Savings rates aren't that high, but banking shouldn't be costing you money.
Maybe you aren’t thinking of switching your bank right now, but you should be. You could be losing money.
Your checking account may not even be earning in interest what you’re paying in fees to keep the account. According to a new analysis of checking account fees by GoBankingRates.com….
- Interest rates for checking accounts average 0.26 percent per year;
- The median overdraft fee for banks is $30;
- Assuming you have $10,000 in the account, just one overdraft per year costs 115.38 percent of your deposit’s yearly return.
A lot of people have way less money than that — so even a smaller single fee can wipe out your interest. That makes now a better time than ever to research where opening a new bank account can actually save you money, and hopefully earn a little. Here are the best places to open an account right now…
…If you’re a millennial
Check out: Simple and Ally Bank
“It’s very common for millennials to distrust big banks right now,” says Morgan Quinn, a writer for GOBankingRates. Both Simple bank and Ally Bank are smaller, online-only banks. Simple is “a cutting-edge bank that has a very innovative app. Ally is also online-only, but offers higher interest rates than Simple,” Quinn said.
If you currently have no savings
Check out: GE Capital Bank, MySavingsDirect, Barclays Bank
For those who don’t have a savings account, this is a great time to get started, Quinn says.
“According to our database, the average savings account rate in the U.S. is just 0.17 percent, but our most recent study found several savings accounts with rates that beat that by a factor of ten,” she says.
Those accounts include the online savings account from GE, the MySavings account from MySavingsDirect, and the online savings account from Barclays. All three tied for GOBankingRates’ Best Savings Accounts of 2015.
If you want an online bank account
Check out: Simple bank
“Because the bank is only online, they can offer a lot of free services that other traditional brick and mortar banks charge for,” Quinn says. Those services include a free checking account and no overdraft fees. Everything is done online or with an ATM card, and funds can be deposited through direct deposit, online transfer, or through the mobile app, “so it’s definitely a cutting-edge financial institution,” Quinn says. The bank made GOBankingRates’ top checking accounts of 2015.
If you’d rather have rewards than cash
Check out: Capital One, TD Bank, PNC
“As banks endure more strict regulation, it’s possible these types of programs will be completely phased out,” Quinn says. Bank of America, Wells Fargo, and Chase all canceled debit card rewards in recent years. But current banks that still have rewards include…
- Capital One Rewards Checking, which lets customers earn rewards based on a percentage of their purchases
- TD Banks’s Debit Card Discount Offers, which get you deals on everything from cruises to fine jewelry
- and PNC’s Purchase Payback, which lets you earn points and rewards for using your debit card
If you prefer a credit union to a bank
Check out: Navy Federal Credit Union, Pentagon Federal Credit Union, Alliant Credit Union, Consumers Credit Union
You’re more likely to find free checking at a credit union than a bank, and many people are catching on.
“After the fall out of the 2008 financial crisis, many consumers turned to credit unions as an alternative to larger financial institutions,” Quinn says. “A big bank answers to its shareholders and credit unions serve its depositors, which is why credit unions often offer competitive rates and services and stellar customer service.”
She recommends Navy Federal Credit Union for its great rates on loans and certificate of deposit (CDs), low- or no-fee accounts, and “incredible customer service.” Both Navy and Pentagon Federal Credit Union are military banks, but they have easy eligibility requirements, like volunteering or belonging to other organizations.
The two non-military credit unions Quinn recommends are Alliant, which only requires a $10 donation to Foster Care to Success, and Consumers Credit Union, which requires a $5 donation to the Consumers Cooperation Association.