4 Alternatives to Big Banks and Their Record-High Fees

  • February 17, 2026

Big bank fees are at an all-time high, with the average total cost of using an out-of-network ATM now reaching $4.86 in 2025—a record according to Bankrate’s latest survey. Meanwhile, interest rates on checking accounts remain extremely low, with the average annual percentage yield (APY) at just 0.07 percent. Worse yet, recent years have seen continued scrutiny of practices like cross-selling, where banks encourage customers to adopt multiple products, often leading to higher fees and more complex relationships.​

Cross-selling is rooted in consumer research that large financial institutions rely on. It shows that customers are more profitable for longer when they own more products. This is one reason why banks push deposit products for which we pay them, rather than the other way around. Does this absurdity leave you wanting to bolt the big banks?

Fortunately, you have alternatives. Here are the top four:

1) Online Banks

A good option for most is to flee the big brick-and-mortar bank for its younger virtual sibling: the online bank. Online banks, which lack the overhead of their more traditional rivals, can offer higher interest rates, lower fees, free ATM withdrawals, and low or no minimum balance requirements. And they do.

For example, many online banks now offer unlimited ATM fee reimbursements, and some provide access to tens of thousands of ATMs nationwide. In 2025, nearly half (47 percent) of all non-interest checking accounts are free, and another 48 percent waive fees for direct deposit. The best online banks also offer competitive APYs and easy account management through highly-rated mobile apps.​

When choosing an online bank, look for features that best serve your needs and lifestyle. Some offer unlimited ATM reimbursement, while others may cap the amount or restrict you to a large network of “free” ATMs. These banks may also pay higher interest rates than traditional banks. For up-to-date recommendations, see Bankrate’s annual list of the best online banks.​

2) Community Banks and Credit Unions

For consumers who still want or need a physical bank, consider a community or association bank or a credit union. The main reason to “need” a physical bank is to deposit cash, though many people now use cash less frequently due to the rise of electronic payments and mobile banking.​

Beyond daily banking, it can be valuable to have a relationship with a local bank or credit union, as they tend to offer higher rates on deposit products and lower rates on loans. They may also provide financial planning tools such as home equity lines of credit, often with favorable terms (e.g., rates no higher than Prime plus one, no origination fees, no annual fees, and no pre-payment penalties).

Regardless of whether you use an online or physical bank, always ensure your accounts are protected by FDIC insurance.

3) U.S. Treasury Money Market Funds

If you’re fortunate enough to have cash in excess of FDIC limits, consider warehousing your short-term cash through a U.S. Treasury Money Market fund in your taxable brokerage account. As learned during the financial crisis of 2008-2009 and again during the COVID-19 pandemic, market volatility can impact even traditionally “safe” accounts. Therefore, if safety is your priority, seek out money market instruments holding only vehicles backed by the full faith and credit of the U.S. government.​

4) Certificates of Deposit (CDs)

To maximize the earning potential of your short-term cash management strategy without putting that money at risk, consider Certificates of Deposit (CDs) with FDIC protection. Creating a “CD ladder”—positioning multiple instruments at varying maturities and rates—can help you earn higher returns while maintaining liquidity.

You can create your CD ladder through traditional banks, but it’s often easier to purchase brokered CDs in your taxable accounts. This strategy requires more skill but can be worthwhile for those seeking higher yields.

Given these readily available alternatives, are there any good reasons to stay with a big, traditional bank?

Not really, unless you’re interested in strengthening the bottom line of banks deemed “too big to fail.”

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