Banking: Brick & Mortar vs. The New Online Order
In our digital world, nearly everyone is walking around with a small computer in their pocket. Your smart phone puts many things at your fingertips, including online banking options and bill pay options. If you’re comparing fees, interest rates, or you don’t like traditional banks – an online bank (like Ally, Chime, and Varo) can be a good option.
Passing on savings to customers
Online banks do not pay for a physical location – so they save a bit of money. Usually, they pass some of those savings to their customers by offering higher interest rates, lower fees, and fewer fees. Ally, Chime, and Varo – online banks – have an average monthly maintenance fee of $0 for checking accounts, and the average annual percentage yield (APY) for savings accounts is 0.47%.
Compare those fees to Chase Bank, Bank of America, and Wells Fargo – the biggest banks in the United States in 2020. They have an average monthly maintenance fee of $11.33 for checking accounts, and they all offer an APY of 0.01% for savings accounts.
Weigh your goals
It is critical to weigh your goals and your options when you are choosing a bank account. Some pros and cons for online bank accounts and traditional brick and mortar banks below. If you have questions or want to talk to a housing counselor about finding the right bank account for you, please reach out to a housing counselor at Piedmont Housing Alliance!
Examples: Chime, Ally, Varo
- Lower cost to operate so fewer fees, lower fees, and higher interest rates
- 24/7 access to mobile site
- Better design and accessibility for website/mobile site
- No physical location – cash transactions can be difficult
- No face-to-face assistance/customer service
Brick and Mortar aka Traditional Banks
Examples: UVA Credit Union, Bank of America, Wells Fargo, Truist
- Physical location to make transactions like depositing or withdrawing cash
- Face to face assistance/customer service
- Higher cost to operate – that can mean more or higher fees and lower interest rates
- By and large, a clunkier website/mobile site