Free Checking
One of the main reasons to use online banking is the ability to access free checking, which is a checking account without the monthly maintenance fees that are typically charged on accounts.
Some traditional banks and credit unions offer free checking, but they are usually small institutions. Generally, it is difficult to find this offer in traditional banks without attached conditions. In most cases, you must qualify for free checking at traditional institutions by depositing your salary into your account or maintaining a large account balance.
This is not the case at most online banks, where free checking accounts are offered to anyone – often without a minimum initial deposit and no need to maintain a minimum balance. Additionally, you may be able to earn interest on cash in your checking account if you use an online bank. The interest rates may not be as high as those in online savings accounts, but they are much higher than what you can typically get at a traditional bank.
Higher Interest Rates
Online banks are known for offering higher annual percentage yields (APY) on savings accounts and certificates of deposit (CDs). The reason for this is that online banks do not have to pay for the operating costs associated with building and maintaining a physical branch, so they can pay a little more to customers.
If you are looking for the highest available interest rate, you are likely to get the best results at an online bank. But don’t be disappointed if you find that another bank exceeds your rate. This is why some people open and use several online bank accounts and transfer money between accounts as rates change. This strategy can be rewarding, but it’s important to pay attention to transfer periods when your money is not in any account earning interest.
Note: Generally, interest does not begin to accrue on a deposit in an interest-bearing account until the business day that the bank receives credit for the deposit.
Cutting-Edge Technology
If you know your way around a computer, another reason to use online banks is that they generally lead the way in banking technology. Of course, some small banks and credit unions offer some advanced tech features even before the largest online banks, but online banks generally provide new features before more advanced traditional banks. One of these features, mobile check deposit, is a great way to fund online bank accounts without having to send deposits by mail (which means your money starts earning interest faster).
Online banks also allow you to access features that you may not have available through other means. If your bank does not currently offer free online bill pay or person-to-person payments, there is a good chance you will find an online bank that does. You might also enjoy a larger ATM network – depending on where you live – making it easy to withdraw money for free.
No Need to Go to a Branch
Ultimately, online bank accounts save you time (and fuel expenses) from going to a branch during limited business hours. If you need help, most banks offer remote customer service – via chat, email, or toll-free phone lines. As competition increases among banks, the quality and availability of customer service also improve.
Additionally, people living in small communities may appreciate the anonymity that comes with online banking – no one in town will know about your financial transactions because they won’t see you conducting them.
Do You
Should You Use an Online Bank or a Traditional Bank?
The reasons mentioned above for using online banks make a case that they are a convenient option for customers seeking affordable, high-interest accounts with advanced features. Overall, they are a viable addition to the banking world. However, they are not perfect or suitable for everyone.
If you prefer to conduct transactions or receive account guidance from agents in person, you may want to stick with a traditional bank. The same applies if you feel reassured knowing you can physically access the bank that holds your deposits.
If you choose a bank in an online institution, you will also need to be comfortable using a computer and understanding the basics of internet security. Online banking is generally considered a secure way to conduct transactions if you select a legitimate bank that offers insurance on your deposits from the Federal Deposit Insurance Corporation (FDIC). However, you will need to keep your system updated to avoid email fraud, which you could fall victim to if a fraudulent website tricks you into providing your personal information or bank account details.
Like anything related to technology, you may occasionally encounter technical issues. However, for most people, the benefits of using an online bank outweigh the inconveniences.
Source: https://www.thebalancemoney.com/best-reasons-for-using-online-banks-315138
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