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Get Out And Stay Out. Go The Way Of Online Banking.

I went through a break up earlier this year.  It was one of the longest relationships I was ever in.  I felt safe and taken care of for a very long time, but then the more I came to learn, the more I realized I wasn’t actually being supported in a very healthy or productive way.  And actually, if I’m being completely honest I was seeing someone else at the exact same time.  They weren’t really supporting me either.  Things were so complicated- they both leaned on me in different ways, and ultimately I wasn’t gaining much of anything in return.  And as this all began to weigh on me, I knew I needed a change.

So in January, I broke up with Chase and Bank of America for my personal banking.

The History

Chase has been my family bank for as long as I can remember.  Growing up in suburban New Jersey, there were ATMs and Banks aplenty- convenience was pretty key in selecting which bank you might want to keep your money with, and you didn’t have to look too far to find a Chase.

I had one Chase checking account, and one Chase savings account for as long as I can remember, and that’s where all my money lived.  Then one day, we packed up the car with linens, books, odds and ends, and my parents drove me up to Boston to begin a new life chapter at college.  There was one hitch we realized pretty quickly upon arriving in Boston- there was NO Chase in sight.  In fact, Chase only opened their first Boston branch back in 2018,  six years after I graduated and left the city!

Enter the mistress, Bank of America.

I signed up for a BofA checking and savings account right inside my college greeting hall.  They had a little table set up, and were poaching out of towners left and right.  “Well I NEED to have access to an ATM right?  I don’t want to pay that ATM fee every time I want to take out money!” (*Shakes fist at sky in outrage over ATM fees*).

I signed on the dotted line, and all of a sudden I had two banks in my life.

I banked with BofA pretty exclusively through my years in Boston, and then came back to NYC post-graduation and stayed with them primarily.  I used my BofA for my professional money flow, and my Chase became a pseudo savings zone, sort of out of sight out of mind for me.  It seemed to work pretty well for a while.  And then I got wise to these institutions and the way they were taking advantage of me for that precious perceived “convenience”. 

Towards the end of 2019 as I began devouring information and resources related to personal finance, I discovered Ally Bank, and I was smitten.  (Note: Please do see my Disclosures page for more info, but I have no vested interest in Ally other than I love using them as a bank personally).

The Present

I have to admit, at first the notion of an entirely “online bank” unnerved me a bit, but in hindsight I do enjoy having a good chuckle at my old hesitations.  I’ve found so far that the pros are transformative in terms of the way I can structure my finances, and the cons…well there really aren’t many.  Let’s review.

Pros

1. High Interest Rates – While I was with Chase, I was receiving a 0.01% APY (Annual Percentage Yield), meaning I was making .01% annually on the money I kept in those accounts.  When I signed up with Ally in January, I opened an Online Savings Account which yielded me 1.6% APY.

Woah.

Let’s recap quickly – I went from getting a 0.01% to a 1.6% return on my money.  160x better.  You can collect your jaws off the floor now, I’ll wait.

When I found out that accounts such as these existed online, with no funny business (it’s literally a normal savings account, without a branch to walk into), I was flabbergasted.  I felt betrayed by Chase.

It’s worth noting that those rates have since been cut down because of actions taken by the Federal Reserve in cutting interest rates, and I now receive 1.0% interest in that same account. 

For the sake of example – If a person were to keep $10,000 in a Chase Savings account vs. one of these online high interest yielding accounts (at 1.0% APY)- after one calendar year, the Chase account would yield $1, while the high interest account would yield $160 in the same amount of time.

Like I said, this was a relationship I simply had to leave.

2. ATM Fees – I was always taught to avoid ATM fees as much as possible, but that usually meant seeking out the ATM which corresponded to the bank I wanted to withdraw from.  And sometimes it’s not really possible to do that, and you end up eating the $2-4 service charge.  Yuck.

Ally is one of many online banks that operates within a network of ATMs that charge $0 for withdrawals- the “Allpoint” network. (Do you have an Allpoint ATM near you?  I bet you do, take a look.)

I have a few ATMs in this network right on my block.  And if I can’t find one for whatever reason, I can actually use any ATM I want, and Ally will reimburse me up to $10 each month for ATM fees in my account.

Ally 2, Chase 0.

3. No Hidden Fees – Like, none.  Really.  No minimum balance requirement, no monthly maintenance fee, and no fee for wires or bank transfers.

This is one of my favorite reasons to have made this switch because having no transfer fees has become paramount to the way I manage my savings and buckets.  I’ll detail in another post the way you can set up automatic transfers to your online savings buckets, but Ally makes it incredibly easy- plus you still have the ability to use Zelle, and even move money around via Amazon Alexa voice command if you’re super savvy! (I only just got my lightbulbs set up for voice command, so I’m still a little ways away from vocal banking).

Just as a point of comparison, you can link up to three external accounts to a Chase bank account before they’ll start charging you some $ to move your $ around.  I currently have ten external bank accounts under my finance umbrella (Don’t freak out!  They all have a purpose!)- most of which are held with Capital One 360 Savings, which I also highly encourage you look into.  I keep Online Savings accounts with Capital One for a myriad of different things- including money I set aside for taxes, for annual holiday gifts, a vacation fund for myself, and a few other things.

Cons

There are just a few, and maybe they won’t matter that much to you- they don’t seem to bother me.

1. No Physical Locations – Um, yeah.  You can’t actually walk into one of these banks and look someone in the eyes.  So what?

You might think, “Well what if I need to TALK to someone?  What do I do?!?”

Ally has incredible customer support via phone.  The few times I have called I have rarely had to wait more than a minute or so, and they are 1000% available to their clients in problem solving.

2. Cannot Deposit Cash – Because there are no physical bank branches, you actually cannot deposit cash into these accounts.  For me, that’s totally fine- I do acknowledge a lot of folks that are in the service industry or who nanny full time and are paid in cash might take some umbrage with this.  If you are one of those people who has a large cash influx each week or month, then totally consider keeping a brick & mortar bank checking account to deposit your monies.  But send that cash over to your high interest savings and get that sweet rate after!

The Future

As I think I’ve made pretty clear at this point- I love my new bank.  They treat me right, I’m getting an awesome annual return on my savings, and there are no little surprises along the way so the trust is super strong.  I don’t think I’ll be moving institutions any time soon- but I’m always open to hearing about who is offering the best rates.

As I mentioned the online savings rate has taken a dip generally as the Federal Reserve navigates the Coronavirus pandemic, but we’re hopeful to see those rates go back up in the coming months and years.  But there’s no denying that even 1.0% is pretty far and above the competitors.

I’ll leave you with this: do some research on these companies.  Groups like Ally, Simple, Capital One– they’re all FDIC insured up to $250,000.  It’s not a scam, your money isn’t going to disappear after your third deposit.  It’s going to sit there safe and sound, and grow.  At Creative Finance we will be continually looking for ways to make your money work harder for you, not against you- and this is right in line with our philosophy.

Just starting to take your emergency fund seriously after Post #3? (Be Prepared! Why You Should Have An Emergency Fund).  Consider starting an online savings account where you can get some kind of return on that money.  Don’t let your bank take advantage of you.  If I were you, I’d tell your brick & mortar to get out and stay out, because you’re taking back your life.

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