The most important part of anyone’s money system is their primary checking account. This is the financial inbox of your money system – the main checking account where most of your income goes into and that you pay your bills out of. For the most part, you probably won’t change this bank account very often, but every once in a while, you’ll be in a position where switching banks may be necessary.
That’s the position that I find myself in right now. For the past five or so years, I’ve used Simple, an online-only fintech bank based out of Portland. Simple was one of the first of what I call the fintech banks – that is, smaller banks with a startup culture that is geared toward mobile and online users. They don’t have physical branches and most of their energy is dedicated to making a banking product with a beautiful app and online interface.
Unfortunately, Simple recently announced that it would be shutting down operations, which means that I’m now in a position where I’m switching banks and looking for a new primary checking account. There are a lot of options out there when switching banks, so in this post, I thought I’d walk through my choices and give my thoughts about each option, along with the option that I ultimately decide to go with.
So if I’m switching banks, which bank should I switch to? Well, first, I have three criteria that must be met for me to even consider using the bank.
- The bank has to have no fees. This is the most important requirement for me. Some banks have fees that can easily be waived by meeting certain requirements. That’s not good enough in my opinion. If I’m using a bank, I should be able to use it for free, period. This also means that the bank must have no minimum balance requirement – I shouldn’t be forced to keep a certain amount of money in the bank simply to avoid a fee.
- The bank has to have a good app and a good online interface. I do all of my banking on my phone or laptop, which makes it incredibly important that any bank I use has an app that both looks good and works well. Some banks do this very well. Most banks do not.
- The customer service has to be decent. I’m a little less picky here, but generally, if I have an issue, I should be able to send a message online and receive a reply promptly. And if I call in, I should be able to get a human on the phone in a relatively short amount of time.
With all that said, here is how I’m thinking about the different banks that I can switch to. For those of you who don’t want to keep reading, I’ve opted to move my primary checking account to Ally. I find that Ally is generally the best overall bank for most people and in my current situation, it works out well.
The Four Categories of Banks
There are a lot of options when it comes to picking a bank. To make things easier, I tend to divide banks into four general categories. These categories include:
- Traditional brick and mortar banks
- Large online-only banks
- Large fintech banks
- New, small fintech banks
In the next few sections, I’ll detail how I define each of the different types of banks and give you my list of the banks in each category that I would recommend.
1. Traditional Brick and Mortar Banks
The option most people go with is a checking account from a traditional brick-and-mortar bank. These are the big banks that most of us know about – Chase, Bank of America, Wells Fargo, etc. Traditional brick and mortar banks are what most people use and it’s what I used for most of my life as well. My first bank was Suntrust, then when I moved to Minnesota for law school, I switched over to TCF Bank and used them for about 5 years before I made the switch over to Simple.
I’m too much of a millennial to consider using a brick-and-mortar bank anymore, so this category of banks is not one I would personally consider. To me, there are only three reasons you’d use a traditional brick and mortar bank: (1) you’re already using this type of bank and it’s too much of a hassle to switch; (2) you need to deposit cash regularly; or (3) you simply don’t trust online-only banks. The first two are legitimate considerations. The last one – well, I think phones and the internet are so ubiquitous now that this isn’t a concern but I understand that not everyone is comfortable with not having a physical branch that you can walk into.
That said, I still keep my TCF bank account open because it has no fees and it gives me a bank account that I can use when I need to deposit cash. I typically keep a couple of cents in that account and whenever I need to deposit cash, I can swing by a branch and do that.
If you are going to use a traditional brick-and-mortar bank, of course, make sure that it’s a free account. There is absolutely no reason you should ever have to pay a bank to have a checking account, especially when there are hundreds of free banking options available. I’m not going to list the brick-and-mortar banks that offer free checking accounts, but you should be able to find one in your area that fits the bill if this is the option you prefer.
Finally, it’s worth talking about credit unions. In general, it seems like credit unions have a better reputation with the public because they’re owned by the members of the credit union and seem to be less profit-driven. If you like your credit union, then that’s great. I haven’t had a good experience with credit unions because I find that their apps and websites are horrible and despite being so friendly, their customer service is often lacking. This makes sense – they typically don’t have the resources to improve in these areas, at least not when compared to the larger banks that have more money or funding.
2. Large Online-Only Banks
The second category of banks to consider is what I call large, online-only banks. These are banks that are often as big as the traditional brick-and-mortar banks but operate without physical branches. I think of these large online-only banks as a good compromise for someone who wants good banking technology, but also wants the stability and perceived safety of a large, established bank.
The banks that I like in this category include the following:
- Capital One 360
- Charles Schwab
All of these checking accounts are 100% free and require no minimum balance. They also all have good apps and good online interfaces.
I have checking accounts open with all of these banks and have never had issues with any of them. Of these banks, Ally is the one I recommend the most. Indeed, it’s the bank that I’m ultimately going to use as my primary checking account once Simple is officially gone.
3. Large Fintech Banks
The third category of banks would be what I call large fintech banks. These are banks or banking apps that are newer but are also very large companies with valuations of over one billion dollars. Many of these companies will likely go public in the coming years (or at least have ambitions of going public).
The banks that I include in this category include the following:
- SoFi Money
Every one of these banks is a solid bank with no major issues. Importantly, all of these banks are 100% free with no minimum balance requirement and can be opened in a few minutes online or with your phone. They’re heavily geared towards mobile users, so they all have very good apps.
Even if you’re not thinking about using a large fintech bank, you might still want to consider opening these accounts for the following reasons:
- SoFi Money offers a $50 signup bonus if you open a new account using a referral link and fund it with $500 or more. This is one of the easier bank bonuses to earn and is worth opening to at least get the bonus. You can make more money if you refer friends and family (and you help your friends and family out by helping them get the signup bonus). Here is my referral link for SoFi Money if you’re interested.
- Chime offers a $75 signup bonus if you open an account with a referral link and do a direct deposit of $200 or more. Any ACH transfer into the account seems to trigger the direct deposit requirement, making this one of the easiest bank bonuses to earn. Like with SoFi Money, it’s a good idea to have this account solely so you can refer people. Here’s my referral link for Chime if you want to get your signup bonus.
- Betterment is unique among banks because it reimburses all foreign transaction fees and ATM fees. This makes it a really good bank account for people who travel internationally. I have a Betterment checking account that I keep open solely for when I travel. Anytime I go abroad, I move money into this account and then I’m able to access cash wherever I may be in the world.
4. Smaller Fintech Banks
The fourth and final category of banks is what I call the smaller fintech banks. This is the category that I placed Simple in when I first opened my Simple account many years ago. There are a lot of different and unknown banks in this category, but the ones that I’ve noticed include the following:
Of these banks, N26 is probably the most interesting to me. They have some interesting features and a good-looking mobile app. They also offer a small signup bonus for new users, which gives another incentive to try them out.
One fintech bank I did try out was Douugh, but I did not have a good experience with them and do not recommend them at all. The customer service is terrible. They have no phone number you can call, so all you can do is email. And then they take days to respond. If you have any issues, you’re going to be emailing back and forth with them for weeks or months.
Which Bank Am I Switching To?
When it comes to switching banks, I’ve broken my choices down to four options: Ally, SoFi Money, Betterment, and N26. I think you can’t go wrong with any of these banks.
For my current situation, switching banks to Ally makes the most logical sense. I already have an Ally checking account open and I use Ally for many of my sub-savings accounts. Moving everything to Ally simplifies things a lot. I’ve also been an Ally customer for 5 or more years, so I’m familiar with all of the features and am happy with it. Whenever anyone asks me which bank they should use, I typically recommend Ally because it has a lower learning curve. I think of it as the perfect compromise between a cutting-edge fintech bank and an established major bank.
Of the other banks, I still keep my SoFi Money account open because it has no fees and I can refer people to the account. My rule is that if a bank gives you a referral link and it’s a free bank, then you always want to keep the account open simply to give yourself the option to refer people. Being able to refer people not only helps you, but it also helps the people you refer.
With respect to Betterment, I have a Betterment checking account which I leave open solely for when I travel internationally. I’m currently aware of only two banks that have no foreign transaction fees and that reimburse all ATM fees, including international ATMs. Charles Schwab is one of them. Betterment is the other. In the past, SoFi Money also offered this benefit but no longer offers it for new customers. I’d recommend you have a Betterment or a Charles Schwab checking account just for travel purposes.
Final Thoughts On Switching Banks
Switching banks is something that most of us won’t do too often. If you’re in a position where you need to switch banks, it’s helpful to think about all the different types of banks you can choose from. There are a lot of them – far more than I can list in this post. Many of them are good banks. Many are also terrible banks.
My advice is to go with a bank that works for you and that has no fees. You should pick one bank to be your primary checking account. Whether that’s a traditional bank, a fintech bank, or something in-between is up to you to decide. Just make sure it’s free. I’m going with Ally just because they’re a good compromise between traditional and fintech and I’ve had accounts with them open for a long time.
Hopefully, this post gives you some ideas if you’re in the process of switching banks.