With the popularity of online savings accounts on the rise, many people are looking at local banks and wondering what will come of them. One of the most common questions is: are local bank savings accounts a thing of the past? While there has definitely been a shift in the way people are saving their money, local banks still have a lot to offer (It’s Important to check the customer rating of banks here Bank Reviews). These financial institutions and their savings accounts may not appeal to everybody, but there is definitely a market. (Related: Credit Unions vs Banks)
There is one main reason why local bank savings accounts will always be around: convenience. Even though online banks are making it easier than ever to transfer money and manage accounts, there is still a disconnect. With a local bank this is not the case. Instead, if you have a question or concern you can always walk into a branch and ask to speak with somebody. A face to face conversation can make you feel better about your account and any issues you are having. With an online bank the best you can hope for is a phone conversation with a customer service rep.
Most local banks offer more than one type of savings account. While each bank designates a different name, they all do pretty much the same thing.
To start, there are basic savings accounts with no minimum balance requirement. These are perfect for people who want nothing more than a place where they can put their money. Unfortunately, these accounts come with a very low interest rate – nothing like what you would find with an online bank (compare savings account rates).
Of course, most local banks offer accounts with higher interest rates. The problem is this: they will put stipulations on the account. Most commonly, they require that a certain amount of money be held in the account at all times. If you go below this number your interest rate will fall. In some cases, you may even be charged a fee. So, while you can receive a higher interest rate, one that may be competitive with online banks, there are terms and conditions to be aware of.
Safety and Security
This alone is the main reason why many people will always opt for a local bank savings account over an online account. True or not, some people feel that all online banking systems are risky. To a certain extent, you are taking more of a risk. This is true for two reasons: you can’t walk into a branch and physically speak with somebody; somebody could potentially hack into your
account and gain access to your funds and personal information.
You may feel safer doing business with a local bank. No matter what, make sure your funds are FDIC insured. If your money is not insured (usually up to $100k), it is time to move your funds to a different financial institution.
Three Questions to Ask
Before you decide that a local bank savings account is a thing of the past and no longer the right decision for you, ask yourself the following questions:
1. Am I comfortable doing all of my banking online? When you switch your savings to an online account you will have to deposit and withdrawal money via the internet. There is no walking into a branch with a deposit slip in hand. While there are millions of people making online transactions every day, you have to be 100 percent comfortable with this way of doing things.
2. Can I really get a better interest rate with an online savings account? The answer is probably yes, but you may be surprised at what you find if you look around. Online savings rates are at an all-time low. If you compare the current online rates against local bank rates, you may find that there is not much of a difference
3. Will you miss the personal relationship with your local bank? Some people enjoy being able to go to the same teller with each visit to the bank. The same holds true when they have questions and need answers fast. With an online bank you can get support, but you never know who will be on the other end of the line. At your local bank you have a relationship with real people – and that should count for a lot.
Over the past five years, local bank savings accounts have taken a major hit. A lot of people have decided to move their money to online institutions. Before you follow suit, consider the above details.
In short, local bank savings accounts may be less popular but they are not a thing of the past.