If the 2008 global banking crisis and its aftermath had not done enough to damage the reputation of Britain’s five main banks, the series of epic failures last week has probably secured banking’s position as the most frowned upon industry in Britain.
The most recent casualty is Barclays’ Bob Diamond, who announced his resignation on Tuesday morning. But that might not be enough for customers, who have been voicing their rage by looking for alternative banking options.
The Co-operative bank – the UK’s largest bank with a comprehensive ethical plan – saw a 25 per cent increase in online applications in one week alone. Nationwide building society has also reported a significant increase in visits to its website, as has one credit union – London Mutual – which has had 20 per cent more hits.
After the Libor-fixing charges, people don’t know if they’ve paid the right amount for mortgages, pensions, student loan. There has been a tangible change in that people are relating the personal to the macro-level economy. Louis Brooke, Move Your Money
The campaign group Move Your Money, which has also seen a 15-fold increase in online hits last week, says there has been a marked change in the reasons people are switching. The computer glitch at the RBS Group preventing customers accessing money was one thing, as was acknowledgement of misselling to small businesses. But the revelation that Barclays had attempted to fix the inter-bank lending rate, which could have impacted mortgages, pensions, student loans and savings, has caused the most outrage, says spokesman Louis Brooke.
“Before people were citing ethical consumerism, environment or social practice,” he told Channel 4 News. “Now it’s a more mainstream appeal. After the Libor-fixing charges [aimed at Barclays], people don’t know if they’ve paid the right amount for mortgages, pensions, student loan. There has been a tangible change in that people are relating the personal to the macro-level economy.”
Read more: Lloyds tops list as bank complaints rise
What are the alternatives?
Even if customers want to change, such is the dominance of the main high street banks that alternatives can be hard to find. Barclays, HSBC, Lloyds and RBS currently own 85 per cent of all bank branches, and around 90 per cent of all accounts.
In fact UK consumers are more likely to get divorced that move to another bank – a fitting tribute to the strong pull of 21st century British apathy. But whether you are a saver or a spender, with a mortgage or a sky-high student loan, most ethical lenders can now offer a range of comparable products.
Every lender and company has its own particular ethos and priority – be it investments in sustatinable products, or local businesses – and research into your chosen lender is unavoidable for the discerning consumer. Which? has a handy guide to help choose which type of lender and account will suit you best, whether high street or local. The Ethical Consumer also has a comprehensive guide to the current accounts available from all UK banks, building societies and credit unions, all of which are scored according to various policies, from environmental to political so you can choose which is more important.
Credit unions are a tried and tested alternative to mainstream banks, and the Find Your Credit Union website will help you hunt down your local branch. For savings, Move Your Money has put together what it says is the first list of socially responsible cash ISAs, which allows users to rank ISAs by interest rates, provider type and minimum deposit.
Why I have swapped to an ethical bank:
Dolly: “I am utterly disgusted and livid at how they have behaved…Moving to a more ethical bank (although I am aware that the Co-op is not lily white) is the only thing I feel able to do as well as continue to lobby for the banks to be regulated.”
Cyril: “I dislike the lack of transparency from the major backs in admitting failures or demonstrating a commitment to fairer banking for homeowners. I believe mutual organisations could be a better basis for stability.”
Competitive rates vs ethical principles?
A warm, fuzzy, feel-good glow will not be enough to drive most people to swap lenders – and is probably ill-advised by finance experts. But ethical banks do offer competitive rates for most day-to-day services. The banks which score highest on the ethical score board – First Direct, Smile, The One Account, Co-operative Bank and Nationwide – are also highly rated in the list of recommended providers compiled by Which?. Research from the consumer watchdog also found that building societies and credit unions are generally more customer focused compared to banks and have a better customer satisfaction rating.
Because building societies, such as Nationwide, are owned by shareholders. they usually run on lower costs, so can often offer cheaper mortgages and better interest rates. Regulations stipulate that at least 75 per cent of a building society’s assets must be held in residential property mortgages meaning there is also less risk involved.
The big banks are exposed to Greek and other European debt. The more ethical banks and building societies which have to keep back a big percentage of capital – that’s now seen as the safe option. Tim Hunt, Ethical Consumer
As well as being owned by customers and investing in local communities, credit unions also offer very competitive rates, and those on a lower income are usually offered better loans and rates at credit unions than high street banks. In fact, a feasibility study by the DWP published last month found that credit unions offer the most competitive interest rates on personal loans of up to about £2,000 in the UK market.
However it also warned that the low rates of interest were unsustainable if the sector is to remain financially viable. But the sector hopes that legislation brought in this January, which has allowed credit unions to exand the services they offer, may lead to an expansion.
But the main advantage ethical lenders have over high street banks is the “safety first principle”, says Tim Hunt, researcher at Ethical Consumer magazine: “The big banks are exposed to Greek and other European debt. The more ethical banks and building societies which have to keep back a big percentage of capital – that’s now seen as the safe option.”
The myths of bank swapping busted
The perceived hassle involved in deviating from the familiar is one of the main reasons for consumers’ reluctance to change. But financial advisers and consumer champions advise regularly shopping around for the most competitve rates anyway, even if your motivation is not ethically driven. Here Channel 4 News explores the truth behind the myths of bank swapping.
1) You can’t change banks if you’re overdrawn
In fact the opposite is more likely. Banks benefit from overdrawn customers, as they can charge you interest, so they will welcome you and your overdrawn account with open arms.
2) Hassle
In the digital age, changing banks is not nearly as difficult as it once was and customers are entitled to complain if they incur problems. In a Which? survey, 74 per cent of people who had switched accounts said the process was easy, with 32 per cent claiming a “very easy” experience.
3) It will take too long
Under EU common principles, your new account should be up and running within 10 working days from when your application is approved. It can take slightly longer, but until the final switch is made, you should be able to use your old account.
4) Standing orders and direct debit payments won’t be made
This is what puts most people off from moving their money, but after you fill in one form, your new bank sorts out the rest. It will request details of your old account, send you a list of your current direct debits and standing orders, and you simply tell them which ones you’d like to transfer. Just make sure your switch date is straight after the date your largest payment/s leave your account, and keep an eye on your balance.
5) Moving will cost money because of charges
If you incur charges because of a payment delay or mistake, the bank responsible – whether new or old – should cancel it immediately and you’re within your rights to contact the Financial Ombudsman if not. Which? advises keeping some money in both accounts during the switchover process to make sure you can always access money should something go wrong.
FAQs
Here's our list of the most ethical banks out there.
- Aspiration. With Aspiration, you know where your money's going and where it isn't. ...
- Amalgamated Bank. If you're pro-union and pro-labor, then you'll want to check out Amalgamated Bank. ...
- Ando. ...
- Spring Bank. ...
- Sunrise Bank. ...
- Ally Bank. ...
- Beneficial State Bank. ...
- OneUnited Bank.
If you're earning next to nothing on your savings, it may be time to switch banks (or at least move your savings to a new account). Traditional brick-and-mortar banks typically offer between 0.01% and 0.09% interest on savings. That's nothing, and there are plenty of other financial institutions offering better rates.
Which is the best ethical bank? ›
Top 6 ethical current accounts in 2022
- Triodos Bank.
- Nationwide.
- Cumberland Building Society.
- Engage.
- Monzo.
- Starling Bank.
2022 list of sustainable banks and credit unions
- Alamerica Bank (HQ: Alabama) | Impact: Fossil fuel-free | See profile | Website.
- MariSol Federal Credit Union (HQ: Arizona) | Impact: Fossil fuel-free | See profile | Website.
- Southern Bancorp (HQ: Arkansas) | Impact: B-Corp, GABV | See profile | Website | Get started now.
Goldman Sachs and JPMorgan Chase both scored poorly due to their records on the environment, human rights and paying tax, according to a new study by Ethical Consumer magazine.
What bank do millionaires use in USA? ›
Bank of America, Citibank, Union Bank, and HSBC, among others, have created accounts that come with special perquisites for the ultrarich, such as personal bankers, waived fees, and the option of placing trades. The ultrarich are considered to be those with more than $30 million in assets.
Why do people rarely switch bank accounts? ›
People are reluctant to switch current accounts because they're worried something will go wrong – such as their direct debits not being transferred properly or their credit rating getting hurt for example. And according to Consumer Focus, people have a reason to be worried.
Does it hurt your credit score to switch banks? ›
Most of the time, changing banks won't affect your credit score. Which is a good thing, because during your banking life, you might consider a switch if you're looking for a better rate on savings or want to pay fewer fees. The facts are, opening new accounts generally doesn't trigger a hard check of your credit.
Is there a downside to switching banks? ›
you will lose the benefits of the relationship you have with your current bank. you may need to assess the possible impact of switching on other arrangements you might have with the bank eg loans or credit cards.
What is the best bank for minorities? ›
Here are the best black-owned banks for you can check out today.
- Carver Federal Savings Bank.
- Citizens Trust Bank.
- Citizens Savings Bank and Trust.
- First Independence Bank.
- Liberty Bank.
- Carver State Bank.
- City First Bank.
- Commonwealth National Bank.
Among the observed banks, JPMorgan Chase had the most diverse workforce, with 54 percent of the employees who self-identified were racial minorities. JPMorgan Chase was followed by Citigroup, where the share of people of color was approximately 51 percent.
Which is the most eco friendly bank? ›
The world's most sustainable bank is Santander
This distinction recognises our commitment to customers, shareholders, investors, employees and communities in every country where we operate.
Why you shouldn't invest through your bank? ›
Bank stocks can be excellent long-term investment opportunities, but they aren't right for all investors. Bank stocks are near the middle of the risk spectrum. They can be recession-prone and are sensitive to interest rate fluctuations, just to name two major risk factors.
Where should invest my money instead of banks? ›
- Higher-Yield Money Market Accounts.
- Certificates of Deposit.
- Credit Unions and Online Banks.
- High-Yield Checking Accounts.
- Peer-to-Peer (P2P) Lending Services.
2019 list of failed banks
| Failed banks | Date closed | Estimated cost to DIF ($ millions) |
|---|
| City National Bank of New Jersey, Newark | 11/1/2019 | 2.5 |
| Resolute Bank, Maumee, Ohio | 10/25/2019 | 2.2 |
| Louisa Community Bank, Louisa, Ky. | 10/25/2019 | 4.5 |
| The Enloe State Bank, Cooper, Texas | 05/31/2019 | 27 |
On the whole, Bank of America and Chase charge similar fees for their accounts. Bank of America has a higher monthly fee for its savings account. However, most its checking accounts have much lower monthly fees. This is due to Chase's many checking accounts increasing in rewards levels, making the fees more expensive.
Does Chase Bank support LGBT? ›
JPMorgan Chase has long been a supporter of equality in all forms, including for the LGBTQ+ community.
Is Wells Fargo ethical? ›
By the numbers: Wells Fargo's "ethics" score of 38.9 in 2017 was by far the lowest in the history of the poll. (Wells Fargo and the Trump Organization are the only companies to ever score under 50.) This year, it has recovered to 62 — a big jump, even if it's still in the bottom five.
What bank is Elon Musk with? ›
Morgan Stanley took the lead and organized a syndicate of banks—including Bank of America and Barclays—that committed to lending Musk $13 billion. The whole thing took less than a week.
Where do the ultra rich keep their money? ›
Private equity and hedge funds sit adjacent to securities and trading markets. While they aren't the same thing, these two types of investment tools are popular among billionaires. They appeal to people of high net worth who can afford large investments and higher risk.
Jesse Cramer, founder of The Best Interest and relationship manager at Cobblestone Capital Advisors, believes less than $1,000 is ideal. “It depends person to person, but an amount less than $1,000 is almost always preferred.
Are checking accounts becoming obsolete? ›
However, despite their gradual decline in use, checks haven't become completely extinct. We still keep our money in checking accounts, we still balance our checkbooks, and new banking technologies (mobile check imaging is one example) are being introduced to improve the process of paying by check.
Does it hurt to have too many bank accounts? ›
If you happen to have many bank accounts, you might worry if they will have any negative effect on your credit score. Quick answer: Credit scores are not affected by the number of bank accounts in your name.
Is there a downside to too many bank accounts? ›
Having multiple checking accounts could also mean more maintenance — and more fees — from the bank if you fall below the minimum balance requirements or inactivity thresholds. Be sure to stay on top of your finances to avoid paying any unnecessary fees or losing out on accruing interest.
Is switching banks worth it? ›
Switching bank accounts can give you access to introductory offers such as lower interest rates or sign-up bonuses. Banks regularly offer incentives to win customers. If all you have to do is switch to get a cash bonus or better terms, it may be worth making the move.
How many bank accounts should I have? ›
Some experts suggest you should have four bank accounts -- two checking and two savings. You'll use one checking account to pay bills and the other for spending money. One savings account will be dedicated to your emergency fund and the other to miscellaneous goals.
Should you close unused bank accounts? ›
Keeping a healthy credit report
If you have an unused bank account gathering dust and want to close it, it certainly won't hurt. In fact, if you have an account with an overdraft you don't use, by closing it and reducing your overall credit limit, it could actually work in your favour.
What is a good alternative to banks? ›
The Best Alternatives to Traditional Banks
- Credit Unions.
- Online Banks.
- Neobanks.
- Cash Management Accounts.
- Community Banks.
- Payment Services.
- Prepaid Debit Cards.
How to Switch Banks
- Pick the bank you want to switch to. ...
- Make a list of all your automatic bill payments and direct deposits from your current bank. ...
- Open your new bank account. ...
- Update your automatic payments. ...
- Close your old bank account.
Interestingly, the idea of changing banks is pretty common among consumers — CivicScience polling shows that nearly one-quarter of U.S. adults are at least 'somewhat likely' to switch banks in the next three months (22%), with 6% making up those 'very likely' to switch.
Here are some banks and credit unions that don't require you to have an SSN to open an account: Bank of America. Chase. Wells Fargo.
Do blacks get higher interest rates? ›
For many Black homeowners, interest rates are already often higher than their white counterparts regardless of income, according to a 2021 Harvard University study.
Is Citizens bank still black-owned? ›
Founded in 1921 by five black businessmen, today Citizens Trust Bank is a federally certified CDFI and one of the largest African American owned financial institutions in the nation with assets of more than $388 million.
What is the number 1 bank in US? ›
JPMorgan Chase is the top largest bank in the US, with a balance sheet total of $3.31 trillion.
What are the Tier 3 banks? ›
Tier 3 capital is capital banks hold to support market risk in their trading activities. Unsecured, subordinated debt makes up tier 3 capital and is of lower quality than tier 1 and tier 2 capital.
Which is the safest bank in the world? ›
KfW in 2022 again remains the "world's safest bank". For the fourteenth time in a row, the US finance magazine Global Finance declared KfW the “World's Safest Bank”. KfW once again confirmed its leading position among the 500 largest banks worldwide.
What bank has the highest customer satisfaction? ›
Capital One ranks highest for a third consecutive year with an overall satisfaction score of 694. Chase (678) ranks second and TD Bank (663) ranks third.
How ethical is U.S. Bank? ›
16, 2022-- For the eighth consecutive year, U.S. Bank has been named one of the World's Most Ethical Companies by the Ethisphere Institute , a global leader in defining and advancing the standards of ethical business practices.
Is Chase bank good for the environment? ›
We aim to facilitate more than $2.5 trillion to address climate change and contribute to sustainable development, including $1 trillion for green initiatives over 10 years – from 2021 through the end of 2030.
What are the most socially responsible banks? ›
Sunrise Banks is a Minneapolis-based financial institution that claims to be “The World's Most Socially Responsible Bank.” Sunrise's 2021 impact report highlights its alternative mortgage program for borrowers who wouldn't qualify for a traditional mortgage; the $135 million in paycheck protection program (PPP) loans ...
In fact, J.D. Power's 2021 Banking Mobile App Satisfaction Study ranked Bank of America highest, with a score of 871.
Are credit unions better than banks? ›
Why Choose a Credit Union? Lower interest rates on loans and credit cards; higher rates of return on CDs and savings accounts. Since credit unions are non-profits and have lower overhead costs than banks, we are able to pass on cost savings to consumers through competitively priced loan and deposit products.
Is Wells Fargo better than Bank of America? ›
Both banks cover a majority of states, though Wells Fargo has the edge over Bank of America when it comes to branch count. Both have multiple ways to contact customer service. Unless you need 24/7 access to customer service like Wells Fargo offers, the two banks are roughly on par with each other.
Which banks have the most complaints? ›
The banks with the most and least complaints
| Rank | Financial Institution | Number of Complaints |
|---|
| 1 | TCF Financial (TCF National Bank) | 246 |
| 2 | SunTrust Banks | 1,159 |
| 3 | Citizens Financial Group | 782 |
| 4 | Fifth Third Bancorp | 698 |
6 more rowsJan 20, 2018
The Worst-Rated Banks
| Name | 1-Star Reviews Nationwide | |
|---|
| Bank of America | 2,256 | Assessment |
| Credit One Bank | 2,168 | Assessment |
| Wells Fargo | 2,019 | Assessment |
| Chase Bank | 1,627 | Assessment |
6 more rowsWe Do the Right Thing through five principles: Open; Teamwork; Respect for Each Other; Respect for Our Customers; and Integrity. Our Code. Our Values. At Capital One, we share a proud commitment to upholding the highest standards of professional ethics.
