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Have you ever thought about where you bank? Like, have you seriously thought about it? A quick google search on what to look for in a bank account will result in thousands of articles on the subject.
Why did you choose your current bank? Was it because of competitive interest rates? Low or no fees? Free ATM access? Because you needed a bank and it was the closest one to your house? People choose to put their money in banks for various reasons.
We have several bank accounts. As a personal finance writer, especially within the banking niche, I love trying out new banks. As banking catches up with technology, I find pleasure in testing modern banking features.
I’ve long considered myself an ally to the black community. The reality, though, is it was just a lot of lip service. Feeling bad or being empathetic towards a group of people is not the same as being an ally. It’s not enough to be against racism. It never has been enough and never will be.
We’ve been on a journey to do better.
We’re educating ourselves on what it means to be an ally. We’re taking action and using our voice and platform to support and fight for the black community.
That’s why we’re moving our money to a black-owned bank.
The process to switch banks isn’t too complicated:
- You find a bank you like and apply for an account.
- The bank checks your identity and other personal information
- If approved, you link an account at another bank to fund your new account
The process can take a few days or a few weeks, depending on where you choose to bank.
For total transparency, we’re only moving over our emergency fund to a black-owned bank. Keep in mind, though, that this is probably our most-funded bank account. We have accounts at other financial institutions, including:
- A basic checking account
- Several smaller savings accounts we use as sinking funds
- A business checking account
We keep our emergency fund in a high-yield savings account (HYSA). Financial experts and bloggers love promoting HYSAs. We love them too. Bloggers love them because they can make affiliate income promoting them. We’ve done that too.
Want to know a secret that personal finance websites don’t want you to know?
Despite earning a higher interest rate, you won’t earn that much money in an HYSA. Now, if you held hundreds of thousands of dollars in a high-yield savings account, yes, you could earn considerable money.
Do you have that kind of cash lying around to stick in a savings account? Yeah, we don’t either.
If we did have that kind of cash, we still wouldn’t put it in a savings account. We only keep enough in our emergency fund to cover expenses for about six months. We use sinking funds to save for travel and other specific savings goals. We invest the rest of our savings in retirement and brokerage accounts, where it earns a much higher return.
We looked at several black-owned banks before deciding on Capway for our new account. While we won’t earn interest on the account, it’s a modern bank with mobile capabilities and other features we love. We also love the mission of the bank. As Capway Founder and CEO Sheena Allen puts it:
“Starting a bank account is just the starting point of the financial race. Achieving financial health and generational wealth is a marathon, not a sprint. At CapWay, our purpose is to make sure you have everything you need to complete the race.”
Choosing an account that doesn’t earn interest might seem dumb. We are simply choosing to put our money to work in a better way.
Why we made the choice to bank black
There’s no way for me to cover the vast and complex history of black Americans in relation to banks and other financial institutions. To be honest, this is a much bigger issue in our country’s history than just banking. We’ve included several resources at the bottom of this post so you can dive deeper into America’s sordid history of racism, discrimination, and the #bankblack movement.
With that said, here’s why we’ve moved our emergency fund to a black-owned bank:
- Undercapitalization: Black-owned banks don’t carry the same amount of assets as most white-owned banks. Why does that matter? More assets mean you’re able to do more, provide more, and have leverage in the industry.
- Lending: Many black people have experienced issues qualifying for mortgages, personal loans, and other types of financing. Only 1% of loans go to black borrowers at major banks, while black banks give over 50% of their loans to black borrowers. Black-owned banks offer an easier path to lending, opening the door to homeownership and closing the racial wealth gap.
- Education: Black-owned banks typically offer financial education services for the black community. It’s tough to take action when you’re unsure what to do. We support true financial education initiatives. Financial education through big banks is often designed to keep you as a customer, not help you grow as a money manager. Black-owned banks provide tools to help people get on their feet and eventually thrive.
- More banks in black communities: With more funding, black-owned banks can open more branches, so people don’t have to resort to alternatives like check-cashing stores and predatory payday lenders.
- Trust: Nearly half of black households in America are unbanked or underbanked. Some of this is due to limited access or exclusionary policies. There’s also an issue of trust. Big banks have done a lousy job building trust with customers, especially within the black community. Black-owned banks provide a safe space for black people to manage their finances.
- Using our money for good: Honestly, what good was our money doing at a big bank, other than generating the bank revenue and providing higher incomes for bank CEOs. If we’re going to put our money in a bank, we love that it will help other people.
These are just some reasons why we switched over to a black-owned bank.
Are we naive enough to think that moving our cash to a black-owned bank is going to make a massive difference in this world? Probably…but we don’t care. We’ve put our money where our mouth is, and we couldn’t be happier.
And this is just the start.
Black-owned banks you should check out
There are plenty of notable black-owned banks and credit unions across the country. Some of the banks we considered include:
CapWay: CapWay is where we ended up moving our money. The bank is 100% committed to providing financial education and modern banking conveniences to all people. A financial tech company, Capway’s banking services are provided by Metropolitan Commercial Bank.
OneUnited Bank: OneUnited is the largest black-owned bank in America. They offer several personal and business banking products and services, including online banking.
Greenwood: Greenwood is a digital-only financial company geared towards black and Latino customers. Its banking services are provided by Coastal Community Bank.
Use the following resources to find black-owned banks and credit unions around the country.
Other resources to check out
We’ve provided the following links for further reading on the topic of black-owned banks and their importance and other ways to be an ally or activist.
Books to read
The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran
From Burning to Blueprint: Rebuilding Black Wall Street After a Century of Silence by Kevin Matthews II
Wallet Activism by Tanja Hester
A Great Moral and Social Force: A History of Black Banks by Tim Todd (Free digital book via Federal Reserve Bank of Kansas City)
How to choose a black-owned bank
We’ve chosen to bank black and think you should too. When choosing a bank, make sure it’s FDIC insured (or NCUA insured for credit unions) and provides the services and products you need in a bank. Familiarize yourself with any fees charged by the bank before opening a new bank account. Do yourself a favor and make your money count for something more. Choose to bank black today.
How did you pick your bank? Let us know in the comments below.
Kevin Payne is the co-founder and budgeting and family travel enthusiast behind FamilyMoneyAdventure.com.
Kevin is a freelance writer specializing in personal finance and travel. He is a regular contributor to Forbes Advisor, Credit Karma, Fox Business, Credible, CreditCards.com, and Student Loan Planner.