Is it better to bank online, or should you stick to a traditional, physical bank? Since 2011, about 700 million people have opened bank accounts. While many still use conventional banks, a lot of folks are now opting for online banking instead.
I personally find online banking more time-efficient, but I understand why some might prefer having a traditional bank account.
If you’re unsure which option is right for you, consider the following factors:
**SECURITY FOR BOTH OPTIONS**
A common worry is that online banks are less secure than traditional ones. This isn’t completely true. Although it might feel risky to share personal information online, most businesses store data digitally using strong security systems and encryption to protect your details.
Established online banks are very secure, and they safeguard your personal data. Often, just knowing a username and password isn’t enough to access the account, especially from a new device. There are additional security layers and verification steps to ensure no one else can get in. Also, both online and traditional banks offer FDIC-insured deposits up to $250,000 per depositor.
**CUSTOMER SUPPORT OR IN-PERSON ASSISTANCE?**
When you need help with your account, you’ll want to reach a bank representative. Online banks have toll-free customer support lines you can call during business hours. But if you prefer face-to-face interaction, a traditional bank might be better for you. Ultimately, it’s about what you’re comfortable with.
**DEPOSIT AND WITHDRAWAL CONVENIENCE**
If your bank is nearby, depositing checks or withdrawing cash is easy. Many banks offer free withdrawals at certain ATMs. Online banks let you deposit a check by taking a picture and uploading it through their app. While this might take a bit more effort, setting up direct deposit with your employer can simplify things. Online banks usually provide fee-free withdrawals at partner ATMs, and you can also get cashback during transactions or use your debit card like usual.
**HIGHER INTEREST RATES WITH ONLINE BANKS**
One big reason to consider online banking is the higher interest rates on savings and checking accounts. Online savings accounts often have the best rates in the industry, allowing your money to grow more compared to a typical low-interest savings account. Since online banks don’t have the overhead costs of physical branches, they can offer better benefits, including competitive interest rates.
**SHOULD YOU MAKE THE SWITCH?**
Switching from a traditional bank to online banking made me a bit hesitant at first, but I’m really glad I did. Initially, I thought about opening a savings account with my traditional bank to build up my savings. However, they required a $250 minimum initial deposit, which I didn’t have.
Many online banks have low or no fees and don’t require a minimum deposit. For example, CapitalOne 360 allowed me to open a checking and savings account without a minimum deposit or monthly fees.
Other top online banks offering good rates for savings accounts include Goldman Sachs Bank USA, Barclays, and Ally Bank. Their application processes are user-friendly, and it’s a good idea to compare their features and rates to find what works best for you.
Do you prefer online or traditional banking? Do you think you could get a better interest rate on your savings account?