Now that you’ve decided to take advantage of the benefits of online banks, it’s time to choose the right one. Although doing business with an online bank has the potential to maximize your earnings and streamline your financial life, not all online banks are created equal. Here’s what to look for as you evaluate your options.
Competitive interest rates
Because online banks don’t have the same kinds of overhead costs associated with building maintenance and staffing, they can pass the savings on to you in the form of higher rates—and usually lower fees, too. If you check out rate comparison sites, like Bankrate.com, you’re likely to find that that annual percentage yields (APYs) on products like savings accounts and certificates of deposit (CDs) are consistently higher for online banks.
That said, not every account type offered by any one online bank will be the highest rate you can get. It’s best to decide which account(s) you’ll need, like checking, savings, or CDs, and compare those rates across several institutions. That way, you’ll be sure to compare apples to apples to find the best fit for your finances.
Current security measures
Most online banks implement several common security measures to provide a safe banking experience for their customers. These include SSL encryption, firewalls, anti-virus protection, and multi-factor authentication, to name a few. But you want to be sure the online bank you choose stays on top of industry trends and goes the extra mile to protect your information.
Because individual banks approach security in different ways, look up the security policies of each bank you consider. Find out what they do to protect your information, and make sure you understand what your liability is in the case of unauthorized activity on your account.
Diverse product offerings
Having all (or most) of your bank accounts in one location can make it easier for you to keep track of your balances and stay organized. A good online bank will offer a solid range of all the bank products you use most. In addition to savings and checking accounts, online banks often offer a wide range of other bank products, like money market accounts, certificates of deposit (CDs), and individual retirement accounts (IRAs). Many online banks offer mortgage and auto loans, too.
If you like the idea of consolidating your banking services, the best online bank for you will be one that has a diverse lineup of competitive products and services.
Attractive account features
Whether you bank online for the rates, the convenience, or both, there’s no reason to skimp on extra features that can enhance your overall experience. A good online bank will offer features like:
- Mobile banking options—think easy-to-use apps and mobile check deposit
- Account linking—to make transfers to and from your accounts as seamless as possible
- Fee free bill pay and direct deposit services
- ATM access—as applicable to your account
- Activity alerts—to help you monitor you accounts
Quality customer service
Doing without face-to-face interaction shouldn’t mean sacrificing customer service. In fact, you should be able to get assistance at a good online bank easier and faster than at any brick-and-mortar branch. Look for an online bank with a stellar customer service track record. You can expect to be able to contact a knowledgeable account representative in a variety of ways—via chat, phone, and email—24/7.
It goes without saying that a reputable online bank also will have a user-friendly website. You should be able to open new accounts, check your balances, transfer money, deposit checks, and more—from anywhere you have internet access, anytime you want, with ease.
Last Edited: February 14, 2018