Banking with Synchrony: Pros and Cons
If you have certain credit cards, such as the Amazon store card, you might be familiar with Synchrony Bank. Best known as a credit card issuer, the bank also offers some savings products for consumers. They aren’t a traditional bank, as they don’t offer checking accounts, loans, or certain other banking products. They also don’t have any bank branches, but they do offer an array of high-yield savings products that appeal to customers who want to put their money to work.
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In addition to providing branded credit cards with retailers, Synchrony Bank offers savings products to customers. In fact, they are so focused on savings that they do not offer any checking account options. Among the accounts you can open with the bank include high-interest savings accounts, CDs, and money market accounts.
Synchrony also offers two IRA products, an IRA CD and an IRA money market account. Accounts are primarily managed online using the bank’s website or mobile apps, although you can make some transactions via phone. It’s also possible to access your cash using ATMs.
What makes Synchrony Bank appealing to many customers is the high interest rates on their products, which are consistently higher than average, and the lack of fees associated with the accounts. Although there is a limited number of account options, it’s fairly simple to understand what each offers.
All Synchrony Bank account holders gain access to the perks program. Your perks level is determined by how much money you put in the account or how long you’ve been a bank customer. Perks include discounts on travel and leisure programs, and more. For example, customers at the Diamond level (those who have $250,000 or more in account balances or who have been with the bank for five years or longer) get a dedicated customer service phone number, unlimited ATM reimbursements, and free wire transfers.
The Synchrony Certificate of Deposit, or CD, works like any other CD: You agree to make a deposit and leave it with the bank for a specific term in exchange for a locked-in interest rate. With Synchrony, the longer the term of your CD, the higher the interest rate you earn. Currently, a three-month CD earns 0.75% interest, whereas a 60-month CD earns 2.15%.
Synchrony requires a minimum $2,000 deposit to open a CD account. Although you can only add additional funds to the CD during the 10-day grace period after it matures, you can make withdrawals from the interest without penalty at any time. You can also make withdrawals from the principal, but doing so will incur penalties. There are no other fees associated with the CDs.
Synchrony High-Yield Savings
Synchrony’s High Yield Savings account works like any other savings account, but with one major difference: they pay a higher-than-average interest rate than other banks. Currently, Synchrony offers a 1.7% annual percentage yield (APY) on savings accounts. This rate applies regardless of your balance, and there is no minimum balance required or initial deposit amount. The bank also does not charge any fees to maintain the account, but you may pay fees to access your money via ATM.
And while Synchrony doesn’t charge customers fees to use ATMs, the ATM owner may charge fees, which can add up if you make multiple transactions. The bank will reimburse up to $5 per month in ATM fees, but that may not cover you in case you make more than two withdrawals. That said, you are limited to six withdrawals from the account per month, and if you regularly exceed that amount, your account may be closed.
Synchrony Money Market Account
A money market account is a savings account with some features similar to a checking account, primarily the ability to write checks on the account. A money market typically earns more interest than a savings account, which is the case with Synchrony Bank, which pays 1.2% on money markets.
What really makes Synchrony stand out though, is that they do not require a minimum deposit to open the account or a minimum balance to maintain it. Typically, money markets require both of these, at much higher amounts than typical savings accounts.
Like the high-yield savings account, Synchrony Money Market customers can access cash via ATMs, but they can also request checks to write against the account. However, like a traditional savings account, you can only make six withdrawals per month from the account.
Pros of Synchrony Bank
Although the high interest rates make Synchrony Bank attractive to many consumers, there are some other pros to banking with them. These include:
- No minimum initial deposit amounts on savings and money market accounts;
- No account maintenance fees;
- Access your money via any ATM with the Plus or Accel logos;
- Monthly $5 refund on ATM fees;
- Check writing privileges on money market accounts;
- Options to bank online, via mobile app, or over the phone;
- Immediate enrollment in perks program that offers discounts on travel and other products;
- Tax-deferred IRA accounts are available.
Cons of Synchrony Bank
Synchrony Bank offers no-frills, straightforward accounts without a lot of bells and whistles. As such, there are some downsides to banking with them. These include:
- Limited account options, and no checking accounts are available;
- ATM fees can add up;
- No physical branches;
- Daily limits on ATM ($1,000) and point-of sale ($500) transactions restrict access to your money;
- Early withdrawal penalties on CDs;
- Accounts can be closed if you exceed the six withdrawal per month limit;
- Does not have highly rated customer service.
Is Synchrony Bank Safe?
Because Synchrony Bank operates entirely online, you might wonder about the safety of your money. In terms of security, Synchrony follows all best practices for online banking, including encryption and multifactor authentication for account access. The bank is also insured by the FDIC, so all accounts are insured for up to $250,000.
Synchrony also provides complimentary identity theft protection for all account holders via CyberScout.
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