The new banking is changing the way consumers save, spend, pay and earn. This article shows some ways to use those changes to get and grow and save more money.
Banking has changed. Banks used to be big, stodgy and slow. Until recently, banks had to have lots of brick and mortar branches. The more branches, the more money. The more money, the bigger and slower banks got. That was okay, since the way money worked stayed pretty much the same as well.
The New Banking
This article is about how the savvy consumer can use the new banking to get, save and grow more money. But to really see the options, first think about a few ways the banking world has changed:
- Giant, slow banks are suddenly no longer the most powerful. New banking means tech firms are just as powerful as banks or even more so. Think PayPal, online banks and credit card companies that now let you open bank accounts or take out auto loans.
- Online bill pay. Old style checking accounts are becoming a thing of the past as online banking makes it easier to pay bills electronically, without a paper checkbook in the home.
- Online banking is an end run around the big old banks. More than half of all Americans now do their banking online. In the new banking world, banks with thousands of brick and mortar branches are actually at a disadvantage. Online-only banks can push their savings back to customers, offering higher interest rates and cheaper services.
- The rate of change is speeding up. Things aren’t only changing in the new banking world, they’re changing fast. There are new products, services, accounts, cards, apps and other solutions popping up literally every month.
Why You Should Be Excited About the New Banking
Gill Haus speaks at Capital One Labs about the challenges in the new banking world.
Instead of a few, giant banks with the same set of rules telling you how things are going to be, there’s now a feeding frenzy of a zillion banks all fighting one another for your dollars. They’re all trying to out-invent each other, creating a rapid evolution of solutions for consumers that parallels advancements in the tech and smartphone industries. Literally every time you turn around, the new banking world has turned out some new way for you to hack your money.
Case in point: at a recent trade event at Capital One Labs in New York, Capital One’s Gill Haus talked about the importance of trying to stay ahead of the curve of today’s new banking environment.
“The idea here is, as opposed to taking 18 months to build something and getting it out to the customer and then realizing, no, it doesn’t solve the problem, we can do that in weeks. That doesn’t mean we’ll always win, but we’re using that kind of thinking. Banks are being threatened by financial tech companies constantly. If you’re not digital, you’re not going to be there,” said Haus.
In other words, the credit card and banking giant is making a commitment to be quicker to react to changes and innovate solutions to meet the changing banking world. They’re not alone. Virtually every bank out there faces the problem of “innovate or die.”
Below, we’ve listed seven ways smart consumers can use the new banking to hack their finances.
1. Use Apps to Hack the New Banking
Apps are one big way the new banking is changing things for the better. The Level Money app and other budgeting and spending tracking apps can link straight to your accounts to let you see your “money gas gauge” at a glance. Consumers can now get a clear, simple picture of their money in and money out. The apps can help track spending by category and even let you know how much you have left to spend today to stay on track. App users can set savings goals and watch their progress in real time.
There are tons of other banking apps out there that let consumers build a fuel gauge for their money. HomeBudget with Sync, Spendbook, You Need a Budget and the GoodBudget app are just a few. For our picks for the best budgeting apps on the market, see our article on the 7 Best iPhone Budget Apps. Most of the apps in that article also have Android versions.
2. Hack Your Savings with the New Banking
The idea of “pay yourself first” has been around forever. Instead of waiting to see what you’ve got left at the end of the month and saving that (if anything) you save first, then spend what’s left. The new banking takes it a step further. Pay yourself first has become “save it before you see it.”
Most banks now offer some kind of automatic savings plan that happens in the background when you aren’t looking. For example, Citizen’s Bank’s Steady Save lets customers schedule automatic transfers from checking accounts to savings. Linking that to their College Saver plan gives an extra $1,000 bonus on a student’s 18th birthday.
Capital One 360’s automatic savings plan can be customized to transfer fixed amounts monthly, bi-weekly or weekly. A relatively high .75% interest rate adds extra value to this automatic savings plan.
The beauty of the new banking’s approach to saving is, it happens when you aren’t looking. Like the Irish blessing about being in heaven half an hour before the devil knows you’re dead, automatic savings plans squirrel away the money before you even know it’s there to spend.
3. Hack Your Car Buying with the New Banking
Switch to the new banking way of car shopping to save tons of time and money.
The old way of car buying is a hassle. Shoppers spend hours in a dealership trying to find out the real price, then the dealership arranges financing. Consumers usually walk out with the shaky feeling they didn’t get the best deal.
The new banking turns that on its head, starting with the bank loan, then finding the best price. Capital One’s Auto Navigator lets car shoppers find out their terms from home. Consumers shop cars online by make, model and year. The online tool shows estimated monthly payments and lets you choose from over 12,000 dealers nationwide. With new banking, shoppers walk into the showroom and just show their offer confirmation on their mobile phone.
Most other banks now offer some form of this same “bank first” method of buying a car. For instance, Bank of America’s auto loan assistance page walks car buyers through a similar process, but doesn’t offer the added step of connecting borrowers directly to a dealership.
4. Mobile: The New Banking’s Silver Bullet
If you’re not using mobile banking, you’re missing out on the new banking’s biggest weapon to save you time and money.
Does anyone ever really need to walk into a bank branch any more? For taking cash out of a bank account, ATMs are more convenient. For paying bills there’s online bill pay. With mobile banking, consumers can even transfer funds, lend money and cash checks with mobile phones. For proof, see our article on 37 banks that let you cash checks with your iPhone.
5. Hack Your Bank’s Security
We don’t mean literally hack your bank’s security. We mean make it work for you. Credit card and bank fraud accounts for billions in lost dollars every year. Fraud siphons money from credit card accounts and bank accounts alike. The good news is, consumers who do a few things right never need to feel the pain of fraud.
- Make use of zero liability policies. The new banking’s approach to fraud is for the banks to shoulder the burden. Most banks offer some kind of no-liability system. For example, Capital One offers $0 fraud liability for credit cards, bank accounts and mobile banking alike. But no-liability policies don’t work unless the fraud is caught, so go over your statements at least once a month to catch transactions you didn’t authorize.
- Get a chip card now. American credit card companies are switching over to EMV chip cards. Instead of storing sensitive info in a magnetic stripe that can be stolen, the card creates a unique transaction code that can’t be reused. Don’t have a chip card yet? Get one. They’re secure as only a new banking solution can be.
- Use apps to stay secure. Possibly the best feature of the Capital One Wallet app is instant purchase notifications. If someone uses your card to make a purchase, you get an instant message so you can do something about it in real time, before it becomes a problem. Many other banks have similar mobile apps to keep your money safe. It’s just one way the new banking is protecting against fraud.
- Don’t worry, be happy. Mobile banking and internet banking is secure. The new banking keeps consumers’ money safer than ever. But don’t take our word for it. Check out security expert Bruce Schneier’s take on security and the new banking.
6. Hack Your Bank’s Rates
It’s easier than ever to switch banks or to use one bank for one thing and another for something else. The new banking offers lots of options, and just because your bank is good at one thing doesn’t mean it’s good at everything.
Shop around to find the best rates on:
- Get better interest rates on money you have saved. Big old brick and mortar banks offer terrible interest rates on savings accounts. Usually their rates are something borderline insulting like .01%. Know how much interest you’ll earn on an account like that in ten years? Not much. Click here to see. But big banks with physical locations have to pay a lot of overhead. Online banks don’t, so the new banking offers higher interest rates around 1%. That’s 100 times more interest than the big old dinosaurs. For our picks for the best savings account interest rates around, see our article on it here.
- Get better interest rates on money you borrow. It used to be you went into your local bank and asked for a loan, and when it came to the interest rate, you took what they gave you. With the new banking, tons of online banks are vying for your business, so there’s more leeway to pick and choose. A google search for “car loan rates” or “home loan rates” will pull up dozens of options for comparing rates and getting to the cheapest fast.
- Get better cashback rates on credit cards. With the new banking, banks and credit card companies are slugging it out to see who can offer the highest cashback bonuses. Cards from Citi, Capital One and Chase all offer between 1% and 2% cash back on purchases. For our list of the 5 best cashback rewards credit cards, click here.
- Get lower rates on balance transfer cards. Consumers trying to pay down their debt without paying heaps of interest often turn to balance transfer cards. The fierce competition out there means cards are offering longer and longer periods of 0% interest. Some even have perks like no interest on purchases, no balance transfer fees and no late fees ever. Cards like the Chase Slate balance transfer card and the Citi Diamond Preferred balance transfer card lead the pack. For our list of the 10 best balance transfer card offers, click here.
7. Look for New Banking Solutions That Fit You
The new banking means the idea of having one bank for all needs has gone by the wayside. In today’s world, it’s all about meeting the need at hand. The most innovative banks are thinking up solutions like crazy to meet the needs of different kinds of customers.Below are a few ways the new banking can help consumers with different needs.
Parents, Meet the New Banking
Many banks now offer special accounts geared towards teens and children. Capital One’s MONEY account brings teens and parents together to manage a bank account and debit card with a simple mobile app. Parents can track and manage teen spending and saving with no hidden fees or minimums. There’s a .25% interest rate earned on cash, plus mobile check deposits.
There are also dozens of new banking options out there to help teens build solid credit scores. Secured credit cards act like debit cards, except they help build a credit history from scratch.
New banking doesn’t just offer solutions to parents. There are special banks accounts, cards and other solutions engineered to help college students, small business owners and retirees. Capital One’s 360 Cafés are just one example of a bank coming up with a new and innovative solution to a customer need. It’s not that all banks are suddenly going to open business incubator cafes, but it’s more evidence that banks are innovating like their lives depend on it, which they do.
“Having a cafe is really valuable. ” says Haus. “One could argue that it’s not bad to offer free Wi-Fi and have a place where you can congregate and get work done and grow a business and then, haha, you’re sitting here and we can offer services to help you.”
Keep Looking
With new bank products coming out all the time and new solutions in the forms of apps, rewards, accounts and cards, it makes sense to keep looking. Keep visiting your bank’s website to see what’s new. Keep checking out the competition too. Browse the app store, look for accounts with better interest rates online, better loan rates, better credit cards. With banks fighting tooth and nail for supremacy in the new banking world, the only thing that certain is that things are going to keep getting better for the consumer. Things are improving fast, and banks that aren’t innovating will get left behind.
Don’t Get Overwhelmed
With all the change in the new banking world, it can feel like you need a backwoods guide to sort through all of it. Don’t panic. If you take away nothing else from this article, knowing that the banking world has changed is good enough. With banking mirroring the quick advances in the smartphone industry, the good stuff will float to the top. Consumers won’t have to dig too hard to take advantage of everything the new world of banking has to offer.
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