Banking Options for Families: Alternatives to Banks for Household Financial Services

Although traditional retail banks are still the biggest players in the finance industry, there are alternatives to banks for excellent household financial services and products. Find out what banking options families have to save and grow their money.

Retail Banks

Retail banks are profit-driven and work to benefit their shareholders, often a small group of investors. Each bank is controlled by a board of directors, who decide the types of services offered and the fees charged. Its customers have absolutely no authority in matters regarding the bank’s operations.

Banks are useful in many ways – they serve everyone and usually offer a wide range of innovative financial products and services. However, banks also charge higher fees and loan interest rates and impose many restrictions.

Credit Unions

Unlike banks, credit unions are owned and controlled by their members – people who save and borrow with them. They are popular alternatives to banks for household financial services because they exist to provide affordable services to their members, who often belong to a group or association and who receive their profits through dividends and lower fees and loan interest rates.

Although smaller than banks, credit unions are found to provide excellent customer service. Figures released by Abacus – Australian Mutuals, the association representing credit unions and mutual building societies in Australia, show that 85.7% of credit union members and 88.5% of building society members reported high customer satisfaction in a survey done in May 2009. Credit unions can also be more flexible and innovative. In fact, a credit union, not a bank, was the first financial institution in Australia to install an ATM and to use electronic funds transfer at point-of-sale (EFTPOS).

In the United States, credit unions are regulated on both the federal and state level. Federally-chartered credit unions are overseen by the National Credit Union Administration (NCUA), while state agencies regulate state-chartered credit unions. The NCUA also insures member deposits up to $250,000 through the National Credit Union Share Insurance Fund (NCUSIF).

However, there are limited numbers of credit union branches, and this can cause some inconvenience to members. And because most credit unions have no international banking ties, they are not useful for those traveling abroad regularly.

Credit unions serve as a member-focused alternative to traditional banks in the United States. With their cooperative structure, lower fees, competitive interest rates, and emphasis on personalized service, credit unions significantly promote financial well-being within their communities. As a result, they continue to grow in popularity as more Americans seek financial institutions that prioritize their needs and values.

Building Societies

Like credit unions, building societies are smaller, regionally based, with fewer financial products. They are also customer-driven, providing customers with a strong sense of community. They have their origins in cooperative movements. In Australia, their numbers have shrunk to only nine presently due to decades of mergers and acquisitions. Even so, building societies have a big role in regional communities and have increased their commitment, while bigger banks have closed their branches and moved away.

Community Banks

Big banks aim to make money rather than to serve customers in the real sense. Not surprisingly, they have abandoned many smaller, rural areas, much to the disappointment and inconvenience of regional households. Fortunately, a few banks still care and join forces with local communities to build community banks. Often, the bank provides banking authority, financial services, and products while a community-owned company runs the operation.

Retail banks are one of many banking options for families, particularly those living in rural or regional areas. These families can consider more customer-centric alternatives to banks for household financial services, such as credit unions, building societies, and community banks.

Families in the United States have diverse banking options to help them save and grow their money. These options include traditional banks, credit unions, online banks, and investment firms, each offering unique advantages and services tailored to families’ specific needs and goals. By carefully evaluating their financial objectives, risk tolerance, and preferred level of personal interaction with their financial institution, families can make informed decisions about where to entrust their hard-earned money. Ultimately, the key to financial success lies in leveraging these various banking options, staying knowledgeable about the latest trends and opportunities, and remaining committed to a disciplined savings and investment plan. By doing so, families can secure a bright financial future and achieve their long-term goals.