In the banking world, the options provided by financial institutions to customers vary, but traditional banks, known as “public banks,” stand out due to their extensive network of physical branches and ATMs. Opening an account at one of these banks is an important step for many, whether to start saving or to meet future borrowing needs. However, these banks face significant challenges compared to digital banks, such as high fees and low interest rates on savings accounts.
In this article, we review the best savings accounts offered by these traditional banks, focusing on aspects such as fees, interest-earning opportunities, and customer services. We will help you make the best decision to ensure you get the most out of your money, whether you are looking for the convenience of immediate access to banking services or opportunities to access better interest rates. Stay with us to discover more.
Traditional Banks vs. Online Banks
Traditional banks, which have physical branches scattered throughout the United States, are a popular choice for many when opening savings or checking accounts. Unlike banks that operate solely online, traditional banks provide direct interfaces and easy access to cash services. Customers can visit local branches to complete transactions, whether depositing or withdrawing money, giving them a sense of security and trust. They also have a wide network of ATMs that allow for fee-free transactions in various locations.
However, there are some drawbacks associated with traditional banks. For example, they often charge high fees on accounts and offer low interest rates on savings accounts compared to online banks. These fees represent an additional burden on customers, especially when it comes to savings accounts. According to the Federal Deposit Insurance Corporation, the average annual yield on savings accounts in the United States is 0.47%, and most traditional banks still report rates below this average. This leaves those looking for better saving options in a dilemma.
Therefore, it is important for customers to understand the benefits and drawbacks associated with each type of bank and consider their personal needs and lifestyle when deciding where to open their account.
Best Savings Accounts at Traditional Banks
When searching for the best savings account options at traditional banks, CNBC Select analyzed and compared a range of savings accounts offered by the largest banks and credit unions. Six of them were selected, taking into account factors such as convenience, the number of branch and ATM locations, savings account fees, available opportunities to earn higher interest, and customer service.
Among these options, accounts such as the Bank of America Advantage Savings and Wells Fargo Way2Save® Savings are considered standout choices. Bank of America offers special rewards programs, where cardholders can earn up to 15% cash back on eligible purchases using their cards. Opening an Advantage Savings account requires an initial deposit of $100, with a monthly maintenance fee of $8 that is waived for 6 months for new users.
Additionally, Wells Fargo offers the Way2Save account, which allows users to avoid monthly fees if they maintain a daily balance of at least $300. These features make it an ideal option for middle-income earners looking to save some money.
The benefits of these accounts become clearer through comparing the different options and the advantages they offer, such as excellent customer service, convenience in transactions, and programs that help promote saving habits among consumers.
Fees and Limits Related to Savings Accounts
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Charging fees on savings accounts is one of the main concerns for bank customers. These fees clearly affect the ability to accumulate savings over the long term. For example, traditional bank accounts incur monthly fees that come with certain conditions to ensure exemption from them. For instance, the Wells Fargo account requires a minimum daily balance, which means that if this condition is not met, the customer will find themselves forced to pay additional fees.
For customers who prefer to minimize their costs, choosing accounts that require a low minimum balance can be a good decision. However, it is important for customers to ensure their ability to comply with these conditions to avoid paying unwanted additional fees. Additionally, such fees may lead to a reduction in the net interest gained from savings, which may affect the primary goal of opening the account. Here comes the importance of comparing different accounts and seeking the lowest fees to ensure the greatest benefit from the savings.
Customers should also be aware that the different practices of banks may affect their ability to access additional services such as disability protection or other financing options, which necessitates a comprehensive evaluation before making a final decision.
How to Choose the Right Bank for You
When deciding on the right bank, several factors should be considered. Customers must study the availability of branches and ATMs and whether these branches are close to their home. The convenience of accessing banking services greatly enhances the customer experience. Additionally, the fees imposed and limits on accounts should be considered, as these factors can significantly affect the final outcome of the savings associated with the account.
Digital services should also be taken into account, as some banks offer online features that allow easy and quick account management. These services enable transfers and increase savings through smart applications, saving time and effort. Thus, customers today look for banks that provide an ideal blend of both traditional and digital services.
Promotional opportunities and special offers, such as discussing years of free maintenance or high interest rates for certain periods, can serve as additional incentives to choose a particular bank. By weighing all these criteria, consumers can select the bank that best fits their needs and lifestyle. Those sound choices provide additional guarantees to enhance savings and achieve long-term financial goals.
Virtual Savings Accounts and Their Features
Virtual savings accounts, such as the Virtual Wallet® from PNC Bank, are great options that come with a range of innovative electronic tools aimed at facilitating daily money management. This type of account offers a distinctive format that allows the customer to see all aspects of their spending and saving, helping them make better financial decisions. The Virtual Wallet account consists of three main sections: Spend, Reserve, and Growth. Here, Spend represents the daily checking account, while Reserve is the interest-bearing savings account with overdraft protection, and finally, Growth is the long-term savings account.
Each section is designed to meet specific needs, enhancing the efficiency of money management. For example, a user of virtual accounts can benefit from higher interest rates on the Growth savings account, boosting savings returns. Additionally, these accounts are designed to be available for students through the Virtual Wallet Student account, where they receive additional benefits. With a tiered monthly fee structure ranging from $7 to $25 depending on the account type, customers can avoid these fees if they maintain the required minimum balances.
Benefits of Using ATMs
PNC Bank offers its customers access to approximately 9,000 of its own ATMs, allowing them to conduct transactions for free. Additionally, using ATMs not affiliated with PNC may incur fees, but the bank provides some compensations to alleviate the financial burden on customers. The presence of a wide network of ATMs is a valuable addition, as it increases service availability and makes it easier for customers to access their funds at any time. This network also helps reduce costs associated with using ATMs from different banks, allowing customers to benefit from a flexible and cost-effective system.
Loyalty programs like PNC Purchase Payback® are a good example of how customers can earn points or cash back by using the bank’s debit card. These programs may include offers from specific retailers, increasing the value of each purchase made by the customer. These programs incentivize customers to frequently use banking services, enhancing their loyalty to the bank.
Pros and Cons of Traditional Banking Accounts
When choosing a type of banking account, customers must consider the pros and cons of traditional accounts compared to virtual accounts. Traditional banking accounts offer personal service and direct support, which may be essential for some customers. For example, during times that require additional clarifications about banking operations, it may be preferable to go directly to the branch. However, virtual accounts have a reputation for offering higher returns and lower fees, attracting customers looking to improve their investment returns.
Interestingly, many traditional banks tend to offer lower interest rates compared to virtual banks, due to the high operational costs involved with branches and professional services. Thus, when customers prefer to benefit from higher profits, virtual accounts may be the optimal choice. Therefore, there remains a need for careful evaluation of all available options based on the customer’s needs.
Financial Advice and Choosing the Best Savings Accounts
When searching for the best savings accounts, individuals should consider some important factors. First, one must understand the fees associated with the account, the available interest rates, and the terms of deposit protection. Therefore, checking for FDIC deposit insurance, which provides protection up to $250,000 for deposits, is recommended. This protection gives customers peace of mind that their money is safe.
Additionally, understanding the basic terms of each account in terms of minimum deposit and required balance is critical. Some banks may offer flexible options for opening accounts, while others find transferring from other accounts unacceptable. This may be impossible for some, causing a degree of inconvenience. Therefore, choosing an account that aligns with the customer’s financial needs will help them achieve their desired goals.
Furthermore, individuals should look for reward programs or special offers that allow them to earn more points or benefits from daily transactions. In this way, one will combine efficient money management with gaining additional value. These tips and others will enhance the direct and fruitful experience with various banking accounts, supporting individuals in achieving their financial goals more effectively.
Source link: https://www.cnbc.com/select/best-brick-and-mortar-savings-accounts/
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