Dave Ramsey is a huge fan of NeoBanks. Here’s what they are and why you might want to use one
Should you listen to Ramsey on this tip?
- Dave Ramsey is a fan of neobanks.
- Neobanks are fintech companies offering online financial services.
- The use of neobanks has great advantages, including reduced operating costs.
Choosing the right bank account can be complicated because there are so many different financial institutions, each with their own advantages and disadvantages. Besides traditional banks and credit unions, there is also another newer option: neobanks.
Financial expert Dave Ramsey recently discussed the pros and cons of neobanks. It’s worth taking a look at how these banks work and what Ramsey has to say about them, so you can decide if one is right for you.
What exactly is a neobank?
As Dave Ramsey explained, “technically a neobank is not a bank at all”. Instead, it is an online-only business that is not a chartered bank and only offers traditional banking features such as a checking account and a savings account, without a card. credit or loan program.
Neobanks focus on “apps, software and other high-tech ways to virtually manage your money,” Ramsey said. “That makes them appealing to tech-savvy people who appreciate a better digital experience and don’t want to go to a traditional banking institution.”
When you open an account with a neobank, the steps are simply to download an app and enter some basic information to open your account. You don’t need to meet with customer representatives or send a lot of documentation. And once your account is open, you can manage it entirely online.
Here’s why Dave Ramsey loves neobanks
Dave Ramsey said that “there are a lot of things we like about neobanks”, although he acknowledged that they are not necessarily the right choice for every person. Some of the key features that make these accounts great include:
- Reduced operating costs: This allows them to pass the savings on to consumers. As Ramsey explains, many of these accounts don’t charge a monthly maintenance fee, unlike more traditional banks that typically impose this additional cost unless you meet certain conditions such as maintaining a set minimum balance.
- Higher rates: Because neobanks don’t have such large costs, they can usually pay a better rate on high-yield savings accounts. As Ramsey explains with an example on the Ramsey Solutions blog, the additional interest paid by an online bank can sometimes be very impressive.
- Convenience: Ramsey said one of the great benefits of a neobank is that you have the ability to manage your account online and access its features 24/7, rather than having to your banking transactions during traditional business hours. He also said that many of these banks offer much wider access to free ATMs, including those at places where you can shop anyway, like convenience stores.
Ramsey also recognizes the disadvantages of neobanks, including more limited account services and the inability to access in-person customer service. But, despite that, he thinks most people will be fine using one. “We’re going to be really honest with you here – we’re a big fan of neobanks. Traditional banks have been slamming people with fees and credit card offers for far too long. They’re taking advantage of people’s debt load, and it’s That’s why neobanks are great.
Ultimately, you’ll want to research both the pros and cons Ramsey discussed when deciding where to bank – but you might find that a neobank is your best bet.
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