Distrust in Financial Institutions

Woman showing distrust on laptop.

When it comes to putting trust in banks/credit unions with your money or financial plans, there may be a lot of hesitation– Who do I trust? How do I apply? What do I apply to? Am I making the right decision? As much as we would like to believe everyone has your best interest in mind, it isn’t a myth that some bank/credit union employees treat their customers as transactions, judge them for personal financial decisions, or oversell unneeded services. We want our banks and credit unions to actually care about our concerns, not just use or shame us.

There are roughly 7.1 million American households that go “unbanked” each year. Although this number is decreasing annually, it has been noted that the biggest disparities come from income inequality and systemic injustices, but it is definitely not limited to those specific socio-economic populations. Families continuously going unbanked has led to generational distrust in financial institutions. This distrust has been created by financial institutions over many years and continues to be an issue with some financial institutions today.

Additionally, a study from George Washington University showed that only a quarter of millennials have basic financial understanding. This, plus financial trauma in impoverished/minority communities creates uneducated and ill-managed financial decisions. In today’s age, especially with the unknowns of post-pandemic life, it is extremely important to have a reliable bank/credit union for any of your financial needs.

Important Terms to Understand

  • Material Safety
    • A person’s ability to access and sustain resources for everyday basic needs, such as, safe housing, food, clean water, and transportation (McKenzie, 2020).
    • These are needs, not wants.
  • Financial Trauma
    • This is the response to the systemic harming of a person’s wealth-building capabilities caused by financial institutions, environmental events, policies, actions, and cultural messages that reinforce instability with money, value, wealth, and worth (McKenzie, 2020).
    • Financial trauma blocks material safety.
  • Financial abuse
    • Usually an event, action, policy, or cultural circumstance that impairs a person’s financial stability (completely out of their control) (McKenzie, 2020).
    • Examples include redlining, discrimination within the housing market, and being turned down for a loan without further education on how to be approved in the future.
  • Economic Violence
    • Any harmful experience a person endures in order to maintain material safety. In an oppressive system, this is often experienced by vulnerable and marginalized communities so they can survive (McKenzie, 2020).
    • Examples of this would include dealing with workplace harassment because you need the job/money, or staying in an unsafe environment because of the affordability of living.
  • Financial Shaming
    • The psychological effect of shaming those in a specific socio-economic status who are economically harmed and financially abused (McKenzie, 2020).
    • This includes shaming a person because of their spending habits, telling a person that they need to work harder to make more money, and ignoring the barriers/trauma that have contributed to their financial hardship.

Common Experiences that Create Distrust

  1. Fees, Fees, and More Fees
    • There are many fees that come with having various accounts at different institutions. Some institutes find ways to add fees in discriminatory ways. In awful circumstances, there are even hidden fees that may not be announced before they are charged.
  2. Debt Resequencing
    • In unfortunate cases, a bank/credit union may cause a surge of debits to an account causing the balances to fall and creating overdraft fees.
  3. Feeling unheard
    • Instead of listening to you, a financial institute tries to push their products and services onto you. This can be a case of trying to oversell so they can cash out on your financial downfalls.
  4. Feeling unwanted or unimportant
    • If you aren’t treated with kindness and respect, especially when it comes to sensitive issues like financial decisions, it can feel like you are unimportant or your concerns are being discarded.
  5. Privacy Concerns
    • Some people can feel as if their money or personal information is at risk. Although there are laws against personal information sharing, that may not always mean you feel confident in sharing very personal details about your financial situation.

What to Look for in a Bank/Credit Union

  1. Education
    • A financial institution you can trust won’t just sell you products and services, especially ones you don’t need. 
    • They help you find features and services important to you.
    • Education for the institute employees is just as important as educating their customers.
    • All of your questions and concerns are addressed no matter how big or small.
  2. Honesty
    • Who is giving you the time?
    • Who is solving your problems without creating new ones?
    • They explain all fees, premiums, requirements, etc.
    • Nothing will be hidden from you.
  3. Care and Empathy
    • Who is treating you as a person and not a transaction?
    • A financial institution that cares will show you unconditional, judgment-free compassion.
    • They show you how you can improve credit scores, decrease debt, increase savings, etc.
    • They go beyond financial planning to care about your personal life and responsibility.

What Makes Marine Credit Union Different

Marine Credit Union diligently tries to earn customer trust with these guidelines above. We pride ourselves on providing help when others don’t. MCU is different because our employees are trained in Resilient and Trauma-informed courses. They go through extensive anti-bias training, empathy training and learn about motivational interviewing. We know that to tackle the issues of income inequality and systemic injustices, we need to have employees who understand how to talk to customers with financial trauma. “I have been a financial counselor for almost a decade and Marine Credit Union is a trail blazer when it comes to building trust and understanding their membership base,” said Majel Hein, MCU’s Senior Financial Literacy Counselor. “They are truly living up to their mission of taking members from a place of financial need to a life of ownership and giving back to their communities. This can ONLY happen when you address the root causes of financial stress and provide empathy from day one” (2021).

MCU also has many accessible services to help anyone in any financial situation. One of our unique services is called Get Credit. Get Credit helps people, well, get credit! This service is a simple way to build or rebuild credit while building up money at the same time. You can choose what amount you want to add to your account per month to pay, on-time. The monthly payments not only help your credit score grow but will also help your savings grow. After making 1 year of on-time payments, you will be eligible for a loan and have a higher credit score.

Another unique service is CoverIt. This service acts as a safety net to cover life’s unexpected ups and downs. When this service is added to your existing MCU checking account, you can receive unlimited access to a $50 grace zone that lets you breathe easily without the unwanted overdraft fees.

Additional Resources:

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