Are you thinking about signing up for an online bank? If you are, that’s not a bad idea. There are actually many benefits to owning an internet bank account. But if you’re hesitant about getting a digital bank, don’t be.
In the information below, we’ll explain the pros and cons of using online banks, so you can make an informed decision. Just keep reading.
What Is an Online Bank?
An online bank is the same thing as a traditional bank. The only difference is that internet banks don’t have a physical building. Most online banks can only be accessed by computer or phone. However, many people these days enjoy online banking because it’s convenient and quick.
There is no waiting for a teller and most online banks offer perks that traditional financial institutions don’t. For instance, they’ll generally charge lower fees and provide better interest rates. The reason being is because they don’t have to pay for an actual building.
Are Online Banks Safe?
Actually, online banks are very safe. As long as the virtual bank that you choose is insured by the FDIC, they have the same protection and coverage as any FDIC-insured bank.
Before you sign up for an internet account, use the FDIC’s bank find tool to verify that the particular institution is insured. The website allows you to search any bank by its name or website address.
Although it’s a little scary to think about banking with an institution that doesn’t have a physical location, most banking tasks are done online anyway. For example, if you have an account with Bank of America, chances are you rarely go into the branch.
You probably have direct deposit for your income, and if you get a physical check, you digitally deposited using your phone app. As far as convenience is concerned, you can always have an online bank account and a standard bank account, just in case you ever need to go into a physical location.
The Pros and Cons of Online Banks
As with everything in life, there are pros and cons to enrolling in a digital bank. We’ll first discuss the perks:
If you’ve ever had an online savings account, you’ve probably noticed that the interest rates are significantly higher than your standard bank. Again, online banks are able to offer more to their customers because they don’t have the overhead costs that traditional banks incur.
Essentially, you can get more bang for your buck by using a virtual bank.
No Maintenance Fees
Most online banks don’t charge maintenance fees. That means that you can keep your bank account for months and months without incurring a 5$ or $10 dollar monthly fee. A traditional financial institution will charge you for not maintaining a minimum amount or setting up direct deposit.
If saving money on fees is a big deal for you, then consider using an online bank.
If you try to withdraw money from an ATM using a standard bank card, you’ll probably incur a fee. However, since online banks realize that they don’t have physical locations, they generally partner with a large network of ATM providers.
Therefore, you can use almost any ATM without getting a withdrawal fee. Even for online banks that do charge a withdrawal fee, sometimes they offer reimbursement.
The Cons of Online Banking
Here are some of the drawbacks of using an online bank:
No Physical Location
Although you can probably go months at a time without going into a physical location, sometimes you have to go inside of the branch. If you’re interested in getting a loan or you need a money order, it’s convenient to just walk into your banking institution.
By not having access to a physical location, you could miss out on some of the perks that traditional banks provide.
Bad Customer Service
If you don’t like calling into annoying call centers, then you can always go into your bank’s office location. In most cases, things go much smoother when you walk into the branch and speak to someone face to face.
But since you don’t have that option with online banking, you could spend half an hour on hold, only to get a phone rep who is rude or doesn’t know how to help you.
Online Banks Can Go Offline
Although technology is great, sometimes things happen. It’s not unheard of for online banks to go offline for a while. So if you try to log into your account or transfer money, you won’t be able to until things get back up and running.
But you won’t have that problem with a brick-and-mortar bank. You can always go into the branch when you need something. Again, if you want to get an online account, always have a standard bank as a backup plan.
If you believe that owning an online account is the right decision for you, visit farmersnationalbankonline to learn more about their internet bank accounts.
The Benefits of Using Online Banks
The truth is, online banks are awesome. You can’t really go wrong with having one. As long as you have a Plan B bank account, things will be fine.
Not to mention, you’ll save money by not having maintenance fees or withdrawal fees. Plus, you’ll earn more interest on your funds. It’s a win-win!
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