If you’re banking traditionally — aka at a brick-and-mortar institution — and you’re happy with it, great. But if you’re tired of driving to your bank, waiting in line to take care of your transactions and often uncovering hidden fees associated with your account, there might be a better solution for you.
There is no one perfect solution when it comes to banking, but online banking comes pretty close. Now you can stay put and bank in the comfort of your own place, likely get a better deal when it comes to interest rates and fees and never deal with waiting in line again.
Keep reading to find out a number of reasons why it might benefit you to switch to online banking and see if it meets your needs and works for your overall financial situation.
Online Banks Generally Offer Lower Fees
Because brick-and-mortar banks must pay big overhead costs, they tend to pass those costs on to their customers. Online banks, on the other hand, do not have high operating costs, and they tend to pass on those savings to customers in the form of lower fees.
Online Banks Generally Offer Better Rates
Again, because online banks don’t have that expensive overhead to pay, they also tend to provide consumers with better rates on savings accounts and CDs — and loans and credit cards if they offer them. Even if an online bank is offering what sounds like a small interest percentage more than a traditional bank, every penny counts, particularly when your interest is compounding.
Online Banking Is Uber Convenient
Think about banking any time you want — you never have to wait for your bank to open or worry that it’s closed. Online banking offers 24/7 access to your accounts and funds, wherever you are. If you never had to wait in a bank line again it might be worth it to make the switch just for that. And think about this: If you move out of your city, you never have to switch banks.
It’s Easy to Make Deposits and Access Cash at Online Banks
Although you can easily deposit a check at a traditional bank’s ATM, why do that when you can use a mobile app to deposit one at an online bank? It’s so easy — all you need to do is sign the back of the check, snap a picture of the back and front, add in the amount and send it off for deposit. In addition, if you’re worried about not having access to your cash, keep in mind that most online banking institutions provide customers with a large network of ATMs they can use.
Online Banks Might Offer Rewards
If you’re thinking of opening an account at an online bank, do your research. You might be able to find one that offers rewards such as a bonus for opening an account or cash back for spending in different merchandize categories.
Online Banks Can Help You Manage Your Money
If you haven’t explored online banking, you might be surprised at how easy it is to manage your money via an online account. You can check your account information any time you want, transfer funds immediately, send money and pay bills with an online account. Some online banks even offer automated savings deductions from your checking account so you can save without even thinking about it.
Make Sure You Join an FDIC-insured Online Bank
You must consider only online banks backed by the FDIC, which guarantees deposits of up to XXXX. That way, if the bank goes out of business, your money is safe.
How to Choose Your Online Bank
There are so many choices in online banks that it might be difficult for you to choose just one. Because you already know you must choose one that is FDIC-insured, you’re already a step ahead of the game. In addition to that, it’s a good idea to check out how stable the bank is — consider things such as how long it’s been up and running, how big its asset base is, and maybe even review some of its financial reports. A little legwork in the beginning could save you a headache in the long-run.
Make sure you find an online bank with a healthy ATM network so you won’t have trouble accessing your cash — and ask if you’ll be reimbursed if you use other banks’ ATMs. And because you’ll be banking online, do check your choice’s security record to see if it has had any breaches and also if it will provide you with alerts regarding suspicious transactions. Last, if you do more than check and save at a bank, make sure the online bank you choose offers an array of financial products, such as CDs and money market accounts, credit cards and loans.
To get you started with your search, GOBankingRates compiled a list of best online banks of 2020. All 10 picks include no fees for checking, savings APYs of 1.10% or greater and 12-month CD APYs from 0.31% to 2.10%, so it’s a great place to begin.
How to Open an Online Bank Account
It’s a cinch to open an online bank account. Once you’ve chosen which one you want to join, all you need is a computer and Internet access. Then, it’s just a matter of applying for the account online (of course), which will require some personal information, including your Social Security number and the bank or credit union from which you want to transfer money to open the account.
You might want to keep your traditional bank account and try out an online account for a month or so just to make sure it fits your needs. And keep in mind that if you ever have to talk with a real, live person, have no fear — online banks typically provide live customer service departments just like brick-and-mortar institutions, and many are open 24/7.
Just Do It
Face it — our economy is going digital, and fast. Maybe it’s time for you to join the digital revolution. Online banking is an easy, secure way to do that while providing you with convenience and often putting money in your pocket. If you’re still banking the traditional way, consider online banking. Chances are, you’ll never look back.
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