Last week, I got an email from US Bank. I had been a happy customer of their free checking account for the past three years. But it seems it was not to be. In a few weeks, I will be their customer no longer. Now I need to decide between going to an online bank, such as Ally, or stick with a local bank.
US Bank used to have three ways to waive the monthly maintenance fee. Direct deposit, a minimum balance, or automatic savings. I’m only employed for 8 months out of the year, so the direct deposit is out for me. Since this is my sandbox account for paying debts, I try to keep my balances low in case I need to cut and run again ($#%^ing Bank of America!). So minimum balance exception doesn’t help me either.
So, for the past 2 years, I’ve been happily depositing $25 per month into a linked savings account to keep my account free. Then, when the work dries up in the winter, that cushion gets me through the first month while I’m waiting for unemployment to start. But now, that option will no longer keep my account free, starting August. Since the other two methods are not options for me, US Bank and I are breaking up.
It really is a shame because their tellers have always been fantastic. And their supermarket kiosks are open on Sundays, which is awesome.
The case for the local bank
Consider it one of those fortuitous coincidences. My supervisor and I were driving to a work site and noticed a garage sale in a bank parking lot. So, on the way back, we stopped to take a look. There was a 22″ widescreen monitor that I had my eye on, for only $50, but I held strong. The boss came away with a lounge chair. At one point, I went inside for the restroom and talked to a teller. It turns out that free checking at small, local banks still exists.
Adams Bank & Trust is a small, family owned bank that first opened in Nebraska in 1916 and over the last 97 years has slowly spread west into the northern Front Range in Colorado. They have several checking options, but the one that interests me is their “e-checking” No minimum balance, no frills, and free if you sign up for electronic statements. I haven’t received a paper statement from a bank in over 4 years!
It’s a no-frills account with just the basics, but that does include remote deposits! For free! US Bank charged $.50 for remote deposit, so I never used it. With remote deposit, I don’t have to ever worry about bank hours or the fact that the bank is about as far away as you can get from me and still be in Fort Collins. One of my incomes is paid with a pre-paid debit card. Once per month, I take it to the supermarket and buy a money order for $.59 to clear out the balance, and deposit the money order in my bank account.
Now, buying local, and supporting local businesses, is important to me. I believe it fosters community and is better for the environment. I buy produce from farmers markets and prefer independent restaurants to chains. Even the convenience store where I get my coffee sometimes is a local chain. So the fact that there is still a local bank out there, and that they have a free checking account with everything I need; that’s awesome.
The case for online banks
For some people, online banks are a really good deal. Free interest checking, free ATM usage, all sorts of bells and whistles. The interest on a free checking account is a big deal. Very few brick and mortar banks have ever offered free interest-bearing checking accounts and the few who have no longer do.
But really, I’m not sure that it’s for me. I have an account with an average daily balance under $200. Interest on my checking account doesn’t do much for me. Using Ally Bank‘s interest calculator, I discovered that I could earn approximately $.84 per year in interest. Yeah, that’s worth basing a decision on! 😉
On free ATM usage, that seems like a feature that would have been great in the 90’s. In fact, I did see that feature in the 90’s. Back then, I used a bank that was so small it only offered two locations, one just a quarter-mile from my house. To entice customers, they waived ATM fees if you used a Star Network ATM, which accounted for roughly 75% off all the ATM’s I ever looked at.
But the days of ATM’s are numbered. Sure, there are several people who still use cash. But they are dying breed. I’ve already written about why I generally avoid using cash. It just burns a hole in my pocket. Maybe that’s just an excuse for poor impulse control. But if I’m more responsible with my spending when using a debit card than with cash, shouldn’t I use every resource in my arsenal to keep my spending under control?
Other features that are often touted for online banks are good customer service. If you are coming from a big, national bank like Bank of America or Wells Fargo, that’s a great selling point. But US Bank always treated me well. Okay, the tellers did; corporate not so much. But you will usually receive great customer service from local banks as well.
One area that online banks probably beat local banks is the ability to weather a financial down-turn. Online banks made it through the recession quite well. You could even say that they thrived and came into their own over the last few years. Meanwhile, local banks have struggled and dozens of banks failed in the same time. Smaller banks are probably more vulnerable since they have fewer depositors. And banks that don’t fail get swallowed up by larger banks. I remember the bank that my parents used when I was a kid. Bank of Mid Jersey. It was bought by a larger NJ bank, which was then bought by a regional bank. All in all, that bank on Main Street has had 5 different names on it in my life time, currently Bank of America. But the location is the only thing that Bank of Mid Jersey and Bank of America ever had in common.
Who is to say that the same can’t happen to Adams Bank & Trust? There are plenty of regional banks who could buy them. And then those regional banks could be bought out by a national bank like Wells Fargo. No thanks!
What do you think? Would you bank with a local bank? Or should I jump on the online bank bandwagon and ride the future?