Banks like to tell you that keeping all your money with them brings certain perks, like free checking or lower fees.
But finding real, usable benefits from big banks is getting harder and harder. Should you keep all your accounts with one bank, or is it time to branch out?
But what about loyalty?
Loyalty gets mentioned a lot when you start thinking about switching banks. Yes, “relationship pricing” is real and it does have some benefits — but those benefits are often just linked to the amount of money you have on deposit.
Let’s look at two examples of loyalty benefits from big banks:
To get actual perks from Wells Fargo, like free checks, you have to do one of the following things: have a total of $10,000 sitting in linked accounts, take out a mortgage with them, or pay $13 a month. That’s a lot of commitment — especially if you can’t remember the last time you wrote a check.
This is not a criticism of Wells Fargo — most big banks are similar. At TD Bank, the Relationship Checking Account pays a small amount of interest and will reimburse all ATM fees if you keep at least $2,500 in the account. You’ll need to have at least $20,000 in deposits or loans, however, to waive the Relationship Checking Account’s $25 monthly fee.
While we all like perks and fancier-looking debit cards with affluent-sounding names like “premier,” “platinum,” or “preferred,” there are other options worth considering.
Online-only checking accounts
Online-only banks tend to offer free (or very low-fee) checking accounts with better interest rates, and savings accounts that actually yield a return on investment. The lack of brick-and-mortar buildings means their operating costs are lower, and some of that savings is passed on to consumers.
If you do most of your banking online and on the go and can’t remember the last time you stepped inside a branch, then an online checking account could be a great option. Most have easy app integration and no monthly fees. Read more about why free checking never went away — and where to look.
Online-only savings accounts
Online savings accounts are a great way to test the waters of online banking, and they offer some of the most competitive interest rates out there. Here are a couple of options worth considering:
Capital One 360 Savings Account
The Capital One 360 Savings Account offers a competitive interest rate and offers several unique features. Our favorite is that you can have up to 25 linked and nicknamed accounts, making it easier to earmark savings for different purposes like “House,” “Car,” or “World Pizza Tour.”
Barclays Dream Account
The Barclays Dream Account is an excellent option if you are not sure about online banking and only want to move a little bit of your savings away from your main account, or if you’ve only just started saving. Your initial deposit and any subsequent monthly deposits must be under $1,000. The account offers a 1.05 percent APY, as well as some neat bonuses if you make a direct deposit every month for six months.
Other online banks worth looking into include Synchrony at 1.05 percent APY, and MyDirectSavings at a 1.10 percent compounding daily rate.
Important note: Savings rates change often and may be out of date. See the link below for that latest savings rates:
If you don’t want to make the leap to straight-up online banking, credit unions are a nice middle ground between online accounts and traditional banks.
They provide a mixture of brick-and-mortar branches, lower fees, and generally better rates than most mainstream banks. As a general rule, credit unions are more likely to approve their members for lines of credit like auto loans, judging them on more than just their FICO scores. However, the interest rates on these types of loans are not broadly advertised online and will often require you to shop around until you find the best rate.
Diversifying can make it easier to reach your savings goals
There’s an extra benefit to not keeping all your eggs in one basket: Keeping a separate savings account with a different bank — whether an online bank, a credit union or a different major bank — makes it more difficult to “borrow” money from yourself to pay for purchases you don’t need.
Sometimes the convenience of linked savings and checking accounts can work against you and your savings goals. Keeping a separate account adds another layer of security, making it less convenient to withdraw cash while still giving you easy access in case of a genuine emergency.
Keeping all your money in one bank does offer convenience — you can run all your errands by visiting one branch and you don’t have to manage multiple accounts. If ATM access and face time with your bankers is very important to you, traditional banks still offer the best access and most locations.
If you do most of your banking online and last stepped into a bank to nab a handful of free lollipops, then an online checking or savings account will offer you more competitive interest rates (and you can use the extra cash to buy better candy).
If you just don’t like taking sides, or want a mixture of personal interaction and better rates, a credit union in your area will help you earn higher interest on your savings as well as offer more competitive rates on loans.
Looking for banking alternatives? Use our resources to find an option that’s right for you: