When it comes to banking, you have more options than what’s on the high street thanks to the internet. Some banks don’t have any branches at all and are purely online and with lower overhead, they can pass on those savings to you and give you cool features that the big four banks may not give you.These are called challenger banks and include banks like Monzo, Revolut, Wise, and Starling. While you lose the convenience of having in person branches, these banks are fully licensed and your money is protected, and these banks have some advantages and in this blog post we’ll talk about some of those advantages and what to look for in them.
Slick, user friendly apps
Challenger banks are also called fintech or digital banks and part of that modern fintech approach is having a slick, user friendly app with the ability to open an account in minutes; real-time notifications about account activity, graphs and category labels that can help you keep track of your spending and help you budget; and a spaces feature so you can set money aside for a savings goal. Some of these apps may allow you to log in with face or touch ID. In case you lose your bank card, you can easily freeze it via the app.
No foreign transaction fees
Do you like to travel? You can make your money stretch further by getting a bank account that has no foreign transaction fees. If you’re spending a lot of money on your travels, those foreign transaction fees can add up and you lose money at currency exchanges so getting a bank account with no foreign transaction fees is a smart choice. There are credit cards that offer no foreign transaction fees, but not everyone wants to have a credit card, so it’s great to have a debit card option with no foreign transaction fees.
Even if you don’t travel much, no foreign transaction fees is a great feature to have especially if you like to shop from websites based in other countries and they don’t have an option to charge in GBP.
Higher interest rates
In general, challenger banks have higher interest rates than the big four banks do. Because they have lower overhead costs than the big four banks, they can pass on the savings to you in the form of higher interest rates.You’re going to want to look for how often interest is paid, preferably daily or monthly, and if there’s a minimum deposit to get that relatively high interest rate.
Downsides
Like we said earlier, challenger banks don’t have a branch so if you’re looking for personal in-person service from a human, you’re not going to get that. Another downside is that it will be harder to make cash deposits with some banks not allowing them and other banks only accepting them at Post Office branches or at banks they have partnerships with.
In Conclusion
Switching banks is relatively easy compared to other things related to financial planning. For help with this and other financial planning issues, get in contact with Neil today.