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Are you thinking about closing your account at a big bank? If so, you’re not alone. People have been frustrated with the high costs of big banks for quite some time. In 2011, there was actually a movement called Bank Transfer Day, which rallied consumers to transfer their funds into credit unions, and over five million people answered the call. Even today, the convenience of the big banks–with branches never more than a short drive away–is often canceled out by the high fees they charge for transactions and standard services. Therefore, if you’re tired of the expenses you continue to rack up month after month, maybe it’s time to consider ditching that big bank and look at some other options.
Credit Unions: The Gold Standard
If you’re searching for an alternative to your bank, one of the first options you should consider is a credit union. A checking or savings account at a credit union would seem exactly like similar accounts in a standard bank. However, unlike banks, credit unions are nonprofit cooperatives owned by their members (customers). Membership in a credit union is often tied to a profession, organization, or even places of worship. Additionally, funds deposited in a credit union are protected in a similar manner to those in banks.
More importantly, credit unions are typically less expensive than banks. Many credit unions waive the minimum balance fees that banks commonly charge on checking accounts, or they at least charge considerably less. ATM fees at most credit unions are frequently lower, too. Credit unions often provide complimentary services to members, such as free online banking. Therefore, if you’re looking for an alternative to the big banks, it’s hard to beat a credit union.
Another option to the headaches and high fees of big banks is online banking. Online banks are banking institutions that eschew the physical presence of brick and mortar institutions and exist only on the internet. Typically, online banks let you employ apps on your mobile devices to monitor your account and execute transactions. Since they exist online, you don’t have to worry about being near a branch location; as long as you can connect to the internet, you have access to your account and all your online bank’s services.
Online banking has come a long way in the past few years. The app interfaces for these banking services continue to get more and more useful. Additionally, the services these banks offer are highly competitive. Their fees are often lower than standard banks offer, and they typically offer high-interest rates on savings and other accounts. Finally, many of these online banks now offer the types of services one would expect from standard banks, such as automobile and other types of loans. If you like having your financial information and services as close as your smartphone or another mobile device, online banking may be a great choice for you.
Certificates of Deposit
Another alternative to a checking account in one of the big banks is CDs, or certificates of deposit. Certificates of deposit are popular financial instruments available at most financial institutions. A CD will require you to “lock” your money in it for varying periods, and it’ll pay higher interest yields than standard savings accounts when they mature. Once the CD matures, you can withdraw all your money and the interest you earned from it with no charge or penalty.
If you don’t need access to your money immediately, a CD can be a great alternative to checking accounts at big banks. If you constantly place your money into new CDs just as older ones are maturing (sometimes referred to as a CD “ladder”), you’ll always have a ready supply of cash on hand to pay bills and for discretionary spending. More importantly, you’ll be able to avoid the high checking account and ATM fees you’d otherwise pay if you had a normal checking account at a big bank.
Money Market Mutual Funds
Another option worth considering is putting your money into a money market mutual fund. These funds are investments in short-term CDs or securities, such as government bonds or treasury bills. You’ll likely have to make a minimum initial investment that ranges from $500 to $5,000. However, unlike a certificate of deposit account, you can regularly access your money. There may be a minimum amount for which you can write a check, and you’ll probably have to pay management fees. You might also be restricted as to the number of checks you can write per month or per year. However, if you shop around a bit, you should be able to find a fund that charges fewer fees than your current bank does, so money market funds can be a great alternative to a standard account at a big bank.
Make the Change from a Big Bank
Even if you’ve been with your old big bank forever, it’s never too late to make a change. If you’re tired of the high fees you’re paying at your current financial institution, consider the options discussed here. They may be a better fit for your current lifestyle and could save you a lot of money, too.