Big banks like Bank of America and Wells Fargo suck. They hit you with high fees for overdrafting, require minimum balances, and add insult to injury by giving you 0.00000001% interest while they loan your money out to other people at way higher rates. Oftentimes they charge you account ‘maintenance’ fees for the privilege of giving them a practically interest-free loan.
Wells Fargo intentionally defrauded millions of people by opening fake accounts and charging customers fees on those accounts. These guys are not operating with your best interests at heart. You need to cut them off.
As financial guru Ramit Sethi says, if they haven’t screwed you yet, they will soon!
“But I’ve had that account since I was a kid!”
Do you still play with dolls and action figures? You’re an adult. You need a bank that treats you with respect and serves your best financial interests.
I know of only one bank that has the features you need to achieve financial independence. I use and highly recommend Ally Bank. Good banks have:
- Online banking that you can link to other bank accounts for easy transfers
- Ability to automate your savings via multiple sub-savings accounts to create your savings goals
- Free, all-online set up, no minimum balances or maintenance fees, and no fees for all the normal services
- A network of fee-free ATMs (including some with the ability to deposit cash)
- A good app
- app-based check deposit ($50 K per day or $250 K in 30 day period)
- paper checks if you want ’em (free at Ally, try Bill Pay too)
- Online bill pay (Zelle)
- A high interest rate on savings and checking
- Online method to add beneficiaries on your accounts
- Cash deposit from an ATM would be nice, but Ally does NOT have that at this time.
What about the lack of physical branches?
Ally has no physical branches, which hardly matters today. I love being able to do everything online from my phone, or from an ATM near me.
If I need to get something notarized for an investment account or estate planning document, I just go to a Big Bank that I have a credit card through. Lack of physical branches is why these banks can keep their costs low and pass on the savings to you. If you can keep your physical bank account open for free with no/low minimum balance, do so as a backup. I closed my physical bank account years ago and have never looked back.
Is online banking safe?
Yes. Welcome to the 21st century.
What should I do next and how do I make the switch?
Open up your accounts for free right now (do at least the checking + one savings.) There’s absolutely no risk or cost and it will only take you 10 minutes. You don’t have to transfer any serious money yet, only a penny or something like that from your old bank to make sure they don’t auto-close the account if you forget to fund it and leave it empty for more than 2 weeks. Start using them whenever you get around to it (the sooner you switch the better, though!) If you hate it, just switch back. There’s no risk, just a little time on your end to redirect bills & direct deposits.
If you’re not ready to make the full switch, use your Ally bank for savings accounts only when implementing the BTF banking system, and keep your old bank’s checking for now, linking it to Ally bank. When you’re ready to rip the band-aid off and commit, switch everything over to your Ally bank checking, including all your bills paid straight from your bank (including rent or mortgage and utilities and insurance payments), credit card auto-pays, and direct deposit.
If you have the cash to do so, keep a month’s worth or so of expenses in both your old bank and your new one when you switch in case you forgot about any bills still hitting your old account.
* I do not receive anything from Ally bank for this recommendation; I’m just a huge fan and customer of them. I send all my clients, family, and friends to them.
What do I do with my old bank?
If you can keep it for free or with a low minimum balance, do so just in case. If it costs you money or you have to keep a bunch of money there, wait one month after you switch to make sure you’ve switched all your stuff to your new bank, then close your old one. You can also call them up and see if they can ‘downgrade’ your account to something that requires a lower or no minimum balance. Make sure to emphasize that you’re either gonna do that or close your account entirely, and they’ll likely play ball.
If you can, make sure to transfer all of the money out your old account even if you keep the account— after a month to make sure no bills are still hitting it– so that your Big Bank can’t take it later if they change their fees policy.
(They will someday once they realize they’re not making any money off you. Bank of America did this to my ‘free’ checking account I had kept open years after I’d switched banks, so I promptly closed that account when they stole most of the $20 I had left sitting in it…)
Do all big banks suck? What about credit unions?
Yes, all traditional big banks suck. This includes TD Bank, Chase, Capital One, etc. Credit unions treat their customers better and have better fee structures, but they just haven’t kept up with technological advances and only have a tiny fraction of features for fully-functional financial freedom for folks like us.
In short, credit unions don’t meet the bar either. Ditch yours, or just empty it and switch while keeping it open for a while if they don’t charge any fees.
So, what are you waiting for? Take 10 minutes now to set up your Ally accounts for free (there’s no risk!) to lower the barrier to start using them later.
If you’re feeling energized, read my post after you set up your new accounts on how to use Ally savings accounts + your employer’s direct deposit to automate your savings goals.
Using your online banking infrastructure to fix your spending & automate your saving is the most critical step on the path to financial freedom.
Happy saving!
P.S. If you know of any other banks that have the features I mentioned above, please list them here in the comments! They must offer automatic transfers & multiple sub-savings accounts to ‘qualify’, not to mention be nearly 100% fee-free.
Small Business Banking
What about for small business accounts? I use Novo.co for my business banking. I’m satisfied, but not ecstatic. They have a solid app, good online functionality, and don’t have any account maintenance or deposit fees. You can even send invoices via email (but no free method to receive payment.) I like them and recommend them, but there might be a better business bank out there, so tell me if you find one you love!
