I use an online bank to earn 20 times more on my money along with a credit union, and it’s the perfect mix for 4 reasons

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When my husband and I started getting more serious about our personal finances a few years back, one of the first things we did was comparison shop for banks.

At the time, regular interest rates were practically nothing even on savings accounts, and the new, exciting, online banks were offering almost 2% on savings with some small amount on checking, too.

I’d gotten fed up with annoying monthly fees and required minimum deposits at my old bank. And after some serious searching, we found a bank that got rid of the monthly fees and gave us some refunds for ATM fees each month: Ally Bank.

Our interest rate was around 1.9% or 2% when we moved all of our checking and savings there, which already made us feel like we were making a good choice. Traditional savings accounts offer as little as .1% or .01% interest, meaning my money is earning 20 to 200 times more in a high-yield savings account than it would in a traditional account.

My online banking journey

It was a fairly easy process to open our initial accounts. We just called the phone number once for some verification steps, and everything else was processed through email and the online banking portal.

The customer service moves fast and the agents were easy to talk to and helpful. We opened separate savings accounts so that we could have an emergency fund as well as a “goal” account, which was a sinking fund for things like buying a car in the next few years. It worked well, and never resulted in frustration or particularly long wait times on hold.

Now, almost two and a half years later, I’ve continued to be very impressed with my online bank. I’ve never regretted the choice to give up on local branches of national banks for my main personal checking and savings.

First of all, while our interest rate fluctuates, it stays quite high (definitely higher than what traditional banks have to offer). We’ve also been able to use whichever ATMs we want and get up to $US10 refunded in ATM fees, which we never reach. The bank even offers free checks.

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However, about six months ago, I needed to open my first business checking and savings accounts. Ally did not offer business accounts, and I felt that even though I was just a sole proprietor working as a contractor for various clients, I needed the benefits that having an actual business account would offer.

I knew I needed a business account to set aside all income, pay quarterly estimated taxes, and pay myself a regular paycheck; with multiple clients, I knew that around tax time I’d be doing a ton of digging around for information if I didn’t have a separate account specifically for business.

I also knew that, should business expenses arise, it would be better to be able to pay for them with a separate account and know that all expenses from that account could be counted on my taxes.

Beyond that, however, I wasn’t sure what to look for in a business account, or what benefits might be associated with having one. I hoped I could find a knowledgeable local banker who could help me take full advantage of a new account.

Choosing a credit union

The closest banks and credit unions to my home in Ohio were my first picks, and when I went in to talk to the local credit union, Telhio Credit Union, I liked what I found.

They had modern features, like an app with mobile deposit, but there was also something really nice about being able to connect with the business specialist at my local branch and hear all the things they could do to make it easier for me to transfer money, write checks, and make payments.

Many of Ally’s features are well advertised on its website, but the credit union was helpful at a time when a lot of things were new to me – like setting aside 25% to 30% of my income for estimated taxes – and working through my business account application in person helped me to think these things through.

Why I’m sticking with a credit union even though I love my online bank

I like supporting not-for-profit banking. As nice as it is to make a few dollars a month on my savings through my online bank, I like the way that credit unions are set up to treat their customers as members and share out any successes to them rather than just to shareholders.

For many accounts, my credit union has better interest rates than other brick-and-mortar financial institutions because it isn’t looking to make a profit.

My work has local aspects, and having a local financial institution is helpful. As a writer, I work with a lot of local publications, and knowing individuals who work at Telhio Credit Union’s local branch has helped me connect with them about upcoming events and activities in the community.

Our credit union runs local canned food drives, hands out free tickets to the fair, and has booths at local events. Telhio also ran a financial literacy course at a summer mentoring program where I was volunteering, and it was very satisfying to see this connection across my community.

Separate institutions help me establish the idea of “paying myself.” Each month, I write a very surreal check: it’s a paycheck to myself, from myself, from my business account to my personal joint checking account as a full-time freelancer.

It helps me remember that, in the weird world of sole proprietorship, I am both the boss writing the checks and the employee receiving and spending them.

Totally separate institutions really makes it feel real that some money needs to stay “in the business” to pay quarterly taxes and fund work-related expenses, while a set amount goes into my checking account as money to spend on my regular life.

Variety means I have somewhere to turn if either option goes south. As much as the idea of streamlining my banking sounds nice, I like both of my financial institutions right now.

If, however, I end up no longer liking the services at Ally or Telhio in the future, having both makes it just a little easier if I need to change things up.

Ally might someday add business checking, and I know Telhio already does personal checking and savings. The diversity I have right now gives me an easier “out” than if I put all my eggs in one financial basket.

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