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Do You Need a Local Bank?

Do you need a traditional retail bank?

Until recently this might have been an odd question. Bank failures, government bailouts and increased fees are causing many people to stop and think about their choice of bank. In this day of direct deposit, ubiquitous ATM’s and increased competition some people are realizing that all of their banking needs can be met in other ways – often with better rates and lower fees!

Retail banks offer a variety of financial services, but the majority of people use them for checking and savings accounts. The #1 criteria for choosing a local bank is often convenience. People tend to give their business to the bank that is closest to where they live or work even though a better deal can be found elsewhere.

Where can a better deal be found? Two sound alternatives to retail banks are credit unions and online banks.

Credit Unions

Credit unions are similar to banks with one key difference: they are nonprofit, member-owned cooperatives. Credit unions return any profit to members, generally resulting in higher checking and savings account interest rates and lower fees than retail banks. Deposits are federally insured.

Credit unions may offer a more limited range of services than a retail bank. They may also provide restricted access to ATM’s and have branches that are less convenient to visit.

For more information about credit unions visit the Credit Union National Association [1].

Online Banks

Online banks are retail banks without branch locations. Eliminating the cost of operating local branches results in a savings to the bank that is usually passed along to customers in the form of lower fees and better interest rates. Paying bills or transferring funds is incredibly easy and efficient. Online banks are open 24/7 for your convenience. Deposits are federally insured.

Obtaining money from on online bank isn’t as easy as a retail bank. ATM cards are provided so you can withdraw cash, but ATM access may be restricted.

Two popular online banks are ING Direct [2] and HSBC Direct [3]. Other options can be found at The Best Bank for Your Money [4].

Where do You Bank?

Do you still bank at a traditional retail bank? Have you switched to one of these alternatives and love it? Are there other worthy bank alternatives not mentioned in this article?