Consumers vs. Investors: Banking Edition (Plus an Update on Wells Fargo)

The recent revelation that Wells Fargo (WFC -1.83%), the nation's third biggest bank by assets, systematically defrauded customers from 2011 to 2015 could leave people wondering how to choose a good bank. That's the topic of this week's edition of Industry Focus: Financials.

Tune in to hear The Motley Fool's Gaby Lapera and John Maxfield discuss the latest updates in the Wells Fargo case, as well as the things to look for (and avoid) when choosing a bank.

A full transcript follows the video.

This podcast was recorded on Sep. 15, 2016.

Gaby Lapera: This episode of Industry Focus is brought to you by Rocket Mortgage by Quicken Loans. Rocket Mortgage brings the mortgage process until the 21st century with a fast, easy, and completely online process. Check out Rocket Mortgage today at quickenloans.com/fool.

Hello, everyone! Welcome to Industry Focus, the podcast the dives into a different sector of the stock market every day. You're listening to the Financials edition, filmed today, on Thursday, September 15, 2016, but you're listening to this on September 19th, because I laugh in the face of production schedules. Actually, it's because we're on a pre-taping binge, because I'm leaving for Asia, and my topic for Monday was more evergreen. You guys get to hear about Wells Fargo again! My name is Gaby Lapera, and joining me on Skype is John Maxfield, The Motley Fool's top bank analyst. Hi, John! How's it going?

John Maxfield: It's going well, Gaby. But, do you know what you did right there? You violated the rule that we set up earlier.

Lapera: Oh no!

Maxfield: You can't mention your vacation, because it will cause too much envy.

Lapera: I thought that was limited to just China, I was hoping if I just said Asia in general --

Maxfield: Oh my gosh! Are you a lawyer? (laughs) 

Lapera: (laughs) Sometimes my boyfriend thinks I am, but I'm not. I promise not to mention the forbidden topic any more in front of you. Don't listen to any of the other podcasts from here on out until November. This week is a continuation of last week. Obviously, last week, we spent a long time talking about Wells Fargo and the mess they're in. We thought we'd give you a little update on Wells Fargo, and then we thought we'd answer a question that's been wandering around The Motley Fool's discussion boards. We've gotten a couple emails from members about how to pick a good bank if you're a consumer. Let's start with an update with what's going on with Wells Fargo, as of about an hour ago.

They said they're going to curb cross-selling. In case you don't remember, cross-selling is Wells Fargo's practice of offering customers products every time they come into the store. Say you going to deposit a check, they're like, "Oh, but do you need a home mortgage today?" Or whatever it is they try to sell you. They're dropping what they call "product sales goals" by January 1st, and they've told people to stop selling for the time being, as well. This is a huge shift from what they used to be like, right, John?

Maxfield: That's right. One of the questions, thinking about Wells Fargo and all the issues that they're having right now, from an investor's perspective, the question is whether or not this changes the investment thesis on a stock. And for a while there, and I guess this is all transpiring very quickly, because it was just revealed last week that it had defrauded all these customers from 2011 to 2015, and they paid a fine. But all the regulatory fines and the things that Wells Fargo has to do are pretty minimal, when you consider that this is a bank that earns $5.5 billion per quarter. So, it had a $185 million fine. That's just a drop in the bucket compared to how much it earns. So, unless any other shoes dropped, this really didn't fundamentally alter the fact that Wells Fargo is still one of the most profitable banks in the country. And it is still one of the most efficient banks in the country. It's still one of the best when it comes to managing credit risk. 

So, the thesis was still intact, but these other shoes have started to drop that are starting to erode that thesis. And one of them is the fact that John Stumpf, the CEO, came out and said that they are suspending the cross-sells of financial products. This goes to the absolute core of one of Wells Fargo's competencies, and that is the ability to get the retail customers to use more Wells Fargo financial products than most other banks can get their customers to use. And that boosts revenue, it boosts growth, it ties these customers in more tightly to Wells Fargo, making it harder for them to leave. So when you hear the CEO of Wells Fargo come out and say, "We're going to dial back cross-selling," while, it has to do that in response to all the trouble it's in, it's really starting to cut directly into an investor's thoughts toward Wells Fargo.

Lapera: Yeah. And to give you guys reference, we're filming this on September 15th, and our initial show on Wells Fargo was on September 12th, and this hadn't come out when we filmed in the morning. So, in the last three days, this has happened, and these other things have also happened. Federal prosecutors are investigating to see if they should file a case against them. And it's not just one. Wells Fargo has received subpoenas from three different prosecutor's offices, which is a lot, and a little bit worrisome for them.

Maxfield: Yeah, and the rumor is, what federal prosecutors are looking for, they haven't decided if they're going to file a case, evidently, and also they haven't decided, if they do file a case, whether it's going to be civil or criminal. But the thing that they're looking at is whether or not high-level executives at Wells Fargo knew that thousands of its employees were opening up to two million unauthorized accounts for Wells Fargo customers in order to boost cross-sells.

So, these are really difficult investigations, because you have to prove what, in law, we call scienter, which is that there was an intent on behalf of the executives at Wells Fargo to actually get behind this, as opposed to it being a group of rogue employees. It's a really important thing, because if a number of additional lawsuits come out, it will further impact Wells Fargo's reputation. And, presumably, they're also going to have investor lawsuits against the executives. So you're going to have those, you could potentially have additional fines from the federal regulator, for federal prosecutors. It's getting to be a much bigger issue than it originally looked like it was going to be.

Lapera: And this actually leads nicely into my next point. Guess who said this quote? Are you ready, John?

Maxfield: I'm ready, go for it.

Lapera: "This was a staggering fraud. Come on, this went on for years and they didn't smell anything in the air about fake accounts?" she said. There's a hint.

Maxfield: Was that Elizabeth Warren?

Lapera: That is Elizabeth Warren, who has demanded that Wells Fargo appear before the Senate's Banking Committee. John Stumpf has agreed to testify. Just in case you don't know anything about Elizabeth Warren, Senator Elizabeth Warren ... there's no love lost between big banks and Senator Warren. This is going to be a really interesting testimony. The House Oversight Committee has also started demanding documents. I will tune into that.

Maxfield: Yeah, that's going to be a really interesting thing to watch. Let me add another element to this. On last week's show, we really focused on Wells Fargo and the misdeeds and the malfeasance that went on there. But, I think, to be fair, I think you have to step back and appreciate all the good that Wells Fargo brings to the table. Let me give you some specific examples. When you are thinking about banks, these are incredibly important institutions for economic growth. They keep our capital, they make it possible to get loans, to invest that capital, which pushes economic growth. These are incredibly important things. And when you look at the nation's biggest banks, Wells Fargo is the third largest bank, it is arguably the safest and the soundest of them. JPMorgan Chase (JPM -1.22%) probably comes in a close second. But, that's important. Wells Fargo holds something like 10% of our nation's deposits. The fact that it is so good at credit risk, and so responsible in terms of keeping its customers' money safe, that needs to be recognized and appreciated to offset some of this.

Lapera: That's fair. Wells Fargo is, from a federal perspective, a safe bank. It's not going to go belly up anytime soon. But it has to shake consumer confidence in the bank, and potentially the bank's business if consumers start leaving, that the bank was lying and doing these things.

Maxfield: There's no excuse for what Wells Fargo did. But let me add a little bit more context behind this. If you go back to the financial crisis, the federal government pumped tens of billions of dollars into Bank of America (BAC -4.55%) and Citigroup (C -1.98%). It even did the same with JPMorgan Chase, when the federal government went to JPMorgan Chase and asked it to, in effect, to rescue Bear Stearns. Well, JPMorgan Chase wouldn't do that without a $30 billion loan from the federal government that would cover any potential losses from Bear Sterns. 

Wells Fargo didn't need bail out. It went into the crisis, it avoided the worst of the subprime mortgage mess, so it wasn't in that same type of dire situation. And as a result of that, when Wachovia was on the verge of failing, Wells Fargo was able to step in and buy that bank without any government assistance, and incorporate it into its model. That saved United States taxpayers many billions of dollars. And keep in mind, before Wells Fargo stepped in to buy Wachovia, which at the time was actually bigger than Wells Fargo, it was a huge bank, before it did that, Wachovia was going to be sold to Citigroup, of all banks.

 And it was not only going to be sold to Citigroup, but it was going to be sold to Citigroup -- this is my understanding -- after it was acquired, after the FDIC or the Federal Regulators stepped in and took possession of it. So, in that way, not only would Citigroup get it for an extremely inexpensive price, but the federal government would then be on the hook to cover potential losses from Wachovia. The point I'm trying to make is, there is no excuse for the systemic fraud that took place at Wells Fargo between 2011 and 2015. However, we have to keep in mind that this is an incredibly important cog that acts responsibly in a lot of other capacities, with respect to the economy.

Lapera: Yeah. I don't know. Sometimes, when stuff like this happens, I wonder if we're going to look back on it in 10 years and be like, "Oh, that was our Gulf of Tonkin." That might be a controversial thing. Please don't write in about the Vietnam War. I frankly don't want to hear it, listeners, I'm so sorry. 

Just to get back to some other stuff that's happening with Wells Fargo, after that brief interlude, one of the things they're going to talk about in front of the Senate Banking Committee is Carrie Tolstedt, I believe I'm pronouncing that correctly. She, you might have heard, is the head of the Community Banking Division unit, where all the fraudulent activity took place. She is retiring at the end of the year. I think on Monday or Tuesday, they reported that she was going to get $124 million in stocks and options when she retires come out which is now valued at $85 million because of the drop in the share price. John Stumpf seems to be totally cool with this, which is really interesting. The Senate Banking Committee is asking, "Why not clawbacks?" Do you want to explain clawbacks really quickly?

Maxfield: Yeah. Clawbacks, that would be if the bank were to come back in and take some of that compensation back, because of the fact that Tolstedt was in charge of the Community Bank, where the fraud happened, during the years in which it did happen. Just to clarify one point about Tolstedt, her retirement was announced in July. Now they say that had nothing to do with this, but let's just be real, her retirement is not a coincidence.

Lapera: Was probably not a coincidence.

Maxfield: (laughs) Probably. Right. Let's be real.

Lapera: Let's be careful, because I have already interacted with our company's lawyers, and they're very nice, a couple days ago, and I would like to avoid doing it again. (laughs) Not for anything really bad, mind you.

Maxfield: I feel pretty comfortable saying that it wasn't a coincidence. (laughs) Wells Fargo knew what was coming down ... this is a pretty big deal, this is pretty standard operating procedure for how companies work when these types of things happen. The same thing happened to JPMorgan Chase, when they had the London whale scandal in 2012.

But, here's the thing about Carrie Tolstedt that is so disappointing. It's not so much about Carrie Tolstedt, but more about the CEO, John Stumpf, the chairman and CEO of Wells Fargo. In the announcement of her retirement that Wells Fargo published, upon her retirement announcement in July, John Stumpf, this chairman and CEO of Wells Fargo, said that she was a "standard bearer of Wells Fargo's culture," which leads you to wonder, was this type of behavior, these aggressive sales tactics that pushed over and cross the line into fraud, is that a part of Wells Fargo's culture? Of course it's not, but the choice of words certainly made it seem like that's what Stumpf was saying.

Lapera: Yeah, it's not looking great. I mean, I haven't been watching the news as carefully today, but based on what I've seen in the last couple days, it feels a little bit like John Stumpf hasn't quite realized how much trouble is coming down the line. Like, he's standing at the very base of a mountain, and the avalanche has started at the top, but he hasn't noticed the following chunks of ice yet. You know what I mean?

Maxfield: Remember, if there's a federal prosecution investigation going on, Stumpf has got to be careful with his words, because he doesn't want to be implicated in that. But the problem is, he then came out and basically, in an interview on CNBC, and an interview with the Wall Street Journal, he basically came out and laid this at the feet of Wells Fargo's branch employees, who probably get paid like $12 an hour.

So, here's John Stumpf, a guy who makes $20 million a year, around there, blaming systemic fraud that captured 5% of the bank's branch-based employees -- he's blaming that on people who basically make no money, while at the same time going out and saying that Carrie Tolstedt, who was in charge of that unit, who is going to get upwards of $100 million when she leaves the bank, as a result of accumulated stock options, and that she was a standard-bearer of the culture. You look at this and think, wow, who is advising John Stumpf to throw the little guy under the bus and protect the big guy? It just encapsulates all of the problems we've been having with banks in the United States over the past few decades.

Lapera: Yeah. The whole thing makes me feel anxious, yet weirdly energized? (laughs) Which is probably good for this show. So, that's your kind of brief update on what's going on with Wells Fargo.

I want to turn to the second half of the show, but before we move on, let's take a quick minute for our sponsor. Mortgages are hard. We know that because we evaluate banks all the time on the show. They're super hard. Luckily, Rocket Mortgage has taking all the complicated time-consuming parts of applying for a mortgage out of the equation. Everything is completely online, and with the touch of a button, you can share your financial statements, helping you get approved in minutes for a custom mortgage solution that's been tailored to your unique financial situation. Quicken Loans is an Equal Housing lender, licensed in all 50 states, nmlsconsumeraccess.org number 3030. Thanks again to Rocket Mortgage by Quicken Loans for supporting our podcast.

I want to turn to the second half of the show, where we talk about how to find a good bank, from a consumer's perspective, and not an investor's perspective. Most of the time, this show focuses on how to find a really good to invest in, to buy stock in. But, like I said, we've been getting a lot of questions asking, "How do I find a bank that's good for me as a consumer?" And I want to start this piece with me saying that neither John nor I are going to advocate for one bank over another, and if we accidentally do that, we really aren't saying you need to run out and get an account with that bank. But, just general advice for what to look for, what benefits consumers that doesn't necessarily benefit investors.

Do you want to kick it off with the investor's perspective, John? What do you think?

Maxfield: Yeah, absolutely. The thing to note here is, there is an inherent tension between what an investor looks for in a really good bank and what a consumer looks for in a really good bank. Now, there are some overlaps, but most of it is more of a conflict. Let's think about that. If you're bank investor, what do you want to see? You want to see a bank that's well-diversified, that they don't just earn money from their asset portfolio, they also earn fee income. Well, if you look at the fee income, where does the fee income come from? It comes from account fees, overdraft fees, insufficient funds fees, things like that. Those are not consumer-friendly things. While diversification is good for investors, it's not good for the consumer. We talk about transparency. You want to know what financial products you're getting, what they do, all those different things. You want to understand what you're buying. Well, banks don't have an interest in making those things clear. If you don't exactly know what you're getting, or the fees associated with accounts, it's a lot easier for bank to ply you for additional fees if you don't know what's happening.

Lapera: You are so right. And there's federal regulations surrounding this now, especially around mortgages. If you happened to get a mortgage pre-financial crisis, and another mortgage post-financial crisis, you probably have noticed that you get handed a paper that makes it very clear what the terms of the mortgage are. That was something that was federally mandated post-financial crisis, because they felt a lot of consumers didn't know what they were getting into with their mortgages, especially in terms of the interest rates.

Maxfield: Yeah, that's exactly right. I know a lot of people don't like Obamacare, but it's the same principle that Obamacare was going for with the exchanges. If you put all this information in a simple format, where you can compare all the different companies that are offering these products, that will make those products more competitive, which means it will lower the price for consumers. But if you go against that transparency, you're going to get wider margins. That's good for investors and bad for consumers.

Lapera: Right. And I want to point out, this clarification of what's going on with the mortgages, that wasn't the banks just saying, "You know what we should do?" No. This was the federal government saying, "No, you have to do this." Because the banks, like I said, they're interested in keeping their investors happy and keeping themselves running and making more money.

Maxfield: That's right. When banks talk about this, they talk about how thanking mortgages have been commoditized. They mean that as a negative thing. But from the consumers perspective, commoditization of mortgages a good thing, because that means that the bank isn't earning a lot of profit out of that.

Lapera: Yeah. Another thing that's good for investors and good for a bank's profitability is cross-selling products. Not as great for consumers. (laughs) The obvious example is Wells Fargo being pushed into creating fraudulent accounts. But it's also not great for consumers for another reason, which is that sometimes, consumers, if they're not very well educated, end up with accounts that they don't need, which can end up causing them to have to pay a lot in fees. 

Maxfield: Yeah, and you're just harassed anytime you interact with your bank. Wells Fargo customers, when you read about their experiences with Wells Fargo that have come out, they couldn't go into a bank without being crossed sold another product. When you're just going into cash a check, you just want to cash a check. You know what I mean? You don't want to sign up for, like a point you made earlier, a mortgage at the same time.

Lapera: Yeah. And then, the third thing that investors appreciate about banks is that some banks make it pretty hard to switch, which means you're way less likely to move your money out of the bank. That means they're going to have your money to make loans with or do whatever it is they're doing with your money. Good for investors, bad for consumers, because if switching costs are high, the rates are a lot less competitive between banks.

Maxfield: Yeah. It's good that the switching costs came right after cross-selling, those two are intimately intertwined. If you go to, let's say, Bank of America, and you have a brokerage account, an IRA, a checking account, a savings account, credit card with them, maybe you get your mortgage with them, and your car loan. Let's say you get those seven different products with them. Then, they do something, maybe some back-handed thing where they charge you too much for something, or do something that wasn't approved, what are you going to do? How long will that take, to switch all of those accounts? And then, to add to the complexity of that, let's say your paycheck, every couple weeks, is directly deposited into your account. And then, let's say you automatically pay things out of your account, so you would have to detach those things. So, the switching costs make it really hard for you to vote with your feet, if you will, if you're being mistreated by a particular bank. And on top of that, here's the great irony with the switching costs, Gaby, let's say you do want to switch to Wells Fargo -- you still need a big bank, because, like we were talking about before the show, maybe you travel a lot or something like that, so you want branches all over, a large ATM network. Who are you going to go to? Bank of America? With the things they've done over the past couple of decades? Or JPMorgan Chase, or Citigroup? They're all in the same boat in this regard.

Lapera: Yeah, definitely. I'm struggling really hard not to tell you about my personal life and all my personal banking stories. Let's move on to things that consumers should look for when they open a bank account. Low fees. You should find out what all the fees are on everything before you open anything.

Maxfield: Yeah, whatever it is. Annual fees, overdraft fees, insufficient funds fees. If you're a consumer, that's where the bank is making money off of you. If you can attack the fees, from a consumer's perspective, that's going to get you three quarters of the way along to where you want to be in terms of picking a good bank.

Lapera: This seems kind of obvious, but maybe people haven't thought about this -- FDIC insured. Your bank should be FDIC insured. If it's not FDIC insured, you're probably not at a bank, and you have given your money to a charlatan. (laughs) Get it back ASAP.

Maxfield: Yeah, stop listening right now and go change banks.

Lapera: Savings accounts, or really any accounts that are not credit cards or mortgages, anywhere where you're parking your money, you want to look for accounts that have a high interest rates so you get a lot more return on it. I think most big banks average an interest rate of 0.1-0.15% on savings accounts, I believe. Which is pretty gosh darn low, especially when you realize that there are other alternatives, which we'll discuss shortly, like Internet banks or credit unions that do have higher interest rates. (phone ringtone)

Maxfield: What was that?

Lapera: Sorry ... I feel like I've been transported back to my classroom in the University of Nebraska, and I'm looking at a student going, "Do you want to share with the class?" I was definitely one of those TAs. (laughs) Another thing you want to look for is good customer support. That can makes a huge difference.

Maxfield: Yeah, that's right. And, in that customer support, there's a number of different ways you can measure that. If you call the call center, how quickly do the answer the calls, how friendly are the people that help you, do they actually help?

Lapera: Do they actually solve your issue? This is huge. And I guess there's no way to really know that until you have an issue.

Maxfield: You can always go out and look. There are companies, JD Power and Associates that go out and do customer scores of banks. So you can get a sense for it there. Or you can go to Yelp and read reviews about banks. There are places you can get data that shine a light on it. But, to your point, you don't really know for sure what that's going to look like until you're there and you have to confront a problem.

Lapera: Yeah. The other thing that you have to think about when you're picking a bank in general is that you need to pick a bank that has services that make sense for you. John, you touched on this earlier when you talked about, "Say you travel a lot and you want access to a really wide ATM network." You want to pick a bank that has services that you can actually use.

Maxfield: You make an important point. If you think about it, for me, I'm an investor, I have an IRA account for myself and my wife, I have a brokerage account, we have checking and savings accounts, we have savings accounts for our kid's education, so long as they're good by the time they go to college, or else I'll just take it and spend it on a vacation. But, for me, it's really convenient, and for people like me, it's really convenient to be able to have all of those products and services in one place. Someone like you, you're going to -- it's not against the rules for me to mention it -- Asia pretty soon. You want a bank where you can get access to those services wherever and whenever you need them.

Lapera: Yeah. So, you might be sitting there thinking, "I don't know if big banks are for me! Are there any other options?" Sorry to sound a little bit like an infomercial there, but I guess that's the nature of this episode. There are a few different options besides the big banks. The two that come to mind are Internet banks and credit unions. And, of course, big banks, credit unions, Internet banks, they all have their pros and cons. We're going to go over them for you so you can think about what's best for you.

Let's start with Internet banks. Internet banks, like we were talking about earlier, actually have the best interest rates on savings accounts. That's typically because they don't actually have to sink any costs into opening physical branches. So, all that money that they save, they can give back to you. And when I say they give you the best interest rates, I mean typically 1% or higher on your savings accounts, which is much higher than 0.15%. The other nice things about the Internet banks is that they're open 24-7. That's good.

Maxfield: And, let's be honest, a lot of banks are going in this direction.

Lapera: That's true. Cons of Internet banks. Sometimes, not having a physical location can be a hassle, because every once in a while you actually have to go into a bank's branch to present identification or whatever it is you're trying to do, get a cashier's check or something like that. A con is, I guess, if you don't trust the Internet, then the Internet bank is not for you. (laughs) That's an actual concern, I'm sorry to giggle. I have some older relatives, especially, who do not trust a bank that they cannot touch. Which is fine. If it's not for you, it's not for you. 

So, potentially, another option for you might be a credit union. Credit unions are really interesting. Earlier, we said that investors and consumers tend to be at odds, they tend to butt heads when it comes to the direction that the bank should take. Credit unions solve that problem, because anyone who is a member of the credit union who has a savings account there is technically of shareholder of the credit union, even though they're not publicly traded entity, they're all privately held by the people who actually have money in the credit union, which gets rid of a lot of those troubling interactions.

Maxfield: Yeah. There just isn't that conflict of interest. As a credit union, for lack of a better term, why would you screw yourself? Whereas a bank, the shareholders, there is an advantage to take advantage, because they're owners and they make more money if they take advantage of consumers. If the consumer owns the bank, it takes away that conflict entirely.

Lapera: Yeah. Some other pros of credit unions are, you tend to get much more favorable rates on loans, you often have ATM fees waived, because since credit unions aren't very large networks, they don't have a lot of ATMs, so sometimes they will pay for that for you, which is nice. That means you can use any ATM wherever. That's not true of all credit unions, so that's something you definitely need to check. What else? I know that we talked about a bunch.

Maxfield: You just get the impression when you talk to people who bank at credit unions that it's a much more pleasant and personal experience.

Lapera: Yes. I remember another one. Their savings account also tend to carry higher interest rates than big banks. Not as big as Internet banks, but higher than you would get at a big bank. 

That being said, there are some cons to credit unions. Like I said, potential ATM fees without a lot of ATMs around. Although, I was thinking about this the other day, I don't remember the last time I paid in cash for anything, so I don't know that that would be a huge deal.

Maxfield: Yeah. I mean, ATMs may not even be around for that much longer, you know? To your point, not a lot of people use cash. And the other thing to keep in mind, we were talking about this before the show, let's say you're in the worst case scenario, and you do need to use ATMs not infrequently. And let's say you incur some additional fees as a result, if you're credit union customer as opposed to, say, a Wells Fargo customer or a Bank of America customer, where they have ATMs all over the country. It's not like there's just a cost. There's also that offsetting benefit, because of the more pleasant experience. And the other thing to keep in mind is, because of the other advantages that credit unions provide, when you factor in even additional ATM fees, it still may be a more economical relationship between you and a credit union than it would be between you and a big bank, even if the big bank waives those ATM fees.

Lapera: Yes. Let me hit you with my second potential con -- credit union credit cards are a lot less likely to have rewards attached to them. If you are a power user of those rewards, this might not be the best relationship for you.

On the other hand, you can always open a credit card with whatever bank you want, and not have to have your savings or your mortgage or whatever with that bank. I think a lot of people don't realize this, but Visa doesn't actually own your credit card. Your credit card comes from, say, Bank of America or JPMorgan Chase or Wells Fargo, and Visa just administers the transaction. So whenever you open a credit card up with a bank, you're actually opening a bank account. So, you can still benefit from that and have most of your business be done with your credit union. I, for example, have credit cards accounts open with two different banks.

Maxfield: Yeah, we're the same way.

Lapera: It just depends. I have a credit card open with a bank because it has really good travel awards, and as I mentioned earlier I travel a lot, but I won't say to where, because I don't want to hurt your feelings, John. (laughs) So, last con for credit unions is there is potential limits on your eligibility. Some credit unions are only for federal employees, or only for people who live in a certain area. So it might be difficult to join. The bright side is, once you join a credit union, they're not going to kick you out. At least, I've never heard of that happening. Results may vary by credit union, just like they might vary by bank.

The other potential con of credit unions is, credit unions don't have as much money as big banks, which means that they tend to be a little bit behind the times in terms of mobile and online banking, which can make your banking experience a little bit more difficult. I don't remember the last time I walked into a physical branch. So, if you're a heavy power user of your online banking platform, that's something you definitely want to check to see if a credit union has that are not before you join. 

Regular banks, I think we've pretty thoroughly discussed the cons of regular banks during this show. They are convenient, both technologically and geographically. If that is something that is important to you, by all means, continue on or join a big bank. And like I said, they're really good if you move around a lot. And, they have a lot of products all in one place. That's also really nice. I think credit unions, I'm not sure about the Internet banks, but they vary in the types of products that they do offer. 

So, while John and I can't say for sure what type of account you should open with what type of institution, make sure you have all the information before you go into it, and be careful with your money. I know that sounds like a really silly thing to say, who isn't careful with their money? But, it turns out, a lot of people. 

Maxfield: And, I guess, the overarching message is -- be vigilant. The banks say they're there for you. But there is evidence to suggest that they are not looking out for your best interest, so you need to be doing that in that relationship.

Lapera: That's true. What would that tag line look like for a giant corporate bank? "We're not here for you, we're here to make money."

Maxfield: At least they'd tell the truth. (laughs) 

Lapera: I'd probably put my money in that bank. They're probably not going to lie to me on my terms. (laughs) Well, I think that's it for today's show. I'm sorry, I know we ran a little bit long, but I wanted to make sure we tried to present an even view of all the different things, and we needed to talk about the Wells Fargo updates. So, thank you very much for joining us, John!

Maxfield: Thank you for having me.

Lapera: And, to our listeners, as usual, people on the program may have interests in the stocks they talk about, and The Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. Contact us at [email protected], or by tweeting us @MFIndustryFocus. Thank you to Austin Morgan, who has done two of my podcasts today! You are awesome. And thank you to you all for joining us. Everyone, have a great week!