Ruth Sarreal

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

Yeah, it sounds like Rachel has the right idea. I think it's a great idea to switch to online banks when you are looking for an account that earns a lot more interest than a traditional bank will offer you, or if you prefer to do most or all of your bank tasks online. And the great thing about

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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Some of these online banks' savings accounts is that they'll have sub-accounts so you can really specify what you're putting money away for. You can specify that it's for vacation or say IVF or whatever needs you have coming up.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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Yeah, as far as cons go, generally online banking is tough if you prefer to do bank tasks in person, like go to a teller. And you mentioned ATM. So if you often need to deposit cash, you'd need to make sure that your online bank makes it easy and ideally free to do so. Because some online banks don't accept cash, as you mentioned, or they may limit how much you can deposit online.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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or they might charge a fee for making cash deposits, though some do let you deposit cash for free. As for pros, again, the much higher interest rates are a great incentive for switching to an online bank. And then along with that, you'll pay fewer fees because online banks don't have the overhead costs that come with having branches.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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They're able to minimize or not charge fees, and they can pay higher interest rates.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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Being a customer of both types of banks can be really useful. Traditional banks do offer some advantages. You can generally get that in-person service. And the biggest traditional banks have a lot of branches and a good number of ATMs. So access to those kind of things is convenient.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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If you need like quarters or crisp bills, for example, it's helpful to be able to walk into a bank and get those things. And the big banks do generally offer robust online and mobile services that can compete with those of online banks. But the biggest downside of traditional banks is a really big one. And as we just mentioned before, it's interest rates.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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So traditional banks, APYs are generally dismal, like 0.01%. So you have no reward for keeping your money with them. And another big drawback is that many traditional banks still charge expensive overdraft fees and other fees, whereas a lot of online banks and credit unions have eliminated those.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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I definitely think those higher APYs are still a huge draw. You can grow your money at a much higher rate with an online bank than a traditional one. Rates have fallen some in the past year, but they're still really strong at a lot of online banks and credit unions. Some of the best online savings accounts right now have rates as high as 4.40% or even higher.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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Sounds like you have the right ideas in mind making a list of all the things that you would need to transfer over. I think having your Wells Fargo account still open is a great idea that we can, you know, easily transfer money as you need to to the new account. And then it's a good idea to keep it open for a little while.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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That way, if there's anything that comes through that hasn't cleared yet, say like an automatic payment, as you mentioned, or maybe a check that needs to clear, you will still be able to have that go through. And you'll just need to make sure that you have enough money in that old account to meet any minimum balance requirements so that you didn't get charged with a fee.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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And I will also say that when you do close your old account, you should get confirmation in writing. And you should also check what your bank's policy is for reopening accounts in case, you know, you did forget to cancel an automatic bill payment or something. The bank may reopen the account and that could result in a negative balance and overdraft fees. So be careful of that.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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And I would keep an eye out for any communication from your old bank about unexpected activity once your account is closed.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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The thing with debit cards at an online bank is that you might need to request the debit card. They might not always automatically send you one. But just like a debit card from a traditional bank, you'd be able to use it to pay bills, make purchases, withdraw cash.

NerdWallet's Smart Money Podcast

Michele Norris Shares Kitchen Must-Haves and the Nerds Break Down Switching Banks for Better Rates

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Rachel, I just want to add that there might be a credit union for teachers in your area. And they might have like special benefits and perks that would be beneficial to you. And that would be a good medium or a good replacement for a traditional bank because then you could still... you know, be able to walk in and deposit or withdraw cash there.