Switching to an Online Bank Has Pros and Cons
Switching to an online bank can offer some advantages. But depending on your situation, an online solution may not meet all your banking needs.
Switching to an Online Bank: Pros
Online banks typically offer much higher interest rates than their brick-and-mortar counterparts. Yields on savings accounts are often between five and 10 times higher than at traditional banks.
Many online banks offer no monthly maintenance fees or overdraft fees. But be sure to research all the fees you might have to pay, such as overdraft fees, out-of-network ATM withdrawal fees, and more.
Many say online banking is more convenient. With highly sophisticated apps, you can have 24/7 access from anywhere you can get an internet connection or cell signal.
Another advantage can be access to multiple financial services in one place. You can find single platforms offering checking accounts, credit cards, CDs, money market accounts, mortgages, as well as investment advice and financial planning resources.
As for security, most online banks are generally FDIC-insured, making them just as safe as traditional banks (or NCUA-insured credit unions).
Switching to an Online Bank: Cons
Dealing with physical, cash deposits can be a hassle with online banks. Customers sometimes have to deal with convoluted ATM networks, or go through retailers.
No physical branches mean no face-to-face assistance for complex issues.
If you have immediate needs, you could be out of luck with an online bank. Immediate access to large sums of money can be difficult. As well, specialized services like cashier’s checks can be hard to come by, or non-existent.
Switching to an online bank is a decision you should make only after careful research, making sure you have access to the features you need. You may find you’ll want a hybrid approach, combining online and traditional bank accounts.
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US News and World Report recommends these online bank accounts.
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