Retirees who are on a fixed income may be seeking different features from their bank compared with younger bank customers. Shopping around for a new bank that might suit their needs better could be a good opportunity to pay less in fees.
The main issue for retirees is about selecting a bank that “truly understands the challenges seniors face when managing a limited budget,” says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling and a former U.S. News contributor.
What Do Retirees Want in a Bank?
Many retirees are often looking for banks that offer more flexible terms such as low minimums for checking and savings accounts, no monthly fees for accounts, and services such as free ATM withdrawals – or fees that are easily waived. They are also looking for perks such as free checks, accessible branches that are near home and some investment services.
Retirees often want to stretch their dollars a little more than other bank customers and are not just looking for a bank that provides the maximum return on their deposits, McClary says.
“Some banks do a better job than others when it comes to providing access to programs that promote financial well-being and provide assistance with budgeting,” McClary says.
One major challenge that retirees are facing is prolonged ultra-low interest rates, says Evan Kulak, co-founder of Polaris Portfolios, a Massachusetts-based financial planning firm that partners with banks and credit unions.
Since interest rates are not expected to rise for a couple of years or longer, another challenge facing retirees is generating enough funds from their fixed-income products to cover expenses, he says.
“Retirees are looking for products that offer safety of the principal amount, access to funds and a competitive yield,” Kulak says. “Banks are attempting to meet retirees’ income needs by offering high-yield savings accounts and attractive certificates of deposit.”
Should You Consider an Online Bank?
Some retirees who do not need face-to-face service at a branch could explore options that include online-only banks.
Since some banks still have limited hours for their branches, and since retirees need to minimize their possible exposure to COVID-19, it’s important for them to find a bank that makes mobile deposit and other online transactions easy to understand, use and trust, says Stephen Ritter, chief technology officer for Mitek, a provider of mobile deposit technology for U.S. banks and a provider of identity verification technology.
Retirees should look for banks that provide tutorials on how to use mobile deposit; offer a feature that enables users to easily capture clear pictures of the checks they want to deposit; encourage retirees to experiment with mobile deposit first, such as by sending a $5 “test check” that customers can only deposit through mobile deposit; and provide a 24/7 call center to help with any issues, Ritter says.
Best Banks for Retirees
Retirees are seeking banks that do not charge monthly fees or require a minimum balance since some people are not receiving direct deposits. Desirable banks also offer higher interest rates for their savings.
Some retirees are less likely to use online banking than their counterparts. Others need to enroll in direct deposit options to receive Social Security payments, tax refunds, stimulus funds and pension payments.
“In these tumultuous times, direct deposit helps retired seniors safely deposit their money faster and securely,” Kulak says. “Banks that offer assisted online banking and comprehensive telephone banking services can provide a valuable and safe service for retirees.”
Ally Bank offers a savings account with no monthly fees and no minimum balance requirements, and it pays 0.6% on all balances. Its checking account does not charge fees, and checks are free.
Discover provides a savings account with no monthly fees and no minimum balance requirements, and it pays 0.6% on all balances. The checking account offers 1% cash back on all debit card purchases up to $3,000, with free checks and no fees on insufficient funds or overdraft protection.
HSBC Bank offers a savings account with no monthly fees and no minimum balance requirements, and it pays 0.01% on balances under $15,000, increasing to 0.05% for balances $15,000 and higher.
Charles Schwab provides a checking account without a monthly fee or minimum balance requirements and unlimited ATM fee rebates globally for travelers. It doesn’t charge foreign transaction fees, and deposits earn 0.03%. Its savings account offers similar benefits, with deposits earning 0.05%.
American Express offers a savings account with no monthly fees. It has no minimum balance requirements and pays 0.6% on all balances.
Marcus by Goldman Sachs provides an online savings account with no fees or minimum deposit. It offers 0.6% on deposits. Marcus does not include checking accounts.
TD Bank‘s TD 60 Plus Checking program provides free checks, money orders and paper statements but requires a $250 daily balance to avoid a $10 monthly fee. It also provides a 0.25% discount on home equity and personal loans.