This is post #26 from the 30 Day Personal Finance Challenge: Boost Your Financial Health with a Daily Tip!
Do you still pay for having a bank account? Do you still pay for cash withdrawals? Have you overslept the disruption of the banking sector?
You might have opened an account a few years back. The conditions might have seemed alright at the time. As time passes by, banks are getting more digitalized by the hour. As the competition is getting tougher and tougher, the prices for banking services and the user experience are better than ever!
A new kind of banks emerged – digital banks. When a bank is going fully online with its services, then the reduction in infrastructure and overhead cost leads to an increase in the interest rates on your savings account and also lower loan and mortgage rates.
An online-only bank provides neither locations that you can visit nor face-to-face interactions with clerks. In addition, they spend much less on traditional marketing so they have lower costs.
The last drop that made the cup run over
When I moved to Germany 5 years ago, I was given the choice of two banks – Deutsche Bank and Commerzbank. I chose DB because they provided service in English and sounded like the bigger, more established bank. Little did I know that I would have to pay quarterly fees just because I had an account with them. They charged me for the monthly bank statements they sent to my postal address and for cash withdrawal from non-DB ATMs.
The last drop that made the cup run over was when the bank charged me €15 for sending bank statements to my old address. I had moved apartments, and I had updated my address in the online banking system well in advance! The bank didn’t realize the change for six months in a row and was sending the bank statements to my old address.
Pain in the **S
Changing your bank can be painful. Everything is connected to it – your PayPal account, utility bills, rent, subscription services, salary transfers, and so on.
Nevertheless, it’s a good time to revisit your banking conditions and research what’s there on the market. Make a list of all that is coming in and out of your account. As you are at it, why don’t you ask your utility providers for better conditions?
Moving to a new bank can reduce slightly your expenses. Most of all, it can give you control and overview of your money. Additionally, the interface of modern banking apps is easy and delightful.
Once you are done with it, you will see it was worth it.
The online-only banks can offer better conditions than traditional banks such as:
- opening an account without the need to go to a real bank office (through a video identification process for example)
- free cash withdrawal from any ATM worldwide
- free opening and holding of an account
- free usage of modern web and mobile apps – almost everything could be done on your phone
- free payments with Mastercard
- free partner card
- hassle free online banking
- support for an investment portfolio
- no foreign exchange fees on purchases
- no requirement of a minimum balance in your account
- customer support round the clock throughout the year
- advanced web and mobile apps – financial planning tools, loan calculators, premium calculators, tools for analyzing investments, budgeting and forecasting tools, tax preparation and tax paying platforms online
- eco-friendly: digital banking saves paper discarding the need for office space, construction, and vehicular movement
- control centre with card blocking options: blocking of payments abroad, payments on the Internet, usage at ATMs, complete blocking of the credit card
These are only some of the advantages. You can see here what exactly to look for before opening an account with an online-only bank.