Free ATM transactions, free checking and savings accounts, better loan rates, and 24/7 convenience. If those options sound good to you an online bank account might be in your future. Online banking has exploded in recent years thanks to the increased use of smartphones and tablets.
These accounts allow for additional flexibility while empowering customers to avoid many of the pitfalls they often experience with traditional banking. Let’s take a deep dive into what online bank accounts offer so you can decide if they are the right option for your needs.
Opening An Account
Remember the days of sitting with a personal banker for hours to open a new account? With online banking, you can apply for a new account and get approved right from your computer, tablet or smartphone. US News and World Reports note that your electronic signature and a few proofs of identity will get you in the door. Those proofs of identity include a social security card, some type of government-issued ID, and a physical address (PO boxes are not accepted). Some providers will ask for a small deposit to open your account and that money can most often be transferred from an existing account at your request either using a debit card or your account routing and account numbers.
Pay Bills In Seconds At No Additional Cost
Many online banks will not provide physical checks. Instead, they allow you to enter your payee’s information which then allows your online bank to print a check on your behalf and send those checks out in the mail at no additional cost. Need a check to arrive faster? Some online banks will charge a small fee for overnight or second-day check delivery. You can also digitally transferred money to recipients using online money transfers. Online banks will allow you to set up monthly recurring payments or one-time payments.
Deposit Checks In Seconds
Do you have a smartphone or tablet? Simply sign the back of a check and then take pictures of both sides of the check. Once uploaded to your online bank account the funds are generally available the same day or within one business day. Keep in mind that larger checks may be subject to longer hold times, much like the rules put in place at traditional banks.
Ditch Traditional Bank Fees
Running a traditional bank is expensive because branches have to be maintained. With online banking, there is less overhead. That means accounts are often free to open and maintain.
Also, because they don’t offer traditional branches, many online banks now offer free ATM transactions. Typically, you will be charged an ATM fee upfront and those fees will be refunded to your account at the end of the month. Some branches claim over 50,000 free ATMs around the world. Many online banks provide a “free ATM” finder that is accessible through your smartphones banking app. ToughNickle, an online financial port notes that an account from Simple provides access to more than 55,000 free ATMs who participate in the “Star” ATM network.
Earn More And Save More
Online banks often provide higher interest rates paid on your account balance since they have less overhead. Wire fees (depending on the bank you choose) are often reduced and sometimes even free. If you can earn more interest from the money you keep in your account and reduce costs you’ll save in the long run.
You might also want to consider your future needs. Credit.com, a leading credit compensation network notes that online banks often provide lower rates on personal, auto, and other loans. That means your banking provider, based on your credit score and personal history with the bank, may provide you with cheaper loans. Loan rates will vary based on your personal credit history and other factors.
At the time of publication, Wells Fargo’s basic checking account offers a .01% APY on standard checking accounts. In comparison, the CIT Savings Builder account offers a tiered 2.4% APY for internet banking customers.
Make sure any bank you choose to conduct business with is FDIC insured. If your bank is hacked, the federal government will ensure up to $250,000 from your account. Remember, all banks, even traditional brick and mortar locations are vulnerable to attacks. Research your bank of choice to make sure they follow strict security guidelines.
Many online banks now provide 24/7 online service. You can chat with a customer service representative, send in-app messages, and in some cases even call a toll-free number to speak directly to a representative. Jumping on a phone call or sending an in-app message can save you the hassle of traveling to a local or out-of-town branch to get the service you require.
At the end of the day, online banking is super convenient and could potentially save you money while earning higher interest rates than standard brick-and-mortar providers. As always, make sure to understand all of the terms for your choice in internet online banking.