Your money is speaking for you
Wondering how to start investing? If you have a bank account, you are already an investor. And an impact investor at that. Why? You are impact banking – your deposits are used by your bank to lend to whomever they want.
Turns out you may not like what your money is doing. In fact, your bank might be investing your money against you. More and more, people are asking how they can make a positive impact and get better returns on their investment.
Every dollar we spend has an impact of sorts. But have you ever asked yourself:
- What’s the impact of the money we save in our bank accounts?
- How about the interest we pay on credit cards?
- Or the plethora of fees we are charged for a bank’s privilege to use our money?
Where does your money sleep at night?
Most of us understand that our bank is not storing our money in some vault, waiting for us to withdraw whenever we choose. Banks loan out our deposits and earn interest off of those loans. And those loans may be financing all kinds of things. What we don’t often realize is the extent to which our money is being used by the bank…for whatever they want.
If you are banking, you are impact banking.
You may be blindly supporting something that you find reprehensible…that may actually be working against you. The fees that you pay to maintain your bank account, the interest you pay on your credit cards, every cent you contribute to your financial institution, in any way, is going somewhere.
What is bad impact banking?
Many people began thinking about where their money sleeps at night in 2016 when social pressure forced the disclosure of Wells Fargo and other banks’ funding of the Dakota Access Pipeline. This discovery led to the city of Seattle completely cutting ties with Wells Fargo. (Wells Fargo is also one of the biggest funders of private prisons in the U.S.)
But Wells Fargo isn’t the only bank invested in the financially risky and environmentally destructive industries of the fossil fuel sector. In fact, according to the Fossil Fuel Finance Report Card 2017, Well’s Fargo is only ranked the 20th worst in the world.
In 7th place, we have Bank of America, with an overall financial contribution of $13.376 billion dollars funneled into the most climate changing, environmentally destructive and capital-intensive fossil fuel enterprises. $13.376 billion dollars of the people’s money. If you have a Bank of America personal checking account, your $12 monthly maintenance fee is a part of that $13.376 billion.
What is good impact banking?
Right now good banks are competing for your business. What are good banks? Good banks are those which are both customer-centric while financing values-driven enterprises for the good of the community and the planet. What does this mean? They want to offer you a better deal and show you that they are doing good things with your money.
Good banks want to offer you a better deal AND show you that they are doing good things with your money.
Let’s start by comparing what your money is doing in the simple interest-earning checking accounts offered by two big banks.
If you have a Wells Fargo Preferred Checking Account and keep a balance of $500, you will earn 0.01%. But you will also be subject to a $15 Monthly Service Fee unless you retain a balance of $10,000, or have a mortgage with them, or set up direct deposit of at least $1,000 per month. In addition, every time you use a non-Wells Fargo ATM, you will be charged $2.50. And if you travel outside of the country, that increases to $5.
At Bank of America, you will also earn 0.01%, but that $25 Monthly Maintenance fee will eat it up unless you keep a balance of $10,000. Like Wells Fargo, Bank of America will charge you $2.50 when you use a non-brand ATM.
How Good Banks Do Better (for your wallet and our planet)
1. Amalgamated Bank
If you open a Convenience+Checking interest-earning account at Amalgamated Bank, you will earn 0.06% for balances less than $500, 0.10% up to $1,000, and 0.15% thereafter. Your non-brand ATM fee will be $1.50, but they’ll reimburse you for this twice a month. And your $10 monthly maintenance fee can be waived with direct deposit.
In addition, if you link your debit card to their Donate the Change program, the bank will donate 10 cents of their own money every time you use your debit card on a purchase of $10 or more. (They are currently donating to Solutions Project, which is leading an energy revolution towards renewable energy powered by the wind, water, and sun.)
Amalgamated Bank, is a B Corp and a member of the Global Alliance for Banking on Values, as well as a member of RE100, a collaborative, global initiative of corporate leaders committed to 100% renewable energy.
“We have a growing environmental crisis unfolding, and Amalgamated Bank will no longer sit on the sideline.” – Keith Mestrich, President & CEO, Amalgamated Bank
2. Beneficial State Bank
Beneficial State Bank is also B Corp and a member of GABV. Beneficial State Bank is a triple-bottom-line financial institution that believes money should serve people, not the other way around. (“Triple-bottom-line” means they look at people, planet, and profit).
Beneficial Bank’s simple Interest Checking rates vary per state. There is no minimum monthly balance and the bank will waive their $8 monthly service fee if you participate in direct deposit. You can use any ATM you want free of charge. (And if you’re a student, they’ll even reimburse up to $10 of ATM charges imposed by other financial institutions.)
“The way we look at it is banking is actually the original and most powerful form of crowdfunding. All banks have impact good or bad.” – Kat Taylor, Co-Founder and Co-CEO Beneficial State Bank.
Although it may be difficult to wrap your mind around, your consumer debt is also a type of investment. And the interest you pay to financial institutions is most definitely having an impact somewhere. Good banks offer a variety of banking products that don’t put corporate polluters before the people and our planet. So if you are paying interest on credit card debt, you can at least choose what is done with it.
If you have a credit card through one of the big banks that are financing enterprises you are opposed to, the Sierra Club credit card with Beneficial State Bank is an alternative that assures your money won’t support environmentally destructive projects. Instead, it’s used to support clean energy, sustainable agriculture, affordable housing, and education.
Revenue from the card also supports the Sierra Club’s work while providing you with both rewards and competitive rates. If you transfer your balance, you’ll receive 12 months of %0 APR and no annual fee.
Of course, both Amalgamated and Beneficial Bank offer online banking and mobile Apps. But our favorite for online personal banking accounts is Aspiration. A quick look below and you can easily see why.
Aspiration is divested from oil and gas and they put your deposits in places you can feel good about.
Here’s a quick overview of the Aspiration Account:
- Pays you up to 2.00% APY interest – at least 100X more than traditional banks offer.
- No minimum deposit – you can open an account with $10.
- No minimum balance – no minimum balance required, ever.
- No service fees – their Pay What Is Fair philosophy allows you to pick your fee, even if it’s zero.
- No ATM fees – Aspiration reimburses ATM fees worldwide.
- Deposits are FDIC insured
- Certified B Corp
- Industry level encryption
- An app that lets you track whether you’re actually voting with your dollars. If you use their debit card, a People and Planet score is assigned to every merchant at which you shopped.
- They also commit to donating ten cents of every dollar to charities that help struggling Americans get off the ground (microloans.
“We wanted to build a financial firm around the idea that you could make money and make a difference at the same time.” – Andrei Cherny, Founder and CEO, Aspiration.
While Aspiration doesn’t offer business banking products at the moment, Amalgamated, Beneficial and New Resource Bank do. All of these banks are also B Corp certified and members of GABV, and are quite transparent about where your money sleeps at night.
“By putting deposits to work for good, we lend to organizations that benefit our communities and preserve our planet.” – New Resource Bank
For better or worse, your money is financing either socially desirable or socially destructive outcomes, good impact banking or bad impact banking. Today, the push by consumers to democratize data is forcing banks to reveal what they are doing with our money.
The Big Banks are Taking Notice
As our demands for socially responsible alternatives and transparency increase, so do our options.
The big banks are starting to pay attention. U.S. Bank (the best of the not-so-bad big banks, if there is such a thing) won most ethical company award in 2016. They also recently announced their intent to stop pipeline project loans.
Your Money Is Powerful. Spend With Your Heart.
In the wake of this, we consumers are becoming empowered with more opportunities to both do good and do well. These opportunities translate into better deals and transparency. As more of these opportunities arise, Wellwallet is committed to bringing them to you.
It is our mission at Well Wallet to provide consumers with the knowledge needed to decide for yourself whether your money is being used in line with your values, and in favor of your financial health.
By choosing well, you can create prosperity on all levels, no matter how small, both out in the world, and with your personal finances. You are already an investor and your money is already making an impact. We owe it to ourselves to make sure that our money is working in our best interest. And we owe it to our communities to make sure our money is working in the best interests of the people and the planet. If you don’t know what your money is doing, it’s time you took a closer look, understand the type of impact banking you are engaged in, and make some changes.
*Based on a comparison of Aspiration’s up to 2.00% APY interest to the following checking account interest rates reported by Bankrate for 2019 Wells Fargo (0.01% APY), Chase Bank (0.01% APY) and Bank of America (0.01% APY).
Aspiration Partners, Inc. and its affiliates are committed to “All Extra Services Provided at Cost,” meaning that we’ll only charge you what it costs us to provide the extra service (such as a wire transfer), and not a penny more. Besides these at-cost service charges, the only account fee you pay is the fee you choose, even if it’s $0, which is why we call it Pay What Is Fair.
All ATM withdrawal fees will be waived for your Aspiration Summit Account. In addition, your account will automatically be reimbursed for all ATM fees charged by other institutions while using an Aspiration Debit Card linked to your account at any ATM displaying the Mastercard®, Interlink®, Cirrus®, or Maestro® logos. The reimbursement will be credited to the account two business days after the ATM fee is debited from the account. Please note, there is a foreign transaction fee of one percent that is not waived, which will be included in the amount charged to your account.
The Aspiration Summit Account provides customers with the ability to see Aspiration Impact Measurement (AIM) People and Planet scores on a range of merchants where they shop using the Aspiration Debit Card. These scores are determined using a proprietary algorithm that incorporates several measures of sustainability performance. For more information, please click here.
Deposits are insured by the FDIC up to $250,000 per depositor. For more information about FDIC insurance coverage, please visit the FDIC website.