These days the consumer-to-banking relationship is really a given one way relationship. With the old-school tradition of doing business with a brick and mortar shop, most consumers are led to give into giving up their buying power to traditional style big banks in order to be less concerned with knowing there funds are safe and available.
In truth, these banks gain more than the consumers who are depositing there funds into these bank accounts due to average annual checking account yield around .01%. To put into context, let’s say you have $50,000 dollars and you would like to keep this money available at anytime but not have to carry it around with you. So you decide to setup a checking account at one of the big banks (Chase, Bank of America, Wells Fargo, Citi, etc.). If you were to keep $50,000 in the checking account for one year and not spend it at all (which would probably not be realistic but let’s keep it in a worst case scenario), the interest generated would be around $5. Is it really worth it?
Of course, the interesting thing is that these banks are typically FDIC insured up to $250,000 per consumer. This is what makes your funds safe in case a bank were to struggle financially for whatever reason. Do you know what other banks are FDIC insured? Online banks. Wait. I know what you’re probably thinking. That’s great and all that they can provide safety if a online bank were to go bankrupt. However, the funds aren’t easily accessible. That is true somewhat but nowadays banks are able to refund on ATM fees monthly, and/or offer other ATM locations to easily access your funds. Of course, the dilemma would be learning to do a new process to get your funds in terms of finding the ATM that wouldn’t cost you as much if at all and seeing if you might have to go a little farther to obtain your funds.
I guess, in truth, there are pros and cons to both online and traditional big banks. Below are a few banks that have sort of came out above both types and excel.
Aspiration is an interesting financial institution. It’s checking account currently yields around 1%. So on the same $50,000 in the previous example, the interest earned after a year would be around $500. In addition, they offer refunds on ATM fees and similar to what was mentioned above offer ATM-free locations.
NBKC is a bank based in Kansas City, MO. It offers a 1.01% annual percentage yield with no monthly account fees, no minimum balance, no fees at Moneypass ATMs and up to a $12 refund on any other ATM fees.
American Express High Yield Savings? Ally High Yield Savings? Discover High Yield Savings?
To be honest, I probably wouldn’t go with any of them. Well, except maybe Ally which is hovering right about 2% APY. Synchrony Bank high yield savings is right about there too. Maybe Wells Fargo high yields savings? Yea right, with that fake account scandal, I’d pass.