Should You Consider Opening an Online Banking Account?
If you haven’t explored online banking, you might still be spending precious time and money doing all your banking transactions at your local bank. Traditional banking is everything except convenience and frugality. Doing your transactions online can save you from the long queue at the branch, slash off some gas money on the side, and take the stress off of having to work around limited banking hours to pay your bills, make deposits, or transfer funds.
An online banking account is an account that you set up with an online bank. Online banks are virtual institutions that have no physical branches unlike traditional brick-and-mortal banks. They operate online and provide banking services that traditional banks offer. You don’t get a passbook or an ATM when you open an account with online banks.
Traditional banks may also offer online banking features for their regular accounts, allowing account holders to transact safely on the internet using their PCs or mobile devices. Bills payment or fund transfers may be done conveniently on the internet usually after enrolling for online services at the bank’s website or at your local branch. However, these online features barely scratch the surface of online banking with virtual financial institutions.
interest rates on Online Banking Account
An online banking account may offer higher interest rates than regular banking accounts. Since they don’t maintain branches and have fewer employees, online banks are operating on low overhead and operational costs. They can definitely afford to give top interest rates to their account holders.
Most online banks require lower maintaining balance than their traditional counterparts. Some don’t require a minimum balance at all. With an online banking account, you don’t have to be nervous about paying bank fees for falling below minimum balance in times of financial emergencies when you really have to dig deep on your resources.
Most online banks allow its account holders to use ATMs without incurring charges for interbank transactions. ATM fees are quickly reimbursed to their clients’ account when they transact using other bank’s ATM. This practice usually extends to ATM transactions done worldwide, which means huge savings on cash withdrawals. Most online banks don’t have ATM, but they may partner with local banks to provide ATM cards to allow online account holders to withdraw cash from their accounts.
The most obvious benefit of having an online banking account is convenience. You don’t have to leave your home to make a deposit, pay your bills, transfer funds, or check your account balance. You can see your account’s movements on time, real time, and this gives you the power to act quickly when you notice a discrepancy. It’s a 24/7 service that lets you have full control over your funds.
Savings account or online checking account?
Just like your ordinary bank accounts, you can open either an online savings account or online checking account, whatever suits your needs. Some online banks offer checking accounts with interest rates. Enrolment procedures vary with each bank, but most banks require online registration, submission of identification documents, and sending of signed documents to the bank. Deposits are usually made by mailing checks to the bank’s office.
As with any breakthrough, online banking does have its share of glitches and inconveniences. While it can be a breeze to fill out online enrolment forms, you still have to send your signed document to the bank’s office before you can start using your online banking account. This arrangement is in stark contrast to traditional accounts that you can use immediately after opening.
If you have a big check up for deposit, you’re bound to be disappointed with the waiting time for your check to be credited to your account and for it to begin earning interest. You can choose an online bank that offers remote deposit, or deposit done virtually through the internet or mobile applications, but banks often place limits on the amount that you can deposit remotely.
Although it shouldn’t be that often, online banking websites can crash or go down unexpectedly, and there’s no way to access your account until the site is fixed and running. It’s best to keep an alternative bank account that you can use in emergencies.
The fear of losing money to internet thieves has been the main reason why people are reluctant to bank online. Hacking and phishing are serious threats to online security.
Considering these setbacks, is it advisable to open an online banking account?
The interest rates on online accounts approximate yields on stock market placements, and this, alone, should be enough reason to consider opening an account with an online bank. You can think of it as a bank account and investment rolled into one. If you must keep your money in a bank, you must keep it in a place where it can earn the biggest returns with the smallest risk. Online banking accounts are insured like traditional bank accounts.
Threats to internet security are real but you can protect yourself in many ways. You can install the latest antivirus software and anti-spyware to catch malicious programs, make it harder for cybercriminals to do their thing by using different codes or passwords for your accounts, and create strong passwords that are difficult to guess.
Statistics show escalating figures on online banking usage, and as more people take to the internet to do their banking transactions, you can expect online banks to offer more competitive products and provide better services to their clients, giving them bigger reasons to set up an online banking account.