Is banking online better or is it preferable to stick with a traditional, physical bank? Since 2011, about 700 million individuals have opened bank accounts. Despite being commonplace for holding money, many are now choosing the online route over local banks or credit unions.
Personally, I find online banking more time-efficient. However, I can comprehend why some individuals are more inclined towards maintaining a traditional bank account.
If you’re unsure about what suits you best, consider the following factors.
SECURITY OF BOTH OPTIONS
A widespread concern is the assumed vulnerability of online banks as compared to traditional banks. This is not entirely accurate. Sure, providing personal details online might seem risky, however, be assured that most businesses are digitally storing data and also employing robust security systems and encryption methods to safeguard user information.
All established online banks are highly secure and protect your personal data online. Many times, just providing your username and password won’t allow immediate access to your account, especially if you’re using an unfamiliar device. There are several layers of security measures and verification processes which the bank will implement if they suspect anyone else trying to gain access. Also, both online and traditional banks offer FDIC insured deposits up to $250,000 per depositor.
CUSTOMER SUPPORT OR IN-PERSON ASSISTANCE?
If you need help or have queries about your account, you would certainly wish to connect with a bank representative. Online banks offer toll-free customer support lines to connect with a representative during working hours. However, if face-to-face interaction is more your style, a traditional bank would serve you better. Either way, your concerns will be addressed. It all ultimately boils down to personal choice.
DEPOSIT AND WITHDRAWAL ADAPTATION
If your bank is nearby, depositing a paycheck or withdrawing money is a straightforward process. Many banks also provide free withdrawals at designated ATMs. With an online bank, a digital check can often be deposited by simply capturing and uploading the check’s image to the online banking platform.
Though this may demand a little additional effort, setting up direct deposits with your employer simplifies the process. Your online bank should also provide fee-free withdrawals at associated ATMs. Other ways to access your funds include obtaining cash back during transactions or using your debit card as you normally would.
ONLINE BANKS OFFER COMPETITIVE INTEREST RATES
A compelling reason to switch to online banking is the higher interest rates provided on savings and checking accounts.
A definite advantage of online savings accounts is the leading industry interest rates, which allow your money to grow and earn additional revenue, rather than lying idle in a normal, low-interest savings account generating minimal returns.
Since online banks do not have physical branches and associated overheads, they can offer more lucrative benefits to their customers, including competitive interest rates for both checking and savings accounts.
SHOULD YOU SWITCH ASAP?
Switching from a brick-and-mortar bank to online banking initially made me a bit hesitant, but I’m absolutely glad I did. When I first contemplated increasing my savings, I thought of opening a savings account with my traditional bank. However, they required a minimum initial deposit of $250, which I didn’t have.
Most online banks offer low or even no fees and do not mandate a minimum initial deposit. For instance, CapitalOne 360 permitted me to open a checking and savings account without a deposit minimum or any monthly balance or fees.
Several other top online banks offering attractive rates for savings accounts include Goldman Sachs Bank USA, Barclays, and Ally Bank.
These banks have user-friendly application processes and it is advisable to compare the features and rates of each to figure out what suits your needs best.
Are you partial to online or traditional banks? Do you think the current interest rate on your savings account could be improved?
