Financial Feminist - 101. What Banks Don't Want You to Know with Vrinda Gupta

Episode Date: July 18, 2023

The banking industry has come under intense scrutiny in recent years and for good reasons. Banks are a tool, but like any financial tool, if you don’t know how to use them and ask the right questions, this same tool that can be so helpful in your financial journey can be just as harmful. Today, we welcome back Vrinda Gupta, owner and founder of Sequin –– banking for women, by women –– to talk about all the ways that banks make money off a lack of financial literacy and targeting already vulnerable communities. In the episode, we dive into banking fees, loan processes, systemic factors, and the question on everyone’s mind –– can I trust my bank? Read transcripts, learn more about our guests and sponsors, and get more resources at  https://herfirst100k.com/start-here-financial-feminist-podcast  Not sure where to start on your financial journey? Take our FREE money personality quiz! https://herfirst100k.com/quiz Learn more about your ad choices. Visit podcastchoices.com/adchoices

If you are not paying for a product, you are the product. And that is very much the mindset of banks. It is all these feeds where they say, okay, here's a free checking account, but then there are all of these gotchas that you need to know about. It does disproportionately affect women and minorities. Hello, financial feminists. Welcome back to the the show i am so excited to see you if you are an oldie but a goodie welcome back if you are new to the show hi my name is tori i am a money expert a financial feminist of course a new york times best-selling author and also the host of this show which is the number one money podcast for women in the world. If you like it here, if you want to hang out some more, hit subscribe. If you are that person who listens to one episode of a podcast and you're like,

that's great, but you don't subscribe. If you subscribe to shows, I can't tell you how much that supports whoever's creating the show. So literally just hitting a button is the easiest thing you can do to support our show and make sure it keeps running. So thank you. Okay. hitting a button is the easiest thing you can do to support our show and make sure it keeps running. So thank you. Okay. The cool thing about doing the show weekly now for over a year is that sometimes we get to bring back some great guests. And if you've been with us for some time, or you're one of those that's gone back and maybe like perused the catalog, today's guests will be no stranger to you. Vrinda Gupta is the CEO and co-founder of Sequin Banking, banking designed by women for women. She's a globally recognized credit expert who helped launch the popular Chase Sapphire

Reserve credit card at Visa Inc. I have one of those cards, and received her MBA from Berkeley Haas. Vrinda lives in San Francisco, California, and is a proud first-generation Indian immigrant. We brought Vrinda back because her first episode on credit cards is still one of our highest rated and top performing. Y'all love that episode about all of the behind the scenes stuff with credit cards. And we are so excited when she pitched us to come back and talk about more broadly about the banking industry. Why? Well, women and minorities are disproportionately paying avoidable banking fees, 18% more than men. That's equal to over $214 per year in avoidable overdraft, monthly minimum, and late fees.

So we sat down to talk with Vrinda about all the ways banks make money and how they often take advantage of a lack of education to keep you in the dark about fees and charges you might not need to pay. We also talked more about how banks loan money, what questions to ask when opening a new account, if banks are even safe anymore, and so much more. So let's go ahead and get into it. But first, a word from our sponsors. Crypto is like finance, but different. It doesn't care when you invest trade or save do it on weekends or at 5 a.m or on christmas day at 5 a.m crypto is finance for everyone everywhere all the time kraken see what crypto can be not investment advice crypto trading involves risk

of loss kraken's registration details at kraken.com. I am so excited to have you back. You are our second ever returning guest. I was telling you before this about how much people loved your episode. We talked all about the things credit card companies don't want you to know, how to boost your credit score. We'll link the first episode down below. But since the last time you were here with us, can you give us an update on your company, Sequin, and also the most surprising thing that you've learned about getting your company off the ground and growing it? Yeah, for sure. And again, thanks so much for having me. I just, I love everything that you're doing and these conversations are so important. And I'm glad to those who listened to

the previous episode. I hope it helped. So thanks so much. Yeah, just as an update on Sequin and what we're up to, last time we were here, we were really focused on credit. And one of the things that we had launched previously was our Sequin card with the idea that you could have a debit card that built credit. And the other piece that I love even more about Sequin is that we always design with our members' needs in mind. And so one of the things we kept on hearing was opening up a new line of credit is actually not solving my problem. And from my knowledge at Visa, the best way to build credit is to optimize your existing credit behaviors and optimize those payoff debt, build credit, travel hack rewards, do all of those things. But opening up new lines of credit is not

necessarily the best way for you to build credit. So we ended up sunsetting that product. And I love so much what we've built instead. And this kind of answers the question, Tori, about what was the most surprising thing. As I mentioned, we started off thinking a lot about credit as it affects women, as it affects minorities. And, you know, the problem starts so much sooner than just when you need credit. And I think it's a great segue into this topic today where really the inequities start with your first bank account or with banking. And there are a lot of hidden fees and a lot of fine print that you need to think about.

There's a lot to think about in terms of actually growing your every dollar. We started off saying, okay, let's build a checking account and let's have you earn interest on every single dollar. Also, that's going to allow us to help you in your credit life as well. So when we understand your income, we can also say, okay, this is your existing credit. These are your credit cards. You can plug those into Sequin and we can also help you pay off debt. We can help you build credit. And the tool is actually smart enough to know which one you need to do. So we're really excited about kind of this full financial view product that actually grows your money, doesn't charge you surprise or hidden fees, and actually helps you with your credit life alongside a community. Yeah, so let's talk more about that. Because I

think I remember the first time I opened a bank account I was really young I was running my vending machine business and I think I was in my local bank when I was nine years old and opened a savings account and then a couple years later I opened a checking account and I remember when back in those days you opened a CD at like four percent especially at the time crazy and we're seeing interest rates similar to that but because inflation is so high but I digress with banks can you give us the rundown on how banks make money in the first place? How does that work? Absolutely. And I love this vision of little Tori with her vending machine. She was very excited to get a bank account. Yeah, she felt like a real adult, even at nine. I love that. I love that. So I love this question, Tori, on how exactly banks

make money. And I love it for two reasons. So the first is you probably have your life savings in financial institutions. And hopefully none of us are stashing our cash in a mattress, right? That is unsafe and your money is not growing. So hopefully most of your money is in financial institutions. And the second is if you know what to look for in terms of banking fees and you know what to look for in terms of ways to grow your money, then you're actually one able to protect yourself so you're not paying hundreds of dollars in avoidable banking fees a year, and you can make the financial system actually work in your favor, which is what we're all here to do. There are three key ways that commercial banks, I say commercial banks, I think that's probably going to be the most relevant for our audience

here is, you know, your personal bank account, right? You get a dollar, where do you put that? You put that, you know, in a bank account. So the three ways that commercial banks make money is first on interest. Every single dollar that you put in your bank, they're actually lending that out with high interest. And if you think about a credit card, for example, those interest rates can be 24% on average. So every dollar you're putting in, they're lending it out, they're making 24% when someone pays that back, and then they are giving you 0.01% as a thank you,

right? Not 1%, 0.01%. So I digress, but that's the first way is interest, right? So every single dollar you put in the bank, they lend it out. When it gets paid back, they get interest. The second way, and this is the one I am screaming from the rooftops, is fees. So it's so important to read the fine print. And there is a myriad of fees. And actually, I'm going to pull up my notes because I made a list of a few of the fees here. And this is not exhaustive, but is some of the fees to look out for. So the first is inactivity fees, overdraft fees. I think a lot of us are unfortunately very familiar with those. And I read a study that banks made $15 billion in overdraft fees a year. And that's, I think, on the low end. Can I pause you right there? Will we explain? Can we explain what each of these fees are? So you

said inactivity fee. I'm assuming that's just like there's not activity in your bank account, but then you get charged for it, right? Yeah, exactly. Yeah, let's do that. Let's break this all down. Okay, so inactivity fees. It's exactly what Tori said. Your bank account is dormant for a few months. It's usually around six months. And then the bank just says, all right, I'm going to close this account. Too bad. And they close it and they send you a check and you're like, okay, I didn't even know, but that is something that they can do. And they will charge you a fee when they do that. So that's one. Second, overdraft fees, right? So that is you don't have enough money in your account,

a transaction goes through, and then the bank says, okay, we can either decline this transaction or we can lend you some money in the meantime, but we're going to charge you up to $35 each time you do that. Even if it's $1, you get charged $35. And I want to say again, banks made $15 billion in overdraft fees. Unfortunately, women and minorities pay most of those. Women are paying $214 a year on average. And that is more if you are a minority, the numbers get worse. And we're paying 18% more than men in overdraft fees. I have a personal vendetta against overdraft fees just because they catch you when you

don't know, right? It's like, I didn't realize I didn't have money in my bank account. And most of the time, it's an accident. So at Sequin, we don't even allow you to overdraft. We text you every single time you make a transaction. We actually let you know how much is in your bank account. And that was a personal experience getting charged an overdraft fee and saying, I had money. I just didn't realize I hadn't transferred it in. So anyway, that's my rant on overdraft fees. too that the average checking account holder paid $8 a month in fees. And that includes like service charges, ATM fees, overdraft penalties. And if you were white, you're paying $5. If you're black, you're paying $12 again on average. And then if you're Hispanic, you're paying $16. So just to have the bank account where it's your own money, you're paying fees in order to keep up

the account in order to gain access to your money through ATMs. It's it's kind of crazy how quickly it adds up. It's wild, Tori. And I think, you know, the thing that I always tell our Sequin banking members, and I love having your platform to say this is, if you are not paying for a product, you are the product. And that is very much the mindset of banks where either you're paying with data, right? You know, in the case of social networks, et cetera, that's most common. But with banks, it is all these feeds where they say, okay, here's a free checking account, but then they're all of these gotchas that you need to know about. And I'm sure we'll talk about this and

unpack it, but it does disproportionately affect women and minorities and all the stats that you just shared. That's what we see as well. So when somebody is opening a new bank account, what kind of questions should they be asking themselves? Yeah, absolutely. So when you're opening a checking account, the main questions I always say to ask your bank is one, how do I waive any monthly maintenance fees? What do I need to do in order to avoid this fee, which can be $12 to $15 a month. And so one of those and key one is your monthly minimum balance requirements. So how much do I need to keep in this bank account every single month in order to

not pay that fee? And that amount on average is around $1,500. It is not a small amount and is something to be aware of. And if you don't keep that amount, then you can be charged the fee. So that is one. The second is there are minimum initial deposit requirements. Some of them say if you spend a certain amount in a month, around $500, then you don't need to pay the monthly maintenance fee. Just understanding how do you avoid the fees and what are those fees? So that's one. The second question, and especially in our high interest rate environment right now, is what is my APY, which is annual percentage yield? How much interest am I earning on every single dollar? And that should be a question that you're asking whether it's a savings account, whether it's a checking account, because you should be

earning interest on every dollar. So those are the two questions amongst many others, but where I recommend to start. I have more questions about like banking and especially banking being racist towards minorities and sexist towards women. I want to caveat though by asking one question in the middle, which is it's very easy. It's going to be very easy to listen to this episode and be like, all banks are terrible. I'm never going to put my money in a bank again. And I want to highlight what you're saying is as long as you know what's going on, and as long as you are finding the bank that is right for you, we don't want it like the conclusions of this episode should not be never open a bank account or take all of your bank account money out and put it under a mattress, right? Absolutely not. That would be the worst

outcome of all of the outcomes. So it's so important to put your money in bank accounts for multiple reasons, right? Safety, if you have your money in cash somewhere, that is just, there's no way to track that, right? You lose your money and it's gone. And I've actually heard, you know, stories of so many women that that has actually happened to, and it is terrifying. So that's one. But the second is, if you aren't making your money work for you in a bank account, then not only is every single dollar worth less because of inflation, and by the way, inflation is at all-time highs, but also you're not growing that money. So you are literally losing your money by just keeping it, and you really need

to be thoughtful on how to make that money work for you. Banks, like other free products, have fees, and that is how they make their business work. The goal here today is for you to not be the one that's funding their business, especially when there are fees that you can avoid. Totally. I just wanted to level set really quickly because it's very easy for me to be a listener of this episode and think like, okay, I'm just going to pull all of my money out of a bank account and not use it. That's the conclusion, as opposed to the finance expert part of me, which is like, no, you just need to go in understanding the landscape of it all. Yeah, absolutely. And I just want to plus one that I really hope a very negative outcome of this talk here would be I put all my money out.

You just want to make financial institutions work for you. Because if you do that, it is so powerful. And that's how you build wealth is by being within kind of, you know, our financial system. It's very important to partake in that. To transition into some of the other things about banks and some of the other things that banks might not want us to know. You found in your research, and we did in ours as well, that women and minorities tend to pay more in banking fees. But something that we found digging even deeper is that it's much more than an educational issue. I think a lot of us, and we've even talked about it on this show, the kind of concept of the fallacy of financial literacy that people believe okay we just need financial education in schools we need to you know teach kids about money and i think you and i both would agree that like that would be helpful however that would not change the structure of the systemic issues at play and we know

specifically if we're talking about black amer that there is this massive, And what, if anything, can be done at an individual level for us to push back against that? Absolutely. I think people forget that that was the case, right? There were instances of, yeah, Black-owned banks being burned down, which is so horrible to think about. And you think about women, minorities being able to be rejected legally from bank accounts and credit cards and business loans until the 70s and the history of that. I think the piece that has remained constant is that money is power. And the fact that there are other populations like minorities, like women who are growing in so much spending power now and the power is shifting, I think that is scary to those

who have traditionally been in power. And so I think it is so important to, as we're talking about, understand how to make financial systems work for you and don't be the one to be paying avoidable fees. Don't be the one to be not growing your money and not optimizing your wealth. That's one piece. But I think a second piece that we don't always think about as well is there still is such a disparity in terms of income, right? There are wealth gaps that do come from just systemic bias over generations. And I think you and I and all the listeners know that just by writing something into law, that doesn't change. It doesn't fix the problem, right? It's just, okay, that was bad. Let's not do that. But there are so many downstream impacts of that.

Gatekeeping education is one of them. But there are other pieces that if you do have a wage gap, for example, then you might be more likely to pay a fee, right? A bank is not saying, oh, if you are a woman or if you are Black or if you are a minority, then we're going to make you pay a fee. But it is these kind of implicit factors that do contribute to perhaps you not having more ideal outcomes. And so I think what is really important is looking for institutions that understand that. And, you know, I look around, I don't see a lot of founders

who look like me, right? A woman of color. There are a few fintechs that are Black-owned. And I think ultimately going back to the money is power, being able to support those companies, I think is extremely important. And the second piece is when you put persons in power that have actually had the experiences that you do, they're going to be able to identify that, wait, that is disproportionately affecting people like me. For example, with the overdraft be able to identify that, wait, that is disproportionately affecting people like me. You know, for example, with the overdraft fees, right? You know, at Sequin, I said, we're not going to have those. We're going to text you every single time you make a transaction so you know how much is in your account. And you can actually be, you know,

you can understand that that product and service is truly being designed with your needs in mind. So yeah, I think it's great to, you know to support a mission, tell your friends. But ultimately, I think money, again, is power and being able to put your dollars behind products and services that you really agree with and that align with your values. I think that is the most powerful thing that you can do at the individual level. Yeah, we talked last time on the show. And something I want to highlight specifically with banks is this huge population of largely black and brown people who are under banks or unbanked, and that it comes from one not having as much money to put in the bank. But really, like you've been saying this entire

time fee is right, if you already don't this entire time, fees, right? If you already don't have a lot of money, and there is some sort of maintenance fee where you have to have a certain amount of money, you're less likely to put your money in a bank. Then on top of all of this is this feeling of distrust for banks that is, of course, not unfounded if you're worried that the bank will get attacked or burned down. So when we're thinking about this feeling of distrust around banks and also banking deserts where literally there's geographically not any banks available, this un- and underbanked crisis, what other ways do banks discriminate or use predatory practices

that we might not even think about? Yeah, absolutely. And I do also want to say something about the fees in that I think the challenge isn't the fact that banks are charging fees, right? They are offering a free service and there's a way that they need to make their business models work. And perhaps there's a way to make that. Totally. We work with banks as our partners. I have banks that I use. Yeah. I mean, you're a business under capitalism. I get you have to make money at some point. Yeah, totally. Yeah. Yeah, no, for sure. And the point I was making was just really important to know what those fees are so you can either avoid them or you can budget for them as well. And not saying that you should say, okay, I'm going to budget for an overdraft fee, right? That is not

really solving the root of the problem. But I think the point I'm trying to make is that hidden fees are what really can derail your financial plan. If, okay, you have a certain budget that you're working towards, or especially if you are in a period of your life where you're living paycheck to paycheck, it's really important to know, okay, how much am I going to be paying at the end of the day? So I think just the knowledge of what are fees that I could be paying, given that that is the case, do I want to bank with this institution? Do I go somewhere else? Just being really thoughtful about those fees you can budget for them is really, really important. Again, not to say you should be paying banking fees, but just know, you know, what the fine print is. So that was a point there. But

yeah, I think there is, you know, I talked about, you know, fees really affecting folks who, you know, might be lower income and might be living paycheck to paycheck, right? But we've talked about this, I think, in the previous episode about implicit biases even in credit scoring, right? The Equal Credit Opportunity Act in 1974 made it illegal for a creditor to discriminate based off of a variety of factors. And I actually have them written down because I think what is interesting about it is that this needed to be put into law in the first place. And it means that all these populations were discriminated against before. So it says, it is unlawful to discriminate on the basis of race, color, religion, national origin, sex, marital status, or age, provided the applicant has the capacity to contract, the applicant's use of a public assistance program to receive

all or part of their income, or the applicant's previous good faith exercise of any right under the Consumer Credit Protection Act. So these are all populations, right, that are, you know, make up a lot of the population of the United States and, right, that are, you know, make up a lot of the population of the United States and is something I think to, you know, be cognizant of. And so when you think about the fact that it was 1974, that was just not that long ago. It still blows my mind. And when you think about when banks were actually founded, it means that all the algorithms, all of their products and services were geared towards white men that owned property. And so everyone else who's even trying to get credit, right? Some of those factors that go into your credit can implicitly bias against you

because they're not trained on data sets that actually represent these populations who were left out of the narrative. So one of those factors, and we talked about this previously, and it's still very true, is this idea of credit utilization, right? Credit utilization, the percentage of your credit line that you're using at any time, the higher, the worse, essentially. And if you are a person who needs to rely on credit a little bit more, then you are viewed as more risky. Even if you are paying off that loan on time at the end of every month, the fact that you even used more of that during the month can be used

against you. And that can be seen as more risky. And who are the people who are using credit where it's the same folks who are systemically biased against? It's women, it's Black folks, it's the Hispanic community. There's just so much that's baked in. So even though it's illegal now to say, if that population, then there are still ways that there's bias that's built into the system. Totally. And the stat that you mentioned and the Credit Act of 1974, right? 74, yeah. Yeah, that was the year, I talk about this in my book, that was the first year a woman could open a bank account in her own name without a male co-signer. And then I believe a credit card or business loan came like 10 years later. And yeah, my parents were alive and kicking in the 70s.

It's just crazy to think about how recently that was. Yeah, it's not ancient history at all. And I don't recall if we talked about this last time, but Hillary Clinton talked about this where she was trying to get a credit card and they asked for a bill. And she said, well, i make more money than him so i'm not sure why you need my house so it's hillary rodham fucking clinton like i'm allowed to open up a bank account i know i know yeah it's it's bizarre so there's one part of banks that we're kind of talking about, which is the I'm putting my money as a user into the bank, right? I am taking a certain amount of money or maybe taking my paycheck

and putting it in a bank account, whether that's a checking or a savings account. The other big part of banks is asking banks for money, right? Getting lent money. You can imagine that the stats for minority folks are not great. Black-owned banks were 12% more likely to own to Black business owners. But of course, other banks were less likely to give loans, whether business loans, personal loans, to Black folks, to other minorities. Let's talk about the lending side of it. Is there any sort of regulation about lending? And if not, or if it's not robust enough, could there be more regulation? And then how does even a bank work when you ask for money or when you're getting a loan? Maybe let's first break down just the lending part of banks. What

happens whether maybe just talk about personal loans and then maybe business loans? Yeah, absolutely. When you go to a bank or any creditor to ask for a loan, the first question they're going to ask is about your credit worthiness. And that is exactly what it sounds like is, do they, one, want to extend you a loan? And two, if they do, at what interest rate do they want to extend that to you at? And that's where your credit score comes in, right? And that's where your credit score comes in, right? This number that looks at, okay, every single other time you have borrowed, how did that go? And, you know, if it went well, and, you know, we can talk about what well means, but if it went well, then you're more likely to, one, be given the loan, and two, be given that loan at better interest rates. So lower interest rates, right? So effectively the cost of the capital that you're borrowing is lower and then you have more money in general, right? That's the simple way to put it. So they'll determine your credit worthiness and that's for personal loans. For business loans, it depends on the type of business that you are. Many times business credit will

actually be tied to your personal credit. And that actually builds these loops of, okay, well, if you are a person who does not have great personal credit for whatever reason, then that can actually extend into whether or not you get capital for your business as well. And we saw that really kind of rear its ugly head with the PPP loans during the pandemic, where women and minorities were actually less likely to get PPP loans because it was connected to our personal credit. So that is something that is little known is that your personal credit can really affect your business credit as well. There are ways to build business credit, right? There's

business credit cards and the underwriting works largely similarly where, you know, if you, you know, have you borrowed before and did you pay it back and how credit worthy is your business? And the benefit of doing that is that you're able to separate your personal finances from your business finances. And let's say, you know, something goes wrong with your business credit, then you as an individual are protected and are not necessarily liable for that amount of money. However, it does vary business by business and it varies structure by structure. So definitely read the fine print. Don't take this as a blanket statement. That was super, super helpful. Again, I know I asked you like four questions in one. So transitioning with, yep, we're seeing that if you're a minority, if you're a woman, you're less likely to get approved for that loan.

Is there any sort of regulation for that? And if not, could there be? So this is all under the Equal Credit Opportunity Act of 1974, where it's the same one, right? It became illegal to discriminate based off of the certain demographic factors that they listed. That being said, the factors that go into lending can bias against you implicitly. We talked about credit utilization. We talked about, you know, wage gaps, et cetera. So those can impact you getting credit at fair rates or at lower rates. So that's one piece. But I spent a lot of time thinking about this, Tori, at Sequin, because initially, one of the ideas was, OK, why don't we create our own credit underwriting model?

And I actually looked at some research in, I believe it was Brazil, don't quote me on the country, but somewhere where they didn't have this regulation. And they actually took into account gender and they were able to extend more credit because they actually, it was kind of affirmative action almost where they said, okay, you know, women are actually better to lend to and we do pay back more often. And so we can take that into account and actually make a more equitable scoring system, which is illegal in the US, which I still think in general is a good thing. But I don't know where I land on the side is, you know, is that a positive? Is it a negative? And, on the side is, you know, is that a positive? Is it a negative? And, you know, I think going back to the world where women could be rejected, or, you know, banks could be burned down. That's not

the world I want to go back to. So yeah, hard to say. It's a big question is something that is, you know, hotly debated in the credit world. This is like, one of my biggest flexes ever, I am pulling my own book. I'm finding my own book to pull a stat. Hold on. Because what you just said, I'm trying to remember the exact, because we found it in our research about basically like blind credit, right? So one of the things they were trying to prevent, of course, was, okay, we're not going to lend to Black folks.

We're not going to lend to women. But okay, if we do it blind, then it doesn't matter. But like you said, the factors are still there. And of course, I'm, I can't find it off the top of my head, or just can't remember where it is in the book. Anyway, I'll find it after it's, it's, that's, that's part of the problem, right, is with this, like, affirmative action you're talking about, it actually, in a way, assists individuals better to know, oh, okay, if they are Black folks and they don't have as good credit, like, that's not their own personal issue, right? Because when you make it, when you blind the process, you still have the same

factors at play. So if you're just looking at, you know, person A versus person B, person A has a higher credit score, you know, a higher net worth. They're more likely to get a loan. And then you realize, of course, that person A is a straight white man versus person B is a minority. Yeah. Yeah. I mean, it's one of the reasons that the hack that I always share is, especially for women and for minorities, is to pay off your credit card every single week if possible, because that makes sure your credit utilization never looks too high. And it's basically hacking the factors that go into your credit. And it's, you know, really effective. I've seen folks, I think even some of the listeners,

she had like over 100 point credit score increase, you know, just by paying off that credit card once. So yeah, I mean, it's a complex issue for sure. And asking for a credit line increase, I think was the other thing. Okay, I found it. It's on page 122. So even in technology as advanced as machine learning, we see massive gender discrepancies. In 2019, when the investment firm Goldman Sachs launched the Apple card, it relied on a gender blind credit card approval process. Good in theory, but in practice, gender can easily be discovered from other variables such as lower net worth. So because women have historically been given less credit, the algorithm continues that pattern.

And then people of color too received lower credit lines. So it's like even when you make the data anonymous or you do this blind, the discrepancies are still there. So they continue receiving less credit, less access to money, less access to capital. Absolutely. Yeah, that was a big deal. Because so the, the way that that entire Apple card scandal happened was, there was a tech entrepreneur who he and his wife both applied for the Apple card, and she got a 20th of his credit line, even though they made similar amounts of money. And so I actually tweeted at him and I said, that is why what we're building at Sequent needs to exist. And he retweeted it and we kind of went viral around that. But in addition to what

you mentioned, one of the other factors was that women and minorities are more likely to have the bulk of their credit history be made up of someone else's credit. So you're an authorized user on a parent or a partner's card, and it just doesn't build your credit as effectively. And that's what was happening in a lot of the discrepancies as well with Apple Card and Goldman's underwriting. We talked about that in the previous episode that you were on, so I'll have people listen to that. But can about that in the in the previous episode that you were on. So I'll have people listen to that. But can you just give us the like TLDR of that? Because I think that was one of my most powerful takeaways is that women are either you know, as a spouse,

they're they're the secondary authorized user on the card, but the cards not in their name, or they're like building their parents credit. So just give us the TLDR of that. or they're like building their parents credit. So just give us the TLDR of that. Yeah, the TLDR was I got rejected from a credit card that I helped build at Visa, the Chase Sapphire Reserve, because I was building credit under my dad's credit card. And I had no idea that that wasn't going to be as effective to build credit. And it got me credit visible, right? So we say, the one time I say it's good to be an authorized user is if you as a parent have good credit behaviors and you want to build credit for your under 18 child, that is a good way to build their credit. Again, if you

are responsible, right? We don't want to transfer, generationally transfer, you know, bad credit behaviors. But yeah, the second that person turns 18, it is so important to have credit history in your own name because that is what is going to ultimately be the way that creditors are going to be looking at you is when were you the primary person and when were you on the hook to make the payments? And that's how I can determine your credit worthiness. I think that was one of the biggest takeaways for me and then then also for our audiences, it's like you're making all these smart financial choices. You're doing all of this work, but ultimately it's benefiting somebody else. And hopefully, you know, it's benefiting somebody you love.

But at the same time, like that, that's not your own credit score. That's not benefiting your financial life. It's benefiting somebody else's. Yeah. And, you know, I, I hope and I like to see, okay, yeah, it's benefiting someone you love, but I can't help but be kind of jaded in terms of, you know, the, the women who I talked to in the minorities who I talked to in our sequin community, it's that goes badly more than it goes well in that, you know, there's just so many instances of financial control and financial abuse and,

okay, we got a divorce and now I am left with nothing or I'm left with his bad credit behaviors. And I just always say, you know, regardless of how happy you are, and I hope you remain this happy forever, it is so important to have one, a bank account in your own name and a credit card in your own name that you use responsibly. So you're building credit and you one a bank account in your own name and a credit card in your own name that you use responsibly so you're building credit and you have a bank account where it's just you and then you can figure out how to manage your finances together but I always say you need to do you build credit in your own name and have a bank account in your own name could not agree more we've talked about it many times here even you just need a small amount even of your own money and your own credit. What else do banks not want us to know? Any other things? Yeah, you know,

it's so funny. I was thinking about this. And I think the simple way to say it is we're on to them. I think for... I just want to sit and laugh with you about it. We're in there. Don't think you can get it. We got it. Yeah. But that's the thing, right? For a long time and still today, and what I think both you and I are on a mission to change with our companies is banks have profited off of women and minorities throughout history

in various ways, even when we weren't supposed to have bank accounts. As I was doing research, I just learned that even when women could not have credit cards or bank account in your own name, because the husband was the only one who was considered a legal citizen and you are his property. And it makes me want to throw up like saying these words out loud. But even then, if something happened to the husband and he didn't pay off the debt, you were still on the hook. Yes. It's the same thing with student loans even now. If you have a cosigner on your student loans, this is like really morbid and really terrifying. If you have a cosigner on your

student loans and you die the cosigner still has to pay for them i know i know crazy it's just it's awful that's why i say we're on to them right because women and minorities are just we're going everywhere right and not at you know i i wish it were at least 50-50. I want it to be everything, but we're so far from that today. And I think in terms of avoidable fees, or in terms of growing your money and just being educated about the financial system and the way that it works and how to make it work for you. Being able to participate in banking in a way that is advantageous to you is just so important. And I don't want to keep on seeing these stats that women and minorities are paying 18% more in banking fees and we're not growing our money.

And we're basically just giving banks free loans by earning 0.01% on our deposit volume and, you know, paying high interest rates. I don't want that anymore. So we're on to them. And, you know, I look forward to the stat just chipping away because there are actually statistics on this from the Federal Reserve that when women and minorities are taught about what to look out for, a lot of the gender financial gaps close. And that stat was the reason that I decided to found Sequin was that I felt the problem was solvable and pretty easily solvable if we could both build products and services that were really meeting people's needs that it wasn't meeting before. And also coupling that with,'t, you know, meeting before and also coupling that with, okay, this is what you need to look out for in terms of, you know, what's out there and

how these, what these companies don't want you to know. Yeah. And what you said that I wanted to, I want to highlight is like, it's making it work for you, right? Back to, you know, my point I made where it's like, the answer is not pull your money out of a bank, never use a bank again. The answer is to go in with clear eyes and understand, right, what questions to ask, how to make a bank account work for you, right? Because there's some places that don't charge fees or they'll charge something else, right? Or there's some places that like nickel and dime you for every fee. And so it's like, yeah, every bank is going to make money. And it's determining like, what are you comfortable with?

What makes sense for you in your financial life right now? Yeah, for sure. And I think, you know, just knowing what those fees are and what you're getting for those fees and yeah, just not being surprised. I think just the lack of transparency is the problem and it just feels really shady. It's like, if you tell me upfront what the fees are going to be, at least I can budget for them. And also I can think critically about is the give and get out of this, does that work for me, right? Do I want to pay this fee?

Do I actually get something that's benefiting my life versus these are just hidden penalties that one fine day I check my bank account and, you know, I'm paying, you know, so I think just the lack of transparency is what's icky about all of it. Can we talk briefly, I overdrafted on my account, probably two years ago, three years. So it's been a minute. But I remember even I like I had the title of finance expert when I did it. And I was like, Oh, this is proof that like we all still make mistakes. And I called my bank and I asked them to reverse the charge. And they did.

So can we talk about negotiating with your bank to get fees? I don't know, withdrawn or like overturned. Let's talk about that. This is one of my favorite topics because in the same way that women and minorities are not negotiating as much, it definitely carries over to our banking relationships. And we've done entire workshops on this at Sequin because I think it's so powerful. So I love that you did that, Tori, that you could call your bank and say, I made a mistake. Please reverse this and do that as soon as possible, right? Because the more time that elapses, the less likely they are to reverse that charge. But it doesn't hurt to ask

because the worst they can say is no. And then you're just in the exact same situation that you are in today. But the best is you get 35 bucks and you can do a lot with $35. That's fun money. Don't give that to the bank unnecessarily. The other piece too is there are, I think in traditional banks, ways perhaps to be more up to date in terms of what is still in your account. So check that out. When I used to bank with a big bank, it was kind of hidden. Some of the things that we do at Sequin is, as I mentioned, every time you swipe, you actually get a text message with how much money is left in your account. You can set low balance alerts. So if your amount goes below a certain balance, then you can get alerted for that. So I think at your big bank, you can do that as well. So it's just important to, I think, protect yourself.

But if it does happen, then yes, call and negotiate. There's that, that works for pretty much any other fee as well. You just check your bank account. I check my bank account every single, my statements every single week, just to make sure that there's no funny business on there. And then I call and I say, okay, I saw that, that didn't mean to be there. More times than not, they have reversed the chart. So that's on banking. In terms of credit, there's a lot that you can call and ask for, right? So a credit line increase is one of

them that's going to help you reduce your credit utilization. Of course, don't call, get a credit line increase, and then proportionately use more you know, more credit because that's just going to, you know, be the same credit utilization. But call your bank, ask for a credit line increase, and then, you know, don't use the additional credit line increase amount. You can also call and negotiate interest rates sometimes. If they are high, you can say, okay, you know, I would, you know, want to talk about being able to reduce that. What can you do? And especially in times when pandemic times, the impacts are still there. There is a lot more leniency and forgiveness as well. And in the what banks don't want you to know spirit, this isn't out of the goodness of their heart. Let me tell you why they agreed to do this. Because the worst outcome for

any creditor is that you default, which is basically you are just like, all right, I don't have the money, so I'm not going to pay you anything. So what creditors are doing is they're saying, what is the highest APR I can charge you that you will still pay it back, but they don't ever want to, one, make them so high that you're not going to be able to pay it back. And two, defaults are just horrible for the bank. So if you call them and you're like, no, I think I will be able to pay this back if you can give me some leniency on the interest rate, then they are kind of incentivized to meet you halfway or meet you somewhere. So there's more, but those are probably the three top, top tips. Did I miss anything,

Tori? I feel like you've talked about this too. Yeah, I have a whole script on how to do it in my book. So if people are curious, the TLDR is just like, hi, I've been a, you know, a good, good, I don't know, loan recipient, like I've paid my bills on time. I would love this fee. I would love this fee removed, or I would love to inquire about a lower interest rate. Yeah, the whole thing's in the book. The one that I've negotiated, and this is specifically as a business owner, is I don't need business checks a lot, but I would need one probably a couple a year. And they want to charge me like $3 to $5 every time I get a business check. And I walk in there and they're like oh it'll be three dollars and I go oh can we waive the fee and they go sure like every time I just ask can we waive the fee and they say yes now

granted I think it's like the money in the account right they can see that we've been a customer for a while but like that's what that's you just ask you're like hey can I waive the fee and they'll typically waive it for you like and again you're like five dollars not a lot but like i don't want to pay five dollars five ten that's a starbucks right right yeah speaking of that you gave me the most beautiful transition and you didn't even know it i wanted to talk to you about this i did some research aka i saw tiktok about how starbucks is one of the biggest banks but people don't realize that it's a bank. So when you reload your Starbucks card in the app, which is what I do and many of my friends do, it's like, oh, my gift card's low. I re-upload it. In a way, Starbucks is a bank. They're holding your money.

They just got like an interest-free loan, right? Because you've already spent the money with them, even though you haven't received a drink, right? If I go put $50 in my Starbucks account, I've just given them a $50 loan. And I can look up while we're chatting, like how much it is. But it's something crazy, the amount of money that Starbucks just has in reserves. So talk to me about that. It's like Starbucks being a bank. Yeah, I mean, there's a lot of companies that do this. And it's smart, right? I think ultimately the insight is if you are an entity or if you are a person with capital to lend out, then you can make money on interest. And, you know, as the person who is giving them the money, just being smart with,

okay, what am I getting out of it? In Starbucks, you know, in the Starbucks case, you're getting a coffee, right? And you're, you know, a Starbucks member, but they do have a good loyalty program, right? And so, you know, some of that, some of what they earn, they go back to like give you rewards, et cetera, when you shop at Starbucks. But yeah, I think any entity that is holding money, they're able to lend that out and they earn interest on the money that they lend the same way that your commercial bank does. And then, you know, in most of the cases, they're like, great, I'm going to keep, you know, whatever percentage I got paid when I got that loan back. So yeah, it's a really smart move, you know, from Starbucks and Starbucks isn't the only entity that does that. Oh, I think about Venmo, right? Like, yeah, Venmo, exactly.

Sitting in my Venmo. So if you are that person, it doesn't necessarily, it's not necessarily a bad thing. Like, just like you said, like, I'm in there because I get free drinks and I want my free drinkies. But beyond that, it's like, if you do have a bunch of money in there, like, be more strategic about when you upload money. So I did a quick Google, 2.4 billion in cash in Q4 of 2021. I mean, that's a bank, right? They said if they ranked them, they would be the 385th largest bank in the United States if it ranked as a bank. I'm not surprised. I'm not surprised. Yeah. And with Venmo, I mean, that amount's going to be so much higher. I can't even imagine where they rank because people aren't cashing out, right? So I think this comes back to making your banking work for you. Of course, understanding fees is one piece, but another piece is growing your money and being strategic about the fact that

every single dollar you have, you can be lending that to someone else to be earning on, or you can be that smart person and you can say, okay, I'm going to be, you know, using a high yield checking account, a high yield savings account, investing, whatever else. And now you're the one who's, you know, profiting off of every single dollar versus, you know, in Starbucks case, that's different. But I guess, you know, that's a good tip, Tori, is being strategic about how much you're loading at a time because you could be, you know, earning on that on those dollars. One of my last questions we've talked about on the show, so we don't need to spend too much time, but we've had some bank closures in the past couple months. I think mixed with this, again,

valid distrust of banks taking advantage of minorities, I think there is also just this general feeling right now of like, are banks safe? We've talked about making sure that your bank is FDIC insured. Yes. Typically, it's up to $250,000, meaning that if you have up to that amount of money, your bank and your money is federally protected. Can we talk about any other things that we need to look out for to make sure that we're banking in a smart way? Absolutely. I mean, the number one question is that FDIC insurance, right? Because if all else fails, at least you get that money back. insurance, right? Because if all else fails, at least you get that money back. And it's, you know,

in their best interest during a bank failure to actually get you your money back because ultimately they want consumer confidence to be high. And the worst scenario is a bank run, right? Which is basically everyone starts pulling their money out of the banks and then that can lead to some pretty dire economic consequences. So check the FDIC insurance and just make sure that your bank is FDIC insured. And I think, you know, most other pieces that you would look at, I think goes back to just making sure that you're banking smart, that, you know, the give and the get makes sense. And I think, you know, thinking through a situation where you are paying a bunch of hidden fees and you're not earning interest or you're not growing

your money, that's not a great kind of trade in terms of what you're giving and what you're getting. So I would just think about, you know, your banking very critically in that way is, okay, you know, how much realistically am I going to be paying and what do I get? And the goal is to get more than you're paying. Brenda is always super helpful. It was so good seeing you. What's going on in your life? What do you want to plug? Tell us more about where people can find you. Yeah, absolutely. So we are super excited about our Sequin banking product. We're actually co-hosting a workshop with Her First 100K on July 20th, I believe, just to talk more about credit tips and banking tips and personal finance. So we'll continue the conversation there. But

we are super excited about our high interest checking accounts. And the idea is, you know, we want you to be using a high yield savings account, we want you to be investing, we, you know, love treasury, all of those things. But for every single dollar in your checking account, that should be growing as well. And what's great about it is it's actually connected to your debit card. So if you need to use it, you can, the best way to use it is actually to connect that checking account where you're earning money to a credit card with rewards, use that responsibly, and then you're growing money and your everyday spending both ways. So we're super excited about that. The second piece, and we've talked about this at Sequin,

is just building around our community members' needs and wants. And the theme of all this is women and minorities, right? And those who have really been left out in terms of having our needs met. So we have gotten feedback from our community on what they want us to build next after our high-yield checking accounts. And one of those pieces is the ability to get a personalized credit card, either debt payoff plan or credit building plan. And so you can plug your existing credit cards into Sequin and then Sequin's smart enough to say, okay, are you in debt payoff mode? Are you in credit building mode? And actually makes plans for you. So no more spreadsheets. And, you know, you can really see kind of your income in one place. And you can also see, you know, all of your debt and

your, you know, financial life in one place as well. So that's the second. And the third that we're thinking a lot about is helping you budget and really understand, okay, I have income coming in. We use this 50-30-20 framework of wants, needs, and savings, and helping you kind of split your income automatically and then see how you're tracking towards it as well. So that's some of what our Sequin community has voted for. But we really love our Sequin banking membership, and we love our partnership and all the collabs with you and your team. So yeah, that's what I'm super excited about, of just building and actually doing something that, for the first time in history, takes women and minorities' voices as that baseline kind of

trained model. We don't experience those implicit biases, whether it is paying hidden fees or not growing our money or not really partaking in the financial system at the same rates. Vrinda, thank you as always for joining us. It was so helpful. Thank you so much. I loved being here last time and I really appreciate you inviting me back. Thank you so much to Vrinda for coming back and joining us again.

If you haven't already, make sure to check out her previous episode on credit cards. It's one of our most popular for a reason. And if you want to know more about Vrinda or Sequin, check out our show notes page. We always link all of the things you need to know. Thanks as always for being here, Financial Feminists. Feel free to rate, review, subscribe to the show to support our work. We so appreciate it. And we'll catch you soon.

Thank you for listening to Financial Feminist, a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields, marketing and administration by Karina Patel, Sophia Cohen, Khalil Dumas, Elizabeth McCumber, Beth Bowen, Amanda LeFue, Masha Bakhmutyeva, Kaylin Sprinkle, Samaya Mullakario, and Harvey Carlson. Research by Arielle Johnson, audio engineering by Austin Fields, promotional graphics by Mary A huge thanks to the entire Her First 100K team and community for supporting the show. For more information about Financial Feminist, Her First 100K, our guests, and episode show notes, visit financialfeministpodcast.com.