Switching banks doesn’t solve anything for consumers. Retail banks have to be competitive and that means most banks can’t afford to break away from the pack of competitors in any large way. Fortunately, savvy consumers can elect several alternatives without making major lifestyle changes.
Avoiding Banks without Changing Your Lifestyle
Ditching a bank doesn’t mean keeping your cash under your bed or in a safe. Several alternatives to traditional banks are gaining popularity and offer almost identical services. Obviously, we all need to use credit and debit cards and would like to gain some interest on the money we manage to save.
These alternatives can offer exactly that. The strangest part is even the big banks benefit from some of these services since it allows them to partner with companies that can reach a different set of clients.
Simple.com – Not Quite a Bank
The term simple and bank rarely go hand-in-hand. Joshua Reich, the CEO of Simple.com aims to replace your bank. Simple.com only gives you a single credit card. However, it can be linked to several accounts. Simple.com learns your spending habits, when you are paid and analyzes other factors to decide which account the money should come out of.
How do they do this? Ironically, with the big banks! The large-scale banks know they will lose customers due to weak customer service, fees and other factors. Simple.com doesn’t charge you a dime since the banks are paying them to process your credit card transactions and handle other financial infrastructure need behind the scenes. Many of the banks Simple.com uses aren’t even set up to work with consumer customers, so the relationship benefits everyone.
Brokerage Firms
Brokerage firms want you to go in with them for the long haul. For that reason, many of the larger firms such as Charles Schwab and Fidelity offer services like check writing, earning interest and even helps you avoid foreign transaction fees. These firms want you to stay with them for the long term and invest throughout your life. It kind of makes sense to keep all your money in one place if they provide everything you need. These firms offer online banking options that are very similar to what retail banks offer.
SmartyPig – Social Savings
SmartyPig is technically a bank, but it is aimed at a younger generation who wants to work toward saving for long-term goals. They call what they do “social banking.” SmartyPig incorporates with Facebook and Twitter to update when users put aside money for their goals.
It is no secret that publicizing your goals often helps you achieve them. This applies to saving as well. SmartyPig also has attractive motivational bonuses when you make significant progress toward your goals.
Should You Ditch Your Bank?
Everyone’s financial situation is different. It is often a scary thing to leave a traditional way of doing things for something new and potentially more beneficial. However, in light of the current economic situation, banks will have some serious competition in the coming years.
Just because your bank is changing fees, that doesn’t mean you need to switch. Be smart, check out all the alternatives available for saving money and then decide if you need to change banks. Find more money-saving tips like these at billeater.com.
Credits: Photo courtesy of Nelson Kwok.