4 Myths to Debunk About Banking

Your hard-earned money should always be kept in a safe and secure place. Some keep it to their trusted piggy bank or even under their mattress. But the best and the safest place to put it is none other than depositing in a bank or credit union.

As you set aside your savings to a bank, you are also responsible for making decisions for your money. Banking is not an easy task, and it requires sound decision-making through being well-informed of misconceptions it entails.

Below are four myths you should not fall trap into to have the best banking experience.

1.Your personal information is at risk when you use mobile or online banking

We all know that identity has been rampant these days. Every information we put out there has a risk of getting into the hands of thieves waiting to take advantage of your hard-earned money.

While it is true that identity theft is rampant, banks that offer mobile or online banking can guarantee that your information is safe and secured.

Banks and credit unions offer digital platforms for easier banking, but stricter security measures also come with it. They use secure encryption software or multi-factoring authentication to identify or verify your access. This requires the user to enter unique personal information or code before you access your account. Moreover, it also verifies if the bank user himself is doing each activity.

To further protect your personal information, it is advisable to change your unique password regularly. Also, come up with unique user IDs to secure your information every time you log in. Make sure that every time you access your online banking platform, you are not connected to public WIFIs in cafes or other public places to avoid getting hacked.

2.Big banks are better than smaller banks

Choosing big banks or local community banks or credit unions have several advantages. They can offer a wider range of services, including various payment options or online banking, which smaller banks or credit unions might not have the capability to offer.

But it does not mean that your money is safer and secured in big banks than their smaller counterparts.

Both big and small banks are under the federal law of giving protection to depositors for up to $250,000 per depositor.

Big banks may offer various customer service platforms too. However, it does not guarantee that customers always get excellent service. Credit unions and smaller banks are more likely to give a personalized approach to customer service because of their small clientele.

3.Debit cards are just the same in theft protection as with credit cards

Credit and debit cards work just the same, including theft protection. For credit cards, identity theft is under the Truth Lending Act. If your credit card is stolen, you have $50 liability for unauthorized charges.

On the other hand, debit cards are covered under the Electronic Funds Transfer Act, which offers less consumer protection.

The rule of thumb is reporting the theft or loss right away and not waiting for days before you inform your bank. You are not liable for anything if you report it immediately. However, if you wait for two business days, your liability goes up to $50 for unauthorized charges. Reporting after three days would mean your liability goes up to $500.

4.Credit unions do not have benefits compared to traditional banks

Big banks offer a wider range of banking services. Compared to smaller credit unions, both are typically the same. Deposits under credit unions are also protected by FDIC, just like in banks.

But there are certain factors credit unions are different from banks. Credit unions are member-owned, and they operate on a not-for-profit basis. Usually, people who open an account in credit unions base their decision on the proximity of where they work or live.

Credit unions are also known to offer fewer fees and better interest rates than traditional banks. Application for personal loans and other loans can also be easier with credit unions than other banks.

Banking in a trusted financial institution gives you confidence in proper money management. Knowing these four myths can equip you better to choose the best banking options for you and your financial goals.

Based on Materials from Smart Asset