I’m a Former Banker: My 4 Top Tips on How To Make Banking Work for You
There was a time when getting the most out of your bank meant jumping through industry-erected hoops — maintaining a minimum balance, using only in-network ATMs, always having enough in your account to cover checks and debits, etc.
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But with so many disruptive alternatives offering so many different options, modern customers can avoid those hoops altogether by choosing the right account at the right financial institution.
GOBankingRates asked industry veterans for tips on making the most of the banking system, and all agreed that once you find the right home for your money, you won’t need tips to enjoy a secure, convenient and fee-free experience.
Choose the Right Account — And Never Take ‘Fee-Free’ for Granted
Joel Schwartz, founder and co-CEO of DoubleCheck, a fintech company designed to help financial institutions with overdraft protection, spent 20 years as a banking executive, including roles as senior vice president and regional manager at First Bank and branch and cluster manager for Downey Savings.
He knows as well as anyone that phrases like “free” and “no-fee” can be little more than slogans if you don’t read the fine print.
“While checking accounts listed as no-fee accounts may not charge account maintenance fees, they usually are still able to charge other fees,” said Schwartz. “They include ATM, overdraft, bounced check fees, account inactivity fees and more, depending on the account and bank.”
The key, according to Schwartz, is to understand what type of fees might be associated with your specific account type.
“For example, a business checking account may have an account analysis fee, whereas free checking personal checking accounts have no fees if certain requirements are met,” he said. “There are out-of-market ATM fees, fees that kick in if minimum balances aren’t met, overdraft fees, non-sufficient funds fees, service fees, etc.”
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If You Chose a Brand-Name Banks With Branches, Prepare To Settle
In recent years, the banking industry has dramatically reduced fees like the kind that Schwartz discussed, but if your bank is a household name with physical branches, it’s much more likely that they’ll charge you to access and manage your money. Most brick-and-mortar big banks still charge at least some of the four major fees — ATM withdrawal, maintenance, overdraft and insufficient funds.
“Opt for banks with low or no monthly fees and minimum balance requirements,” said Fluent in Finance founder Andrew Lokenauth, a banking industry veteran who held leadership positions at JP Morgan, Goldman Sachs and Citi®. “And look for banks that refund ATM fees from out-of-network machines.”
The easiest way to do that is to ditch your big bank and its expensive and nearly obsolete physical branch format altogether.
Bank Online — They Charge You Less and Pay You More
Online banks and financial institutions, like Sofi, Ally and Varo, charge zero fees — except for wire transfers, in some cases — and let you do virtually everything you can do in a branch from the comfort of your own phone.
“Take advantage of technology,” said Lokenauth. “Use mobile banking to deposit checks, pay bills and manage accounts anytime.”
Not only are online banks much less likely to take your money through fees, but they also tend to pay you more by passing their lower overhead costs onto their customers through top-dollar APYs.
Online options like Ally, Betterment, Sofi and Varo currently pay between 4% and 5% interest on savings deposits, which gives you a real opportunity to compound your growth with investment-level returns.
On the other hand, the biggest banks — many of which are raking in record profits — dole out the stingiest yields in the industry despite the highest interest rates in more than two decades.
Pick a Bank That’s Investing Heavily in Mobile
If you prefer the comfort and familiarity of neighborhood branches, make sure to choose one that spends as much on digital infrastructure as it does on rewarding its shareholders.
“One of the best strategies for consumers to make the banking system work better for them is to choose a bank that is investing big in digital and mobile banking technologies,” said Andrew James, a project consultant who has a decade-long contract with Lloyds Banking Group. “Banks that prioritize these technologies are more likely to offer user-friendly apps and online platforms that make it easier for customers to manage their money, keep track of their spending and detect any fraudulent activity quickly.
“Additionally, banks that have poor mobile apps, or even no mobile apps, are likely to have poor back-end systems and rely on a lot of manual processes or workarounds, speaking from experience. Customers will find this out when simple requests take an age to respond to and some things ‘fall between the cracks.’ Digital banking platforms just offer a better service all around.”
10 More Tips for Better Banking
Lokenauth and others offered the following 10 tips in addition to the previous four, to give you a better banking experience no matter where you keep your money.
Set up account alerts to monitor transactions and catch fraudulent activity.
Enable two-factor authentication and biometric logins like fingerprint or face ID for added security.
Ask about special offers like new account perks, cash bonuses or fee waivers, even if you’re an existing customer.
See if any relationship discounts are available by bundling accounts.
Check rates frequently and negotiate for better deals on loans and credit cards — you’ll often get one just by asking.
If you use a lot of cash, choose a bank that reimburses out-of-network ATM fees.
Communicate with your bank. For example, notify them before making large purchases or taking trips to prevent fraud holds.
Ask questions and provide feedback regarding customer service and policies.
If you choose a physical bank, take advantage of it by visiting your branch often to build relationships with local staff for personalized service.
Consider credit unions, which are member-owned non-profits that often offer better rates.
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This article originally appeared on GOBankingRates.com: I’m a Former Banker: My 4 Top Tips on How To Make Banking Work for You
