When reviewing your finances you might forget that you have other banking options outside of your big bank, like online banks. With the tech space booming, the banking industry is changing more than ever with these online banks. Meaning you have more options on where to save your dollars with little-to-no fees and high-interest rates for your savings. That puts traditional brick and mortar banks in the hot seat and you benefiting from these services. Now as a tech-savvy society, how do we become smarter with our money and where to bank it?
You might also be asking yourself “well, how do I choose the best online bank for my situation?” And are you ready to make the switch or implement these online banks into your High-5 Banking Method? The goal here is for you to figure out which online bank benefits your personal financial situation. This is going to be different for everyone, so let’s go deeper into figuring out what you need to look for in these online banks.
Here are my go-to tips when going over online banks:
- Review your banking needs
- Research highly rated online banks
- Review the fine details on these banks
*Bonus: Other Online Banking options
Review Your Banking Needs
When looking to open new accounts, you want to list out all of your potential banking needs first. At this point, list out what you don’t like about your current bank and what you’re looking for in your new bank. This can be like a pros and cons list that you do on a separate sheet of paper. Some of the popular cons are bank fees, like ATM fees, overdraft fees, and maintenance fees. A few other details to look at are the minimum transactions and minimum account balance. These little details could be causing you to get charged more fees than necessary.
After that, I would recommend to write out which bank accounts from the High-5 Banking Method that you’re ready to open. Then start figuring out if your current bank will be a good fit or if an online bank would be a better fit. You might find out that you need an extra checking account for your lifestyle expenses or you might need high-yield savings to account for your emergency fund. Everyone has different needs, that’s why it’s important that you list out what your financial need is on paper before opening or closing accounts.
Researching Highly Rated Banks
When you do your research online, definitely look at the customer service ratings on blogs, YouTube, and Facebook. Yes, you read that it right, all of these search options allow you to get well-rounded banking critique from real customers. I am telling you, I’ve learned more about banks from Facebook comments and boards than their own bank’s website. These communities aren’t scared or getting paid to fake their real experiences. I know when looking at so many banks, all of them might seem to blend together. The truth of how these banks function and treat their customers will only come from real customers. Take your time and take this extra step in your research.
Reviewing the fine details
When reviewing online banks, you need to make a clear list of all of the advantages and disadvantages. For many of these online banks, you can’t compare them to your traditional big banks, you have to compare them to other online banks competing for your business. The reason I say that is because the brick and mortar banks have a larger overhead compared to online banks. Because the tech is saving these online banks a lot of money and they’re able to share that with you instead. I made a small list of highly important details to consider when comparing these online bank options. Also, please take note of how these online banks charge fees.
Annual Percentage Yields
Annual Percentage Yield is noted as APY, and it is pretty much the interest you will be earning on your account. Keep in mind that this yield is calculated on a monthly basis depending on how much money you have in your account. The APY is also open to going up or down at any time during the year, don’t stress this too much. Things change and this yield is no different. It fluctuates with the economy and the need the banks have for your savings. Most online banks do offer high-yield checking accounts and savings accounts with a high APY. This can be very beneficial for many and should be something to take advantage of.
For most online banks the minimum deposit is around $0-$1. As a side note, this is very different than what we’re used to from our big banks. The lower the amount, the more flexibility that gives you to start banking with these online banks as soon as possible. One thing to note is that if no money is deposited within 60ish days, your account could be closed. This is pretty typical for most empty accounts.
For most online banking you can expect a minimum balance of $0-$15,000 depending on the bank. Most of the good ones have a minimum balance of $0. This is something you want to keep a close eye on, as every bank is different. Especially when you’re using a savings account for an emergency fund or a savings goal that will require all of the savings. This allows you to have an empty account for a while without getting penalized.
Take note of how you can deposit money either through transferring from your primary bank or in cash. I’ve noticed with a few app banks they charge you to deposit cash. Also, take note of the ATM reimbursements and locations. This is a big deal if you use ATMs or travel. The main thing you want to be aware of is how your planning on using these online banks and that they’re FDIC approved. All of these tips are important including how these banks charge fees. Lastly, if an online bank isn’t for you that’s okay. You have other local options like credit unions as an alternative to big banks and high fees.
* Bonus: Online Bank Options
I wanted to share some of the highly-rated “other” online bank options that have changed how many people manage their money. The top three options outside of brick and mortar big banks and credit unions are listed below in more detail.
- Online Banks
- Credit Card Companies
- Financial Services Companies
These banks offer great benefits that traditional banks can’t offer with no fees or minimum requirements. These banks are solely online and don’t have a physical location. Here are some great online banks to compare:
Credit Card Companies
Another option many people don’t know about is that credit card companies offer amazing banking options. Some credit card companies to compare are:
Financial Service Companies
Lastly, many financial service companies offer cash management accounts that offer debit cards and money market savings accounts options as options. If your goal is to invest then this can be a great option to have money in hand ready to invest as well. Some financial service companies to compare are:
This was a pretty long blog post, sorry about that, but I want to make sure you have a good list of to-dos before starting your banking research. It is so important to re-evaluate your current money management strategy with some new methods and services. The banking industry is changing and it is time for us to take advantage of the big changes that are available. Good luck on your research and hopefully one of these other online banking options are a good fit.
If you have any questions please feel free to leave a comment.