The Benefits of Combining Traditional and Online Banking

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What Is Hybrid Banking?

Hybrid banking combines the benefits of traditional and online banking. For instance, you might maintain a checking account with a physical bank or credit union while holding a high-yield savings account with an online bank. This approach allows you to enjoy higher interest rates and lower fees from online banks, along with the in-person customer service offered by traditional banks.

When to Choose Online Banking

Online banking offers numerous advantages, including higher annual percentage yields (APYs) and fewer fees. For example, while the average yield for a traditional savings account was just 0.47% in January 2024, some online banks offered yields as high as 5.35%. Online banking is also convenient, allowing you to manage your finances from your phone or computer. Consider online banking for high-yield savings accounts, certificates of deposit (CDs), money market accounts, personal loans, mortgages, and auto loans.

Important Considerations

Before opening an online bank account, ask yourself the following questions:

• How do interest rates compare to traditional banks?
• What does the ATM network look like?
• Are there fees for using an ATM?
• Are other account benefits available?
• Is there a required minimum account balance?

When to Choose Traditional Banking

While online banking has its perks, traditional banking offers benefits like in-person customer service, which can be invaluable for resolving issues face-to-face. Traditional banks also make it easier to deposit cash. Consider traditional banking for checking accounts, basic savings accounts, credit cards, and wealth management services.

Important Considerations

If you’re thinking about opening a traditional bank account, consider the following:

• How important is in-person banking to you?
• Do you plan on making cash deposits?
• Are there bank fees to consider?
• Is there adequate ATM access?
• Are there any perks or rewards for opening an account?

Tips for Balancing Hybrid Banking

Managing multiple accounts at different banks can be challenging. Here are some tips to help you stay organized:

• Compare accounts from multiple financial institutions before committing.
• Download banking apps from each institution to track your spending.
• Consider a budgeting app that consolidates all your accounts in one place.
• Mark your budget to know which accounts are used for which bills.
• Enroll in autopay to avoid missed payments and simplify bill management.

The Bottom Line

Whether you prefer the in-person experience of traditional banking or the convenience and higher yields of online banking, hybrid banking can offer the best of both worlds. Your choice will depend on your specific banking needs and preferences. If you opt for hybrid banking, make sure to update your budget and keep track of your accounts.

Maintaining a healthy credit score is also crucial for financial wellness, whether you’re applying for a credit card or a mortgage. Check your credit score and report regularly to stay informed.

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