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Blending traditional banking with online banking has its perks. It can get you lower fees and higher yields without losing convenience, but it's important to do your research. You'll want to be strategic about which accounts you hold at which banks. You'll also need to keep track of all your accounts once they're active. Here's how to choose between traditional and online banking—and when a hybrid approach might make the most sense.
What Is Hybrid Banking?
Hybrid banking is when you blend traditional and online banking. For example, you might have a checking account with a brick-and-mortar bank or credit union, and a high-yield savings account with an online bank.
There are benefits to using a mix of both. Online banks tend to offer higher interest rates on savings accounts and fewer fees. That can be appealing if you're looking to grow your savings. At the same time, you might like the in-person customer service that traditional banks are known for. Hybrid banking allows you to take advantage of both.
Find High-Yield Savings Accounts
When to Choose Online Banking
Online banking can unlock attractive benefits and fewer fees. Some pay an annual percentage yield (APY) on both checking and savings accounts, on top of signup bonuses. The average yield for a traditional savings account was just 0.47% in January 2024, according to the Federal Deposit Insurance Corporation (FDIC). In that same time period, some online banks offered yields as high as 5.35%.
Digital banking can also be convenient, allowing you to manage your money from your phone or computer. You'll likely have access to a large ATM network and may be reimbursed for ATM fees. An online bank can be a good option for:
- High-yield savings accounts
- Certificates of deposit (CDs)
- Money market accounts
- Personal loans
- Mortgages
- Auto loans
Important Considerations
Ask yourself the following questions before opening an online bank account:
- 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 on the table?
- Is there a required minimum account balance?
When to Choose Traditional Banking
Many people opt for online banking to take advantage of fewer fees and better yields, but traditional banking still has its benefits. In-person customer service is an obvious one. That may be appealing if you like asking questions and resolving issues face to face—which is something that could come in handy if your banking app goes down. A traditional bank can also make it easier to deposit cash.
A traditional bank can be a good fit for:
- Checking accounts
- Basic savings accounts
- Credit cards
- Wealth management services
Important Considerations
If you're thinking about opening a traditional bank account, consider the following:
- How important is in-person banking?
- 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 might get tricky if you aren't organized. The following tips can help streamline things:
- Shop around and compare accounts from multiple financial institutions before committing.
- Download banking apps from each financial institution and track your spending.
- Consider a budgeting app that can show all your accounts in one place.
- Mark your budget so you know which accounts are being used to pay which bills.
- Instead of paying bills manually from each account, enroll in autopay to set it and forget it. Doing so can also help prevent missed payments.
The Bottom Line
Some people like doing their banking in person at a local branch, while others prefer the convenience of online banking. The latter might also translate to fewer fees and better yields on deposit accounts. Hybrid banking can provide the best of both worlds. The right approach for you will depend on your banking needs and preferences. If you do opt for hybrid banking, be sure to update your budget and keep track of your accounts.
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