Banking options, an often-overlooked aspect of college life, are of utmost importance to 5C students. While many traditional banking options are available in the Claremont community, I believe a 5C credit union should be formed. A credit union—a member-driven, democratic, cooperative financial institution similar to a bank—would provide students and faculty with a non-profit banking institution emphasizing lower rates and customer service.
Credit unions are a superior option to traditional banks for college students. Credit unions operate under a not-for-profit model, while offering a similar set of services to traditional banking options. However, credit unions differ from traditional banks because members of the credit union are the owners, and board members and other high-ranking personnel are voted in democratically. Credit unions are often touted as a form of “ethical banking,” removed from for-profit banking institutions.
The conventional for-profit banking model has come into question after the recent recession. In particular, many liberal arts students have grown disillusioned with respect to the greed associated with for-profit banking.
All members have an equal vote and voice in credit union issues, regardless of the amount they deposit into the credit union. Because of this notion of equality and democracy, credit unions are theoretically more subservient to the needs of their users than traditional banks. A bank’s goal is to make profit; a credit union will only make enough profit to keep operations running. Additional profit is usually returned to customers in the form of interest.
A credit union would drastically help Claremont students. Rates for credit unions’ services are normally lower than their for-profit counterparts and savings accounts earn more interest. While many major banking corporations offer promotions, these promotions are later accounted for in their interest rates. Bounced checks and other such mistakes which typically carry monetary penalties at banks tend to carry a less hefty charge at credit unions and can often be refunded. In addition, credit unions have significantly better customer service due to their customer-driven policies.
Many college students come from a privileged subset of America, and many of us are fortunate enough not to be burdened by student loans. However, plenty of college students graduate with significant debt. Banks, although often indirectly, discriminate against indebted and lower-income members of society. Banks make significant profits from their deceptively named “courtesy” overdraft policies—money that is almost always from the unprivileged. A large portion of this money comes from college students. Credit unions, because they are not seeking profit, are much more lenient on most matters.
While a difficult process, the investment in a 5C credit union would have huge benefits for many 5C students. Lower interest rates, lower overdraft fees and a community-oriented environment would create a significantly better banking experience than the traditional banks currently available to Claremont students.
On a college campus where Monopoly-esque Claremont Cash can buy all necessities, it’s easy for us to lose sight of the realities of banking. It’s easy for us to become disengaged with our banking system, partly because we disapprove of it. Instead of ignoring our current for-profit banking system, we should consider creating a credit union. Such an institution would not only yield long-lasting benefits for 5C students and faculty, but would be more in line with our colleges’ values.