Banking · Personal Finances

Branchless Banking

Over the past twenty years I’ve had checking accounts at nine different brick-and-mortar banks, including: First Security (defunct), Wells Fargo, Charter One (defunct), Fifth Third Bank, Washington Mutual (defunct), Chase, PNC, Suntrust, and M&T. Why so many? After all, changing banks can be a bit of a pain. Most of the changes were due to either moving across the country (twice!) or through bank acquisitions. A couple accounts were to score bank bonuses, even though I’ll probably never step foot in a lobby.

About fifteen years ago, I moved most of my banking online when I opened an account with ING Direct (defunct). I’ve since banked online with HSBC Direct, Capital One 360, Ally, and Fidelity. But even banking online, I found it useful to have a brick-and-mortar account, even though I rarely step into a branch office. 

Earlier this year we bit the bullet, closed our Wells Fargo account, and moved everything online.

Our Setup

Today, we bank online with Fidelity, using two different accounts: 

This is the primary account for all direct deposits (e.g. paycheck) and direct withdrawals (e.g. utilities, mortgage, Paypal, Venmo, Virginia529, etc.). We have it setup as a joint account. Any balance is swept into SPAXX and occasionally I’ll purchase the slightly higher yielding SPRXX, matching or beating most online savings accounts, with no monthly transaction limit. While we could also hold stocks and mutual funds in this account, we don’t, mostly because it would make our budget reconciling more complicated. Instead we use another brokerage account for those trades.

Provides no-fee ATM transactions, reimbursing any fees that another bank might charge you when using their ATM. This includes foreign ATMs, as we found when we used the debit card during our Spain trip. Our CMA has a $0 balance because it’s linked to our Fidelity Brokerage account for self-funded over-drafting. This means that any check we write and every ATM transaction using the CMA gets pulled from the Fidelity Brokerage account. Like the Fidelity Brokerage account, we set it up as a joint account and both my wife and I have debit cards.

Both accounts provide free paper checks, but for simplicity we just use the CMA checking feature. While both provide debit cards, only the CMA account reimburses ATM fees.

I’ve been using Fidelity for years, ever since I had an employer who used Fidelity to administer both my 401(k) and ESPP plans. But it wasn’t until I read this post by the Frugal Professor that I discovered how I could use the CMA account to fill the gaps that often plague online banking: paper checks and free ATM withdrawals. Frugal Professor has screenshots that can guide you on how to set up the sweeps to SPAXX and self-funded over-drafting, if you’re interested.

In addition to the accounts above, we also use the Fidelity Rewards Visa Signature card for 2% cash back on every purchase. I find that there could be better integration between the credit card and the accounts, but it’s not terrible.

One hiccup I ran into came when setting up two of our direct withdrawals: Virginia529 and our water utility. To get them setup, I had to call and fax in documents proving my ownership of the accounts. Both had fraud detection systems that flagged the direct withdrawal setup, making setting up those two accounts more manual than I wanted.

But What About Depositing Cash?

I’m not aware of any mobile app that lets you deposit cash like you can with checks, but wouldn’t it be nice (and surely abused!)?

I have several kids that earn money through babysitting or mowing lawns for the neighbors. When they deposit it in the Bank of Dad, I now have cash that I need to deal with. It makes sense to have some cash on hand for emergencies, such as when we experienced a freak wind storm and subsequent multi-day power outage while living in the Puget Sound in 2007. When ATMs have no power and stores are unable to accept credit cards, cash is king. But too much cash also has its risks.

The easiest solution is to spend the cash as you would normally: at the grocery store, home improvement store, etc. Sure, you don’t get the credit card bonus and tracking it can be harder, but it’s probably the simplest approach.

However, maybe you’ve opened a bank account or two to score a bank signup bonus? If the bank has branches in your area (probably likely if it was a mail offer), then you could make a one-time ATM or teller deposit to reduce the cash to a manageable amount. This is probably the approach I will end up taking.

What About Loans?

If you’re worried that closing your brick-and-mortar account will make it harder to get a mortgage or loan, don’t sweat it. When we refinanced in March (and also earlier, in 2007 and 2010) we did it through an online mortgage broker. The “close at home” likely made it easier than doing a refinance through a brick-and-mortar bank. You can likely do the same thing with other loans, should you need them. 

The notion that having a personal relationship with your banker may have been true decades ago when the Baby Boomers started banking and credit scores were in their infancy. Today, your banker relies completely on your credit score and your financial health. You’re delusional if you think your promise of “my word is as good as gold” means anything to them.

It’s also almost a guarantee that your brick-and-mortar bank won’t be giving you the best rate on any loan offer. Someone has to pay the estimated $200 per customer, per year that it takes to keep that spiffy branch open.

Branchless Banking FTW!

We’re happy with our branchless banking setup. Let me know in the comments what you think about going branchless. Have you already done it? Any reason I haven’t mentioned that’s keeping you back? I want to hear about it.

Hasta luego!

Mmmm! Pumpkin pie!

3 thoughts on “Branchless Banking

  1. I’ve been 99.9% branchless since 2005 or so. I was with Ally forever, then Fidelity.

    Thanks to mobile deposit of checks, I agree that branches are mostly useless. However, from 2005-2020 I still maintained a local fee-free checking account to have the ability to deposit cash. I’m still surprised that our society hasn’t evolved to be cashless yet. Nonetheless, we still accumulate the green stuff for random stuff.

    Since interest rates have plummeted to zero, I recently (and reluctantly) decided to leave Fidelity in favor of a 2% checking account (which was recently downgraded to 1.5%) at a local credit union that has some sort of deal with my university for faculty. I miss a lot about Fidelity; mostly the wicked-fast ACH transfers, but I couldn’t turn down the free interest.

    Once Fidelity interest rates come back up, I’ll gladly go back.

    1. Where are you finding 2%? I’m only seeing around .6% at most online banks (Ally, quick poll of Bankrate). I’ll probably stick to Fidelity for now, mostly because of inertia. I still have my account at Ally and Capital One, but interest chasing with my cash doesn’t seem compelling enough. Thanks for the comment.

      1. Just a local credit union that has some sort of deal with the faculty. It’s pretty darn nice, particularly before they reduced it to 1.5% this past month or two. Unfortunately, it’s not replicable to outsiders.

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