from the bank. ...
- You can transfer money to family and friends with.
- You have proof of payment.
If you have a brokerage account with cash you need within the next 36 months, ask your financial adviser to invest in a Treasury-only money market or bond fund. You might also consider buying CDs from different banks up to FDIC limits within a brokerage account.
Why you shouldn't put your money in the bank? ›
Keeping too much of your money in savings could mean missing out on the chance to earn higher returns elsewhere. It's also important to keep FDIC limits in mind. Anything over $250,000 in savings may not be protected in the rare event that your bank fails.
Is switching bank accounts a good idea? ›
As a hard credit check will impact your score for some time, if you plan on taking out a loan in the next year, you might want to avoid switching bank accounts. This is especially true if you've had hard checks on your account for other things, such as applying for a credit card.
What are 3 things banks do? ›
Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds.
What are 3 benefits advantages of saving your money at a bank? ›
Saving at a bank helps you manage your finances in a more organized and planned manner. Having a savings account lets you separate funds used for daily needs from savings funds. You can also check your savings funds' incoming and outgoing flows through neatly recorded transaction history or account mutations.
Should I take my money out of the bank in 2024? ›
First and foremost, it is essential to choose a bank that is insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures deposits up to $250,000 per depositor, per insured bank. This means that if your bank fails, you can still get your money back up to the insured amount.
Will I lose my money if my bank collapses? ›
If your bank fails, up to $250,000 of deposited money (per person, per account ownership type) is protected by the FDIC. When banks fail, the most common outcome is that another bank takes over the assets and your accounts are simply transferred over. If not, the FDIC will pay you out.
Where is the safest place to keep cash at home? ›
Where to safely keep cash at home. Just like any other piece of paper, cash can get lost, wet or burned. Consider buying a fireproof and waterproof safe for your home. It's also useful for storing other valuables in your home such as jewelry and important personal documents.
Can banks seize your money if the economy fails? ›
Banking regulation has changed over the last 100 years to provide more protection to consumers. You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance. Up to $250,000 is secure in individual bank accounts and $500,000 is safe in joint bank accounts.
How much is too much cash in savings? An amount exceeding $250,000 could be considered too much cash to have in a savings account. That's because $250,000 is the limit for standard deposit insurance coverage per depositor, per FDIC-insured bank, per ownership category.
How much cash should you keep at home? ›
In addition to keeping funds in a bank account, you should also keep between $100 and $300 cash in your wallet and about $1,000 in a safe at home for unexpected expenses. Everything starts with your budget. If you don't budget correctly, you don't know how much you need to keep in your bank account.
Is there a downside to switching banks? ›
Moreover, switching banks can make you lose some benefits or relationships that you have built with your current bank, such as loyalty discounts, waived fees, personalized service, or trust.
Is there a downside to switching savings accounts? ›
Con: Potentially Incur New or Higher Fees
Before switching banks, read the fine print to make sure the new account doesn't charge higher (or more) fees than your current bank or moving your money may cost you.
Is there any reason not to switch banks? ›
You Can't Meet Account Requirements at a New Bank
In some instances, a bank will require you keep a minimum balance in your account to qualify for certain benefits, like a higher APY on your savings account. If the bank down the street has high minimum balance requirements, it may pay to stay where you are.
What are the pros and cons of putting money in the bank? ›
Savings account benefits include safety for your savings, interest earnings and easy access to your money. However, savings accounts may have drawbacks, such as variable interest rates, minimum balance requirements and fees.
What is one reason to deposit money with the bank? ›
People deposit extra money into banks because at a point of time people need only some money for their day to day needs. By depositing money in the banks people's money is safe and they get a good interest on their deposit. They can also withdraw money whenever they want.
Why keep your money in the bank? ›
Placing your money in a federally-insured and highly regulated bank ensures that your hard-earned funds are protected and available when you need them.
What does putting money in a bank do? ›
It doesn't remain locked away in the bank vault – instead, the money you deposit into a savings account is used by the bank to make loans to other people and businesses in your community so that they have the money to pay for big expenses like houses and cars, or even to operate a business.
