Traditional banking still manages to be a popular option despite the increase in online banking and technological innovations, such as mobile banking. Traditional banking will likely continue to attract individuals because consumers continue to appreciate the convenience of being able to go into a physical bank and talk to a real person, according to research by the Federal Deposit Insurance Corporation (FDIC).
What Is Traditional Banking?
Traditional banking is the process of handling deposits, withdrawals, and other common bank transactions at a bank with physical branches. It may entail dropping money in a drop box, visiting an ATM operated by the bank, or interacting with a human teller. Consumers can also obtain loans from traditional banks. The word 'bank' is often expressly included in the name of a traditional bank. There are a number of benefits and disadvantages to maintaining this kind of banking relationship. We will explore these in more detail below.
Traditional Banking Advantages
When you choose traditional banking, you have more of a personal relationship with your money and those who are handling it. Essentially, what you see is what you get. Unlike online banking, you can place items into and take them out of bank safety deposit boxes, physically present your checks for deposit, and get cash handed back to you with traditional banking.
At any time of the day or night, you can make easy deposits in the walk up depositories situated outside of physical banks. These depositories are typically available 24 hours a day, seven days a week throughout the entire year unless they are being serviced. They may take the form of ATMs, in which case you can also perform withdrawals. With other types of banking, it is difficult to deposit large sums of cash.
When you travel to a brick and mortar bank, you have the benefit of beefed up security. Many traditional banks have security guards on duty at all times as well as surveillance cameras. In addition, you can interact with real people, such as a special accounts representative, bank manager, or teller.
Since you get a physical receipt from an ATM or teller, you have the security of knowing your deposit has made it safely into the bank.
Security is already mentioned above, but there are many varieties available with traditional banking. You expect your money to be available when you need it if you place it in a bank. Fortunately, the majority of banks are insured by the FDIC for up to a quarter of a million dollars. This means that if the bank cannot cover its accounts due to poor management or a robbery, you can still get your money back.
Traditional Banking Disadvantages
All types of banking have their advantages and disadvantages, and traditional banking is no different. Traditional banks are for-profit organizations that are privately owned. They have many costs associated with doing business, such as utilities and rent. They want to make as much money as possible. They often charge their customers expensive fees to maximize profits.
Many traditional bank accounts charge penalty fees for falling under a certain balance along with monthly account maintenance fees. When you withdraw money using an ATM that is not owned by the bank, a traditional bank may also charge you additional fees. Plus, you will have to shell out up to $30 if you ever overdraft your account.
When it comes to saving your money, you do not usually get the best deals from traditional bank accounts. If you keep all of your funds in a traditional bank savings account, it is tough to build wealth. Credit unions and online banks often have interest rates that are higher than those found at traditional banks.
Is Traditional Banking Right for You?
The answer to this question varies from person to person. It really just depends on your preferences for banking. If you like a more hands-on approach, traditional banking is definitely the way to go. The tellers and other bankers get to know you and your needs with traditional banking and can offer you personalized service. When you choose a local bank, you have the opportunity to get to know the decision makers personally.
Do you need access to your money quickly? Or, do you need to withdraw large sums? Traditional banking allows for this. You can deposit cash, withdraw large amounts of money without a problem, and your checks are posted quicker.
If you need investment accounts, mortgages, safe deposit boxes, or any other accessory services, you will need to look into traditional banking. The other alternatives out there have not caught up in these areas yet.
Do you run a business? Do you have a number of employees who are able to access your accounts? Traditional banking makes this easier. There are business checking accounts that are easy to manage with the services provided by traditional banks.
Finally, the choice between traditional banking and other alternatives is not necessarily a dichotomous decision. Just about all traditional banks now offer online banking as part of their services. In fact, they often encourage their customers to visit the Internet as their primary banking option. This has led to a number of online-only banks. You need to be weary of these financial institutions. Though most of them are above the board, there are many that are not federally-insured and that charge hidden fees for transactions.
Do Your Research before Deciding on Traditional Banking
Traditional banking is still more convenient for many consumers despite its disadvantages. Whenever you need to get assistance from a human, you can just walk into a branch during business hours. Shop around to find banks that offer low or no monthly fees if you do choose to open a traditional bank account.
You can often find updated reviews of local and national banks via a few online services. When making your decision, listen to the advice of current account holders. If you find that traditional banking is not for you, you should browse our site to educate yourself on the alternatives.