You probably do much of your banking online already—regardless of the type of bank you use. So what’s stopping you from enjoying all the benefits of an online-only bank? Although online banks have a lot in common with their brick-and-mortar counterparts, there are a few key features that could tip the scale for you in favor of online banks.
Higher interest rates—need we say more?
For many people, higher interest earnings are the biggest reason to switch to an online bank. After all, you want your balance to earn as much as it can. Because online banks don’t have the overhead costs of traditional banks (think building maintenance and tellers), they can pass the savings on to you in the form of lower fees and higher interest rates.
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.
Online banks offer plenty of products and services.
You don’t need to worry that online banks won’t have the variety of accounts you’re used to. 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, at rates worth looking into. Do some digging and make sure the bank you’re considering is FDIC-insured and has a good customer service track record. A reputable online bank should be able to meet a variety of financial needs.
Opening and accessing your online account is easy.
Most online banks allow you to open new accounts, check your balance, transfer money, deposit checks, and more—from anywhere you have internet access, anytime you want. And it can be easy to get cash from your online account, too. With Ally Bank, for example, you can use any Allpoint no-fee ATM—plus receive up to $10 reimbursement for fees charged at other ATMs nationwide each statement cycle.
Access customer service any time.
Losing face-to-face interaction doesn’t mean sacrificing customer service. In fact, good online banks offer 24/7 customer service—a convenient alternative to “banker’s hours.” Many banks will allow you to contact them by phone, live chat, or secure email. An added bonus of skipping the local branch? Your neighborhood teller doesn’t need to know the state of your financial affairs.
Online banks take your security seriously.
You’re not alone if you worry about your online security. The good news is that online banks are committed to protecting your personal and financial information. Individual banks approach security in different ways, but there are several measures every online bank should take to provide a safe banking experience. These include SSL encryption, firewalls, anti-virus protection, multi-factor authentication, and more.
The truth is, “snail mail” and paper statements may feel safe, but these methods have their own risks. Plenty of identity thieves still rely on personal information easily stolen from mailboxes and trashcans. People who bank online tend to check their accounts more frequently, potentially spotting fraudulent activity sooner. Many online banks allow you to set up activity and balance alerts to help keep you aware of your account activity.
Not only is your information safe, but your funds at FDIC-member online banks are, too. The Federal Deposit Insurance Corporation insures all your deposits in member-FDIC banks up to the maximum amount allowed by law.
Last Edited: February 14, 2018