This week, the MagnifyMoney team has been in Greenville, South Carolina. In partnership with the Greenville Chapter of the Rainbow Push Coalition, we are holding a series of workshops and financial literacy seminars with community groups. We have also done the research on the local community banks and credit unions to help people make the best banking choices.
When I created MagnifyMoney with Brian, I had three simple goals:
- For people who are already financially literate, we want to have the easiest price comparison website with the best deals. You should never be able to find a higher savings account interest rate or lower credit card interest rate at any other website. And we can do that because we rank products based upon the value to the consumer, not the commission to MagnifyMoney (and we currently receive no commissions)
- For the people who don’t feel comfortable making financial decisions, we are designing actionable financial literacy courses and workshops. These are not theoretical classes, filled with equations and tax code. Instead, we help make it easy for you to have the confidence to compare, ditch, switch and save.
- For the banks, we have designed a transparency score that rewards the simplest products. And we have a blog that allows us to compliment those organizations that take good care of their customers. But, equally, we are not afraid to shame those organizations taking advantage of people or designing poor products.
To bring number two to life, we committed to spending at least 30 percent of our time out of our offices, and on the road. From classrooms at Brooklyn College to childcare centers in Chattanooga to churches in Greenville, the MagnifyMoney team provides hands-on financial help.
Our Trip so Far
Yesterday, we had a wonderful day with the Upstate Fatherhood Coalition. We hosted a few sessions during the day, and we received a ton of really good questions.
Some of the hottest topics:
- How to deal with a collections agency, especially for medical bills
- How to improve your credit score, especially if you are already 35 and don’t have any credit.
- How to avoid overdraft fees, which hit almost everyone in the room
- How to get out of payday / title loan traps
We had great conversations, and spent a lot of time talking about Internet-only banks (who have eliminated overdraft fees), and secured cards (which can be really useful for improving credit scores).
We also had the chance to meet with a brand new local credit union. Its goal is to help graduate people from payday loans to non-predatory loans. In order to get the loan (which can charge no more than 18% interest), the borrower has to complete a financial literacy program. Upon successful completion, he or she can refinance up to $5,000 of high interest loans. One woman in particular was moved from a 700% APR payday loan to 18%. And she is paying on time.
But, the best part of this is the mandatory savings element. When her interest rate was reduced at the new credit union, her payments became much lower. However, they don’t let her keep all of that. Instead, they take a portion of the monthly savings and put it into a savings account at the credit union, building the discipline to save.
The manager of the credit union is truly inspirational – and I’m pleased to see these types of efforts at the mico level. The big challenge: how can we scale organizations like this so that a real alternative exists to payday lenders.
Any time we travel, we spend a lot of time looking at the local banks. And this trip is no different. We have reviewed the Top 20 local banks.
Unfortunately, the pattern that we see on the national stage is similar here in Greenville. The average overdraft fee here is $33, similar to the big mega-banks. And, the interest rates paid on deposits are low. The average savings account interest rate is 0.11%.
The Internet-only banks continue to win on fees, interest rates and digital experience.
There is real value – especially for small businesses – to having a local bank. They understand your business and can take care of you when you are in difficulty. But for consumer accounts, the Internet-only accounts just keep winning. I hope to arrive in town one day and become completely surprised by a community bank, but I haven’t yet.
And the city
Greenville is a beautiful city, with an amazing restaurant culture. The MagnifyMoney team has been well fed by our friends in Greenville, and will miss the real Carolina sweet tea when we head back north.
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