Big Online Bank Accounts: Should You Choose One?
You will come across many alternatives to big banks that claim to offer the best deposit account interest rates. Back in the 80s, savings accounts reaped you 5 percent or a bit more than that. But, unfortunately, the economic condition of the decade deteriorated, and you have been subjected to insignificant rates of interest offered by major banks. Online banks which have emerged in the past few years are actually safe for most individuals just like Wells Fargo, Chase, Bank of America, and other traditional giants, with deposits counting up to nearly $250,000. This is why you can count on the big online banks.
High Returns From Savings Accounts
What’s the big advantage of a big bank and why can you rely on such a bank? Various online banks offer almost 2 percent for deposit accounts, and the rates of interest have incessantly climbed higher in the last year among a lot of competition. For instance, Ally Bank has slowly and steadily accentuated its online savings account interest rate from around 1.25 percent in the month of October last year to almost 1.90 percent by October this year. Marcus by Goldman Sachs, American Express National Bank, Discover Bank, Synchrony, and Barclays offer identical interest rates. In comparison to that, of a few largest traditional banks, which shell out a rate as insignificant as 0.01 percent, isn’t this a much better offer? Just for your knowledge, the average savings APY for all banks is about 0.09 percent. Now, it’s up to you to decide.
Much Higher Rates for CDs
Online banks are pioneers as far as certificates of deposit are concerned. These certificates of deposits are actually savings vehicles that offer comparatively higher returns but can’t be smoothly accessed by the customers throughout a given term. The national average rate last year on a one-year CD was approximately 0.27 percent for all the banks, whereas, the figure stood at 1.46 percent in the case of five online banks that are ruling the roost. By the month of June this year, the national average rate for all banks was estimated to be around 0.38 percent. In comparison, the figure has climbed higher to 2.20 percent as far as online banks are concerned. More and more consumers these days are opting for credit unions since they offer high rates.
Pros And Cons Of Online Banks And Credit Unions
If you decide to go ahead with an online bank, or in that case a credit union, and give a thumbs down to a traditional bank, there are some benefits as well as certain loopholes that you may come across. Apart from higher APYs, online banks furnish more mobile-friendly operations. With that being said, you might have to shell out ATM fees if you attempt to withdraw a certain sum from machines that fall outside the network. Aside from that, you may miss out on the face-to-face communication that you are used to during customer services at the physical branches. Certain drawbacks in case of credit unions might include a comparatively slower rollout of a brand new technology and a fewer number of bank visits if you move to an altogether new location. It’s also worth remembering that the membership requirements of credit unions can often be limiting, and that is a certain loophole to consider.
Non-Traditional Banks Accounts: Should You Go For One?
If you are eager to take a risk of approaching a non-traditional way of banking, credit unions and online banks are the best options as they can be a logical departure from the norm and benefit you financially as well. Keep in mind that if you need to deposit $1000 in your savings account which reaps an interest rate of 0.01 percent and pile on $100 each month over a period of five years, you would earn a trifle $3 as interest. Over the next 10 years, the amount would come to only a meager $8. By transferring the same amounts to an online bank which shells out an interest rate of 1.90 percent, you are more likely to rake in an amount of $399 as interest amount throughout the next five years and $1435 over the next 10.
You should, however, choose a bank account based on your personal needs. Do your research thoroughly, and once you’ve narrowed down your options, consulting a personal finance manager is always advisable.
More in Big Bank Accounts
Which is More Important: Money or Fame?
The views people hold about money and fame have always been shifting throughout the course of time and have left many with the...April 23, 2020
Why Is Branding Important for Your Business
When branding a business, it goes beyond the regular logo or graphic content. By thinking about the brand, you also include...April 21, 2020
Bees Are More Than Just Cute Insects: We’d Cease To Exist Without Them!
The collapse of the world’s honeybee population has been a hot topic in environmental science in the current times. However, there...April 20, 2020
Should You Get Your New Business Idea From A Startup Studio?
The concept of a startup is nothing new in today’s world. Several young and talented individuals come up with unique business ideas and aim...April 17, 2020
This Is How You Can Beat Your Sedentary Lifestyle
Advancements in the modern world have made everyone’s lives easier and that’s an undeniable truth. However, aside from all the advantages...April 16, 2020
Six Ways to Wisely Handle Your Finances During a Pandemic
Probably more than health issues, people get anxious about finances during a pandemic. The coronavirus pandemic has an overwhelming impact on...April 15, 2020
Listen Up! Here’s a Great Skill You Can Use to Improve Your Business in Every Aspect
It isn’t unusual for business owners, supervisors, and managers to hear the people around them, without actually listening to them. It...April 14, 2020
Six Things That You Can Never Buy With Money
Benjamin Franklin was right about money. Money has no capacity to produce happiness, nor has it ever been able to produce...April 13, 2020
Five Ways the COVID-19 Pandemic Might Be Saving the Planet
Few months had passed when the Pandemic Novel Coronavirus or COVID-19 swept across the world, leaving more than 69,000 deaths as...April 10, 2020