Are you tired of waiting in long lines, and dealing with too many fees and minimum requirements? Opening a checking account with an online bank could be your solution.
Today, almost every bank offers online banking options, but did you know that there are banks that solely operate online, with no actual branch locations? These banks offer most of the products you find at traditional banks- checking, savings, CDs and money market accounts. A few even offer mortgage products!
Without the overhead of physical locations, online banks can pass the savings to their customers, who will enjoy lower fees and added benefits, including protection from bank fraud. The APY will also be higher than traditional banks.
Why Select Online Banks Over Traditional Banks?
Many have no bank fees, and most offer reimbursement for other bank fees. Just make sure the bank is FDIC insured, usually $250,000 in coverage at traditional banks. Consumers love the convenience of doing their banking from anywhere with a few simple clicks.
Most online banks offer the same banking products that you can find at traditional banks. Most online banks include checking, savings, CDs, and money market accounts.
Advantages Of Online Banks
Due to the nature of online banking, there are some distinct advantages that online banks can offer over traditional banks. Here are a few:
- High Rates. Generally, online banks tend to offer bank account and CD rates of 0.5% or higher, which is more than what most traditional banks currently offer.
- Low Fees. Because of reduced overhead costs, there are usually low fees, or even no fees.
- User Friendly. Most online banks also have mobile apps, and a user-friendly interface, so you don’t have to be super tech-savvy.
Disadvantages Of Online Banks
Of course, making the switch to online banking presents some challenges as well, although they are minor. Here are a few disadvantages of online banks:
- Difficulties with Depositing Cash. Customers who regularly deposit paper checks or cash may face some inconveniences. You can get around this by depositing funds in a traditional bank, and then transferring funds to your online bank to take advantage of high APY rates. If you usually go to the bank to deposit paper checks, you will save yourself a trip by making mobile deposits via smartphone, where you take a picture of the front and back of the check. Withdrawing money is easy; just go to the preferred ATM locations for your online bank.
- Limited Product Offerings. If customers are looking for home loans, personal loans, or brokerage accounts, the choices are limited.
- No Personal Interaction. This is not a problem for most people. You save a trip to the bank, and if you need customer service, you can contact an agent by phone or chat.