A bank vole captured by blackclough/Flickr
I recently switched banks for a higher interest rate on my checking account. My new bank is nontraditional so I had to consider what behaviors would let me take advantage of the account fully.
1. My bank does not have their own ATMs. However, all my ATM fees are refunded to me on a monthly schedule. As crazy as it seems, this is probably cheaper for the bank than maintaining thousands of ATMs across the country. I try to use the ATM only once a month so I don’t rack up a lot of fees, even though they are reimbursed, because I figure the bank factors the expense into other services.
2. My bank does not have traditional branches so I do not have access to bank tellers to make large cash withdrawals or deposits. This is rare for me, but uncomfortable if it comes up. The branches accept check deposits or I can mail in deposits.
3. The branches are few and far between so I do the vast majority of my banking online, through the mail, or over the phone. The bank website is great, I can request free deposit envelopes through the mail, and the US-based phone service is excellent.
4. I have free checking as long as I have a debit card for the account. This is my first debit card ever and I usually use it for small purchases. It does not feel as safe as using a credit card, however. I think that is just me.
5. My other bank services are free as long as I have a brokerage account, which I use to fund my ROTH-IRA. I like having my checking, savings, and IRA all through the same bank, though I’m worried it makes me more vulnerable if my identity is ever stolen.
All told, I’ve had to adapt my banking habits slightly to take advantage of my new nontraditional bank. But I think I made the right decision because I pay no monthly bank fees and my interest rate is higher that my previous bank. Knowing this, would you bank with a nontraditional bank?
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price. 
Do you earn enough extra interest to compensate for the inconvenience of not having a local branch? How far to you have to travel if you have to visit a branch? How much does that cost, including your own time. Especially in your work, time is money.
@FrugalDad I have to drive about 30 minutes to get to a local branch, but in 9 months of banking with them, I have only needed to drive to the branch once. And when I got there, I realized they couldn’t help me and I could have gone to any ATM to take care of business.
I am a banker (in the internet departmetn) and I say as long as you are FDIC insured it’s all good 🙂
I keep extra cash in online savings account where I can trf easily to checking and earn a higher int rate too. I dont keep alot of money in my checking acct – only enought to pay bills etc.
Be careful using the debit card as some merchants add a debit card fee to your purchase total.
@Myke Merchants are required to tell you if there is a debit card free upfront, though, so I avoid that by using cash or credit.
YES – nontraditional banks are great. I use one myself, and find I never have to go to a branch. When the bank had a problem depositing the check, they mailed it back to me with another deposit envelope (no stamps required). Much easier than a drive anyplace and a line for depositing. I could see downsides if you need instant access to money however.
We have banked with an online-only bank for a couple of years because of the higher interest available. And in the last two weeks, we have opened some accounts with another online bank. As Tina pointed out, we only bank with FDIC-insured entities. With both banks, there is no local branch. All transactions are done online, by mail, electronically, and our newest bank will handle matters telephonically (24/7). The only annoying drawback is one that also occurs with local banks: a longer hold period on the availability of funds for new accounts. Also, if deposits are done by mail, it is necessary to not need the funds immediately, even after the new account period is over. So if one lives “hand-to-mouth,” the lure of higher interest will not be worth it. The debit cards we received will only be used for ATM transactions. I prefer to use a credit card for virtually everything else.
BB, is your new non-traditional bank FDIC-insured?
@Diane Yes, my nontraditional bank is FDIC insured.
I’ve been using a non-traditional bank for years, and I love it! Frankly, normal banks make me uncomfortable. My online bank doesn’t have ANY branches in my state, so I keep an account at a credit union. That way, if I need to make a cash deposit (or checks, really; I don’t feel comfortable banking by mail, having had a check lost once) I can do it right down the street and just transfer it to my other account.