Banking Myths
There are good reasons Indigenous folks are skeptical of banks. But avoiding them altogether costs us a lot of money. Unbanked people spend an average of $2,412 per year on interest and fees for financial services, while banked people spend only about $100.
So why not just get banked? To begin to answer that question, let's look at 3 banking myths that show not all accounts are created equal:
Myth 1: I can’t get a new bank account because I left a previous account in bad standing.
Traditional banks review a database called ChexSystems to weed out applicants with unpaid balances or involuntary account closures in their background. Consumers have to provide notarized instructions and a power of attorney just to get a copy of their own report! This can make it very difficult to find a new banking provider.
Totem understands that sometimes, you need a fresh start. We don’t take previous account history into consideration, and we’re able to do that because we’ve built safe, simple products that don’t let folks overdraw their accounts or get caught in a cycle of fees.
Myth 2: It’s faster to use a check-casher than it is to wait on my paycheck to clear the bank.
A lot of folks use check-cashing services because they’re nearby, available after banking hours, and provide immediate access to your cash. But check cashing options are expensive — a customer typically pays between 2% - 10% of the value of every check to the cashing business.
You don’t have to choose between speed and cost. Today, customers of modern digital banks like Totem can get their paychecks up to 2 days early by enrolling in direct deposit.* With just a few clicks, Totem members can log into their payroll provider, indicate what portion of their check they want to be deposited, and complete the entire process without any paperwork.
Myth 3: So-called “free” accounts are never free.
Accounts that are advertised as free are often just waiving their existing fees — but only once certain requirements are met.
For example, some accounts require you to make a certain number of transactions each month (which can encourage overspending.) Or they come with fine print (like a $30 fee if you close the account too soon.) Many “free” accounts also require you to keep a minimum balance in the account (the average in 2022 was $539, creating a big problem for people who live paycheck to paycheck.)
Luckily, mission-driven fintechs with lower overhead than traditional banks are helping to reverse this trend. Digital banks like Totem provide transparent accounts with no monthly fees, no balance minimums, and no strings attached.
In the new paradigm for banking, everyone can find a place they belong.