Online Banking – Should I switch?
As bank fees climb ever higher, many people are looking for ways to spend a little less. One option to explore is switching over to an online-only bank. These are banks that save money by having few or no local branches. Instead, customers do all of their banking via a secure website.
These sorts of accounts can have a lot of advantages, including:
- Lower fees. Most online accounts offer no-fee checking, so, you keep more of your money in your pocket. If you are in the middle of credit repair, this is money that can be applied toward settling unpaid debts.
- Higher interest rates. Very few brick and mortar banks offer interest on checking accounts, while most online banks do. Online banks also typically have higher interest rates on other products like savings accounts and CDs.
- Easy-to-open accounts. At most online banks, you can open new CDs or savings accounts with a few clicks of the mouse. This can be a simple way to put aside money if you are saving for a big expense like a home purchase.
- Twenty-four hour a day banking. Instead of being limited to your local branch’s banking hours, you can sign on at any time day or night to do anything from opening an account to paying your bills.
A few of the possible drawbacks to consider:
- Are you a tipped worker? Servers, delivery drivers, and others who are primarily paid in cash might find online banks inconvenient. Few allow cash deposits at ATMs or through the mail, so, you can get stuck mailing a money order.
- It can be slow to deposit a paper check. While more and more online banks are allowing check deposits via mobile phone or home computer, this is not yet universal. If you have a poor credit rating or if the service is not available from your online bank of choice, you may have no choice but to mail checks to make a deposit.
- No in-person contact. Sometimes, bank customers feel more comfortable talking in person with a branch manager, such as when working to resolve insufficient fund fees or other issues. If you have an online-only account, all communication will necessarily be via phone or email.
How to find the best online bank for you:
- Check out banking review sites like Bankrate.com and MyBankTracker. These sites keep track of factors like interest rates and fees and also post user reviews.
- Ask friends about their experiences. They will be able to share stories about their experiences with customer service, ease of setting up accounts and other details.
- Check financial companies you already do business with. Discover, for instance, has banking products such as a cash-back checking account in addition to their credit card services.
As with any other banking decision, make a list of your requirements and find the bank that satisfies those needs best. If your lifestyle is compatible with the offerings of an online bank, you just might keep more money in your pocket by making the switch.