I left Bank of America many years ago to join a local credit union and take advantage of better interest rates, better service, almost no fees. At the time I thought that was a good at it got. Then one day I learned something that not many people know about and I want to yell it from the rooftops. Are you tired of dealing with big chain banks like Chase and Bank of America? I hate getting dinged with fees for account maintenance or not meeting a their suggested minimum balance. Charge me when I do business with you, but don’t charge me for simply being a patron! These banks profit from the interest they charge when loaning out my money to others, so why should they charge me for entrusting them that money? Somehow we’ve let them get away with making money on both ends of that deal. I’m really not against banks, I promise. But too many people have accepted this as “just the way it is”, when in reality, there are much better options available if you know where to look. A while back I read a book called I Will Teach You To Be Rich where author Ramit Sethi opened my eyes to the world of internet only banking.
“Internet-only” sounds shady, so at first I thought it was a scam.
I had never heard of these banks before, so I began to ask around to see if I was the only person not privy to this information. Immediately I realized this must be a best kept secret because not one single person could tell to me exactly what an online only bank was. When I explained it to them, they said the benefits sounded too good to be true. The good news is, that’s not the case at all! I did my homework and these are regular FDIC insured banks based in the US with good reputations. Soon after that I became a customer myself and have been extremely pleased ever since. After examining all the benefits I would get with my new bank, making the switch was a no-brainer.
Here are the benefits I received when joining my internet-only bank.
- No monthly fees
- Free Checking and/or Savings Account – No minimum balance required (I opened both with $0)
- No overdraft fees – Either set up overdraft protection or prevent your card from letting you spend more than you have
- No ATM fees – Use their huge network of ATMs, or use any ATM and get reimbursed for up to $10 a month if you’re charged a fee
- Free checks, forever
- 0.10% Interest rate on checking accounts under $15,000 (Compare with Bank of America at 0.01%)
- 0.60% Interest rate on checking accounts over $15,000 (Compare with Bank of America at 0.02% between $10,000 and $100,000)
- 0.99% Interest for your Savings Account (Compare with Bank of America at 0.01%)
- 24/7 Customer Support
How is it possible?
Let’s compare. According to their website, Bank of America had 290,509 full time employees as of September, 2011 and they’ve surely grown since then. Ally Bank (top rated online-only bank) on the other hand, has only 7,100 as of December 2014. In a nutshell, online banks have less overhead and don’t have to bother with brick-and-mortar locations so they can afford to offer better rates.
Internet only banks are not perfect.
But let’s be honest, nobody’s perfect. Due to an error on their part, it took Ally Bank about a week to send my debit card when it should have been sent out immediately. Also, Ally used to reimburse all your ATM fees, and only recently added a $10 cap which is a bit of a downer. Lastly, you cannot deposit cash, which isn’t much of a problem these days but it was problematic when I was switching from a cash budget to the EveryDollar budgeting system. Honestly, those are the only downsides and the pros significantly outweigh the cons. Plus signing up for an account was super easy, and I love their web interface. Whenever I call their 24 hour support line, they make me go through a ton of ID verification before giving me any information which may sound annoying but this is actually a good thing. In a world where identity theft is spreading like the plague, it’s good to know my money is secure.
Update: My mom recently read this article and emailed me with some concerns. I addressed them but if you’re interested in seeing what she had to say, please read Some People Say Ally Bank is No Good.
Don’t put up with the big chain banks just because they are right down the street.
Think about it, when was the last time you really needed to go into a bank? These days you can deposit checks with your phone, get cash from an ATM, and transfer funds online. Walking inside a bank is a waste of time. I’m here to tell you that this change will be one of the best upgrades you can make, and it only takes a few minutes to do it. You’re probably thinking, “wow, that’s interesting, I’ll have to check that out.” Don’t put this on the back burner, go check it out right now! If you’re looking for convenience and a way to save money, make the smart choice by optimizing your bank account today.
Why I chose Ally Bank
I don’t ever jump into anything without researching first. Ally Financial came up time and time again when looking at the top online only banks. In fact, Ally has been rated the top online bank for the past 4 years in a row, which you will see plastered all over their website. If you don’t want to take my word for it, just take a look at the chart below comparing the top online only banks to see for yourself.
Some of you have asked why Ally ranks so low in the credit category. This is because Ally doesn’t offer credit cards and they only do auto loans. It’s because of these limitations that they’ve scored so low in comparison to these competitors. If credit cards and loans aren’t important to you (you don’t need them) then Ally Bank is the perfect choice. If credit is important to you, Nationwide Bank and Connexus Credit Union are great alternatives.