5 Reasons to Break Up With Your Big Bank, #146
In celebration of Financial Literacy Month this April, I want to discuss how to get the most out of your banking experience. On this episode, we’re talking about compound interest and how your big bank could stop you from benefiting from this simple financial literacy concept. As well as recommended alternatives to keep your money safe and working for you.
You will want to hear this episode if you are interested in...
What is compound interest? [1:58]
Why Big Banks aren’t the most bang for your buck [3:48]
Getting rid of ridiculous bank fees [6:38]
Upgrading your bank for more financial features [7:56]
Banking where you’re appreciated [10:52]
Understanding compound interest
Compound interest is one of the cornerstones of financial literacy. Albert Einstein called it the eighth wonder of the world because of the snowball effect that happens with compounding. And with interest rates sitting at four to five percent, you are missing some serious snow if your money is not in a money market fund, high-yield savings account, or a short-term CD.
A lack of compound interest is one of the biggest reasons to break up with your big bank. Banks like JP Morgan, Bank of America, Citigroup, Wells Fargo, and US Bancorp are notorious for paying their clients little to no interest. I’m lucky if I make a few dollars per year with my Bank of America account! If you're not getting compound interest on your checking and savings account, or if you are and it’s not at least four percent, you should break up with your bank. Or at least keep a minimum amount of money in that account.
It’s not you, it’s your bank
The use of online banks has skyrocketed and for a good reason! Online banks like Charles Schwab, Fidelity, and Vanguard provide a much better value to clients than big brick-and-mortar institutions. One of the ways they do this is by cutting back on fees. Big banks will charge fees just to have the account. Not to mention account minimum fees, overdraft fees, ATM fees, and even check fees.
Another way online banks make the user experience better is through features. A lot of big banks don’t have the greatest features. They may lack online bill pay or a good way to track transactions and overall spending. Big banks are generally older institutions too. Meaning they have old systems that are often too expensive to update and can take forever to adopt features that online banks have had for years. Listen to this episode for more reasons to break up with your big bank!
Resources Mentioned
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