The vast majority of us have a bank account.
For most people, it’s a financial product you picked on a rainy day years ago as part of some ‘life admin’ or have had since childhood.
And despite how easy it is now with the Government-backed Current Account Switching Service, it’s actually not that common for us to switch bank.
According to research, a fifth of consumers will stay with their bank for over 20 years and nearly 40% of us use the same banks our parents chose for us as children.
When looking at which bank to choose, we might factor in customer service, interest rates, convenience, promotional offers or a host of other factors.
But what about considering where your money is lent and the way that the bank behaves?
Simply put, many banks are not taking enough responsibility for the things they finance that negatively impact people and the planet.
For example, since the Paris Climate Agreement in 2015, the world’s largest banks have pumped $3.8trillion of finance into fossil fuels.
So while many of us are being more conscious of what we consume, the food we eat, or the energy we use, too few of us recognise the impact of switching our bank.
It turns out the value of an interest rate or cash bonus to open an account may mask that it is being paid for by financing fossil fuels, deforestation, arms or tobacco companies that undermine the fair and sustainable future that we are all hoping for.
Banks should be using your money in your long-term interests, not undermining your future!
Meanwhile, there is also the question of how banks operate, for example in offering current accounts for ‘free’.
The business model to offer these so-called free accounts has been based on hidden fees or disproportionate charges, letting some customers fall into unarranged overdrafts that could sometimes charge 10 times the rates of payday loans. This practice has now been regulated because it hit the most vulnerable in society, but the fees are still not fully transparent or fair.
You might think your account is free but pay much more than you realise, or worse still be creating greater poverty and social divides.
Forward-thinking banks will drive the sector towards a fair, transparent and sustainable way of working.
Isn’t it time all banks considered their social purpose and not simply maximising profits for shareholders and bankers’ bonuses?
There are several websites out there that rank the most ethical bank accounts.
The leading and most thorough analysis is done by Ethical Consumer, but other comparison sites will start to include these factors soon. If the climate emergency is your main concern, take a look at bank.green or switchit.money.
The other important thing to keep in mind is how to avoid ‘greenwashing’ from banks. Where they use green buzzwords to attract new customers, without changing their practices.
Rather than planting a tree, running a charity initiative, or offering some carbon credits for every account opened, by far the most important factor is the investment and lending focus of the bank.
And if you don’t see that information about where the bank lends and invests your money on their website, then now might be the time to ask them.
It might take a little more life admin but if you don’t get the transparent answers you are looking for, you can make a strong statement by switching your account.
Perhaps then you can be most proud of the bank card in your wallet.
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