Retirees: Why You Should (or Shouldn’t) Switch To a Digital-Only Bank in 2025

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Digital banks typically come with lower fees, higher interest rates and the convenience of banking from anywhere. But is it the best banking option for retirees? Here are some of the pros and cons of an online-only bank to help you decide whether it’s right for you in your retirement years. 

Also here are five banking services retirees should be using.

The Pros of Digital-Only Banks for Retirees

Here are a few reasons why you may want to consider switching from a traditional bank to a digital-only one as a retiree: 

You Could Earn Higher Interest Rates on Savings

Traditional banks aren’t the most generous when it comes to interest rates because they spend a significant chunk of their budget on maintaining physical branches. But unlike traditional banks, online-only banks don’t have the overhead costs of brick-and-mortar locations, which means they have more room in their budget to offer higher interest rates on savings accounts and CDs. So, if you want to stretch your nest egg and maximize your retirement savings, putting your money in a digital-only bank could make more financial sense. 

They Typically Charge Lower Fees

The last thing you want to worry about when you’re living on a fixed income in retirement is having to pay hidden fees. As mentioned earlier, because digital banks don’t have the overhead cost of physical locations, they can afford to charge fewer fees, such as monthly maintenance fees and overdraft fees. If you decide to bank with digital-only banks throughout your golden years, you could potentially save hundreds or thousands of dollars over the course of your retirement. 

It’s More Convenient Than a Traditional Bank

Since everything is online with a digital-only bank, you can check your balance, transfer money and deposit checks, all from your devices. So, if you have mobility issues or simply don’t have the time or energy to visit a branch or wait in line, a digital-only bank could make your life much easier. 

Better Budgeting Tools

Many digital banks come with built-in budgeting tools, spending trackers and automated savings features. If you want to keep track of your finances without having to deal with or create complicated spreadsheets, a digital-only bank’s tools could save you tons of time and energy. 

Solid Security Features

Most digital banks today offer features like two-factor authentication, biometric logins (like Face ID or fingerprints) and real-time fraud alerts. If you’re worried about security, these banks may actually offer better protection than your local branch.

The Cons of Going Digital-Only

Though digital-only banks come with many perks, they’re not right for everyone. Here are a few downsides of digital-only banks to consider before making the switch. 

No Physical Branches

If you prefer being able to walk into a bank, speak with a teller and get face-to-face customer service, going digital-only may not be for you. Traditional banks typically have more of a personal touch and may be a better option for you instead. 

Limited Customer Support

Though online banks typically offer 24/7 customer support, it’s most often through chat or phone, not in person. If you run into an issue that requires extra assistance, like a frozen account or a fraudulent charge, you may find the automated responses pretty frustrating. 

Cash Deposits Can Be Tricky

If you need to deposit cash regularly, a digital-only bank might not be for you. Many online banks don’t have their own ATMs for cash deposits, so you’d have to use third-party services like Green Dot or deposit through a linked traditional bank account. 

And though some online banks let you deposit checks from your phone, not all of them let you deposit cash at an ATM or branch.

Learning Curve

If you’re not comfortable with technology, switching to an online bank can be pretty intimidating. And even though most digital banks’ apps are quite user-friendly, there’s still a learning curve. 

So, Should You Switch To a Digital-Only Bank? 

If you want to earn higher interest rates, save money on fees and like the convenience of managing your finances from literally anywhere, an online bank can be a solid choice for your retirement years. That said, if you value in-person customer service, need to deposit cash regularly or prefer the familiarity of a traditional bank, you may want to stick with what you know.

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