Choose the best online banks for your money-saving budget
Online banks have increased in popularity over the last decade or two. Without having to compete with traditional banks, digital banking can follow you everywhere, compared to being stuck in limited locations.
Whether you’re a student who doesn’t have time to make to a physical bank or a globetrotter who won’t be tied down, online banks allow people to be as free from buildings as possible. These are a few reasons why online banks have become even more popular today. Add in reduced fees and you can consider your money-saving budget free of unnecessary spending.
When start your budget and avoid unnecessary fees, an online bank might be the best option for your successful lifestyle.
It’s important to look at many aspects of online banks. Each online bank might have similar incentives that could appeal to people, but each incentive comes with a drawback. Most traditional banks require opening deposits, monthly fees, and tack on additional fees for certain spending behaviors, like overdrafts or money-transfers.
Compared to a brick-and-mortar bank, online banking offers many options that traditional banks don’t, but they also have their share of shortcomings too.
Pros: No Banking Fees, Mobile Deposit, High Yields, Money Transfer System, ATM Fees
Ally’s high-interest rates for its checking accounts are promising for many account holders. High-yields for checking accounts are hard to find.
Ally also promotes a new money transfer system. While they also partner with Zelle, they created a new system so they cannot have fees.
Their reimbursement policy on ATM fees is also a bit different from the norm. Ally promises up to $10 for ATM fees but also cater’s to their free ATMs. Most banks, online or otherwise, would not allow reimbursements for ATMs.
Cons: Overdraft Fees, Cash Deposits
Compared to many overdraft fee policies with online banks, Ally doesn’t offer free overdraft fees. It does allow a free 1-day grace period for overdrafts, but will still charge you $25 for any overcharges on your account.
Cash deposits are also not available with Ally banks. Most have cash deposit options, such as Green Dot banks, but Ally doesn’t have options for cash deposits.
Pros: Early Payday, No Banking Fees, No Overdraft Fees, Round-up Savings, Transaction Alerts
One of the attractive things about Chime’s banking solution is an early payday. Deposits can hit your account up to two days early compared to other banks.
Round-up Savings is also a great incentive. With every transaction, Chime rounds up the spare change and deposits it into your savings account.
Transaction alerts are another incentive to help you develop a money-saving budget. While it seems counterproductive, the alerts are set to help you establish a budget.
Cons: ATM Fees, Green Dot Cash Deposits
ATM fees are not reimbursed by Chime. They offer free ATM withdrawals from their supported ATMs but, otherwise, it will cost you a bit extra for your ATM needs.
Cash deposits are only available through Green Dot suppliers. Green Dot suppliers are usually associated with Walmart and other retailers that you might be able to deposit checks like travelers or cashier checks.
Pros: No Banking Fees, No Overdraft Fees, Mobile Deposit, Money Transfer System, Round-up Savings, Savings Goals, Transaction Alerts
Simple is the most similar to Chime but has a few more options to achieve your money-saving budget goals. To achieve a money-saving budget, Simple offers round-up savings, savings goals, and transaction alerts. Simple combines Acorns and Twine apps together for a savings account with your bank.
Lack of fees for banking, opening an account, and overdrafts are other incentives for Simple checking and savings accounts.
Cons: ATM Fees, Checks
Checks are not as favorable for today’s clients, just like traditional banks. That being said, checks are still available for mobile-deposit and are available for order for a $5 charge.
While the ATM will charge you a fee if you are not a member of the bank associated with the ATM, you will not be charged by Simple.
Pros: Early Payday, No Banking Fees, No Overdraft Fees, Round-up Savings, Savings Goals, High Yields
Varo is also one of the few digital banks that offer early payday incentives. Like Chime, you can receive your paycheck up to two days earlier. It’s not only valid for direct deposit paystubs but also applies to tax refunds and any other payments.
Varo is also a great money-saving budget tool. It allows round-up savings and savings goals to start your goals.
High-yields are also another incentive for Varo. Varo offers about a 2% yield in your savings account. That high percentage could potentially earn users about $20-30.
Cons: ATM Fees, Green Dot Cash Deposits
Green Dot Partners are most commonly associated with Walmart but Varo at least allows you the option to deposit cash.
Like many ATM fees, Varo promotes many fee-free ATMs but also might charge you if you frequent an ATM outside of their network.
Pros: No Banking Fees, Mobile Deposit, Money Transfer System, High Yields, First Checkbook Free
I’ve heard many great things about Capital One 360s online bank. The Capital One 360 account has many incentives for account holders.
While not the highest yield options, Capital One 360 creates a tiered system depending on the amount in your account to create a high-yield earning potential.
Capital One 360 also offers a free checkbook for account holders.
Cons: Overdraft Fee Tier System, ATM Fees
While many online banks have no overdraft fees, Capital One 360 offers 4 different level tiers for their overdraft protection charges. Account-holders can choose from auto-decline, savings transfers, credit-line overdraft, or a free one-day grace period option. Each option is a great incentive and offers a way to avoid fees but makes it a bit more complicated than some of the one-option variants for other online banks.
What are your reasons for considering an online bank? Leave me a comment below about why and which online bank you considered when making the switch.
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