Over the past few years, digital banking or neobanking has become increasingly popular among consumers. With its user-friendly interfaces, low fees, and convenience, neobanks are fast becoming a popular choice for those looking to manage their finances. In this article, we will discuss how using a digital bank can help you reach your financial goals faster compared to a traditional brick-and-mortar bank.

Convenience is the name of the game for neobanks

Today’s world is hectic, and we want everything on-demand to match with our fast-paced lives; neobanks understand this and are ready to help. With a traditional bank, you might have to visit a physical branch during business hours to deposit a check or withdraw cash. However, with a digital bank, you can do all your banking from your phone or computer, at any time of day. Additionally, digital banks often have a large network of fee-free ATMs that you can use to withdraw cash, making it easy to access your money when you need it. By having access to your money 24/7 and being able to bank from anywhere, you can manage your finances more efficiently and reach your financial goals faster.

Neobanks have lower overhead, so they can pass those savings on to you

Unlike traditional banks that charge monthly account maintenance fees, ATM fees, and overdraft fees, neobanks like Varo Bank often offer free accounts with no monthly maintenance fees or minimum balances required. This is because digital banks have lower overhead costs than traditional banks, which allows them to pass on the savings to their customers. By not having to pay excessive fees, you can save money that can be used to reach your financial goals faster.

Your money will do more for you with higher interest rates on saving accounts

Compared to traditional banks that offer paltry interest rates on savings accounts, neobanks often offer interest rates that are several times higher. For instance, some digital banks offer interest rates of up to 2% on savings accounts, which is significantly higher than the national average of 0.05%. By earning more interest on your savings, you can reach your financial goals faster, whether it is saving for a down payment on a house, paying off debt, or building an emergency fund.

You’ll have access to helpful budgeting tools that can improve your financial literacy

Many of us struggle with budgeting, especially if we’re keeping track of multiple income streams or are just starting out as an independent adult. That’s why digital banks are so helpful: many neobanks have built-in budgeting tools that allow you to track your expenses, categorize them, and set spending limits. By being able to see where your money is going, you can identify areas where you can cut back and save more money. Additionally, some digital banks offer round-up features, which automatically rounds up your purchases to the nearest dollar and deposits the difference into a savings account. By using these budgeting tools, you can stay on track towards reaching your financial goals.

Know your money’s going with instant alerts and real-time account balance details

With a traditional bank, you might have to wait several days to see your account balance or receive a notification for a transaction. However, with a digital bank, you can receive real-time notifications and alerts for every transaction. By being able to see your account balance in real-time, you can make better financial decisions and avoid overdraft fees.

These tools are incredibly helpful for everyday financial decisions, including avoiding overdraft fees, but they’re absolutely essential if your card information is stolen. Instant alerts let you quickly identify fraudulent activity or errors and take action to resolve them. Time is of the essence when it comes to these issues: thieves will generally make a flurry of purchases right away, before you notice anything is wrong, and then “dump” the card to find someone else. This puts you in danger of overdrafting or being unable to pay for your legitimate purchases, which could get you into serious financial straits. 

You also need to report suspicious activity quickly, as usually you only have 60 days to dispute a charge before banks can no longer intervene. By having timely alerts, you can immediately get to work disputing false charges and taking steps to secure your accounts.

Final thoughts

There are so many benefits to using a digital bank over a traditional brick-and-mortar bank. You’ll get access to your accounts from anywhere, save money and earn more interest, and have a structured budgeting plan that will make your life much easier. You’ll also have more protection from fraudulent activity with helpful alerts and real-time activity updates on your bank’s dashboard.  If you're looking for a way to manage your finances more efficiently and effectively, consider switching to a digital bank.