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In the fundamentals of black wealth building, we must start by making fundamental choices, such as determining which financial institution serves as the best place to keep our money. In the video below, the difference between a credit union and a commercial bank is laid out in a way that is easy to understand. Here are some quick questions you can ask when choosing a financial institution:
1) What are the fees? Banks use overdraft charges and other fees as an additional source of revenue. Even if they are not charging you a high interest rate to use your money, they can sometimes earn 5 times that amount by allowing you to overdraw your account or charging you in other areas. Make sure you know what the cost of banking is going to be by ensuring that the fee structure is optimal for the services you are going to use.
Tavis Smiley Pics
WASHINGTON - AUGUST 23: (EDITORIAL USE ONLY, TABLOIDS OUT) In this handout photo provided by NBC Universal, (L-R) Tavis Smiley, host of PRI's "The Tavis Smiley Show", and Joe Scarborough, host of MSNBC's "Morning Joe", appear on "Meet the Press" with moderator David Gregory at NBC studios August 23, 2009 in Washington, DC. Tavis Smiley and Joe Scarborough discussed health care legislation. (Photo by William B. Plowman/NBC NewsWire via Getty Images) *** Local Caption *** Joe Scarborough;Tavis Smiley;David Gregory
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WASHINGTON - AUGUST 23: (EDITORIAL USE ONLY, TABLOIDS OUT) In this handout photo provided by NBC Universal, Joe Scarborough, host of MSNBC's "Morning Joe", appears on "Meet the Press" at NBC studios August 23, 2009 in Washington, DC. Tavis Smiley and Joe Scarborough discussed health care legislation. (Photo by William B. Plowman/NBC NewsWire via Getty Images) *** Local Caption *** Joe Scarborough
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WASHINGTON - AUGUST 23: (EDITORIAL USE ONLY, TABLOIDS OUT) In this handout photo provided by NBC Universal, Tavis Smiley (L), host of PRI's "The Tavis Smiley Show", and Joe Scarborough, host of MSNBC's "Morning Joe", appear on "Meet the Press" at NBC studios August 23, 2009 in Washington, DC. Tavis Smiley and Joe Scarborough discussed health care legislation. (Photo by William B. Plowman/NBC NewsWire via Getty Images) *** Local Caption *** Joe Scarborough;Tavis Smiley
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WASHINGTON - AUGUST 23: (EDITORIAL USE ONLY, TABLOIDS OUT) In this handout photo provided by NBC Universal, (L-R) Tavis Smiley, host of PRI's "The Tavis Smiley Show", and Joe Scarborough, host of MSNBC's "Morning Joe", appear on "Meet the Press" with moderator David Gregory at NBC studios August 23, 2009 in Washington, DC. Tavis Smiley and Joe Scarborough discussed health care legislation. (Photo by William B. Plowman/NBC NewsWire via Getty Images) *** Local Caption *** David Gregory;Joe Scarborough;Tavis Smiley
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WASHINGTON - AUGUST 23: (EDITORIAL USE ONLY, TABLOIDS OUT) In this handout photo provided by NBC Universal, Tavis Smiley, host of PRI's "The Tavis Smiley Show", appears on "Meet the Press" at NBC studios August 23, 2009 in Washington, DC. Tavis Smiley and Joe Scarborough discussed health care legislation. (Photo by William B. Plowman/NBC NewsWire via Getty Images) *** Local Caption *** Tavis Smiley
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WASHINGTON - AUGUST 23: (EDITORIAL USE ONLY, TABLOIDS OUT) In this handout photo provided by NBC Universal, Joe Scarborough (L), host of MSNBC's "Morning Joe", appears on "Meet the Press" with moderator David Gregory at NBC studios August 23, 2009 in Washington, DC. Tavis Smiley and Joe Scarborough discussed health care legislation. (Photo by William B. Plowman/NBC NewsWire via Getty Images) *** Local Caption *** Joe Scarborough;David Gregory
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Journalist Tavis Smiley, actor Sidney Poitier and professor Cornel West arrive at "Crowns" Los Angeles Opening Night at The Ebony Repertory Theatre on May 8, 2009 in Los Angeles, California. "Crowns" Los Angeles Opening Night The Ebony Repertory Theatre Los Angeles, CA United States May 8, 2009 Photo by Tiffany Rose/WireImage.com To license this image (57391960), contact WireImage.com
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NEW YORK - MAY 05: Authors Tavis Smiley (L) and Dr. Cornell West attend Time's 100 Most Influential People in the World Gala at the Frederick P. Rose Hall at Jazz at Lincoln Center on May 5, 2009 in New York City. (Photo by Stephen Lovekin/Getty Images) *** Local Caption *** Tavis Smiley;Cornell West
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WASHINGTON - MARCH 15: (AFP OUT) Steve Liesman, Senior Economics Reporter at CNBC, speaks during a live taping of 'Meet the Press' at NBC studios March 15, 2009 in Washington, DC. Dr. Christina Romer, Chair of the White House Council of Economic Advisers, Rep. Eric Cantor (R-VA), House Republican Whip, David Frum, Columnist and former speechwriter for President George W. Bush, Katty Kay, Washington Correspondent for BBC World News America, Steve Liesman, Senior Economics Reporter at CNBC, Tavis Smiley, host of PBS's Tavis Smiley and PRI's The Tavis Smiley Show, appeared on the show to speak about politics and the US economy. (Photo by Brendan Smialowski/Getty Images for Meet the Press) *** Local Caption *** Steve Liesman
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WASHINGTON - MARCH 15: (AFP OUT) Katty Kay, Washington Correspondent for BBC World News America, speaks during a live taping of 'Meet the Press' at NBC studios March 15, 2009 in Washington, DC. Dr. Christina Romer, Chair of the White House Council of Economic Advisers, Rep. Eric Cantor (R-VA), House Republican Whip, David Frum, Columnist and former speechwriter for President George W. Bush, Katty Kay, Washington Correspondent for BBC World News America, Steve Liesman, Senior Economics Reporter at CNBC, Tavis Smiley, host of PBS's Tavis Smiley and PRI's The Tavis Smiley Show, appeared on the show to speak about politics and the US economy. (Photo by Brendan Smialowski/Getty Images for Meet the Press) *** Local Caption *** Katty Kay
Getty Images for Meet the Press
2) Do they pay good interest rates for your money? Obviously, you should get paid whenever someone is holding your money. Not every bank pays the same amount of interest. You should find out if you are paid interest on your checking or savings accounts, if that sort of thing matters to you.
3) Do they offer the service you deserve? Different people are at different stages of their life cycle when it comes to personal financial planning. Some just want a savings account, some want checking and savings. Some are looking to become investors, get insurance, do estate planning or buy a home. See if your bank can help you in the ways that you would like to grow financially.
4) Is the bank convenient for your needs? It makes no sense to do online banking with an institution that doesn't have a good online infrastructure. It helps to choose a bank that is close to you if you like to do a lot of banking in person. Does the bank need to be close to your job? All of these issues matter when choosing a financial institution.
Dr. Boyce Watkins is a Finance Professor at Syracuse University, a leading black speaker and author of the forthcoming book, "Black American Money." To have Dr. Boyce commentary delivered directly to your email, please click here.
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By: Sheryl on 9/27/2009 4:43PM
Banks will take more risks with a person, because they are owned by a corporation. Credit Unions are owned by its members and they rely heavily on good credit for loan approvals, but they will have a better interest rate on that loan.
Credit Unions are more 'personable', I worked for a credit union that was geared toward military (active, retired, reserve and DoD Civilians) there is a 'common bond' when it comes to credit unions, so when discrepancies arise, we were able to understand the background, by knowing the person.
I started working there in 1995, and left in 1998 to work for a bank. However, 14 yrs later, my accounts are still with the credit union.
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