Ben Luthi
Internet banks are revolutionizing the way we interact with our money. Also known as direct banks or Internet-only banks, they offer their services solely via the Web, lacking physical branches. While Internet banks are becoming increasingly popular, some customers still have reservations about making the switch from the traditional brick-and-mortar bank. Here are some of the benefits of banking online that make it worth the switch.
Online Banking Is Convenient
Many bank branches have limiting hours that can make it difficult for busy customers to satisfy their banking needs. Additionally, customers visiting branches at high traffic times like the lunch hour or right after work can get stuck in long lines, making for a potentially frustrating experience.
With Internet banks, customers have access to more advanced mobile and online technology. This is where online banks invest, rather than in staffed branches. Many Internet banks are also affiliated with large ATM networks, making it easier for customers to get quick cash. Some online banks will actually reimburse customers that use another bank’s ATMs.
Convenience can be a major determining factor for whether you’ll keep a pulse on your accounts, spending and savings efforts.
Online Bank Customers Enjoy Lower Fees and Higher Rates
Because an Internet bank doesn’t have any physical branches or branch employees, its costs are significantly lower than traditional banks. Therefore, the Internet bank can offer higher interest rates with lower fees on your deposits.
For example, compare Ally Bank and Chase Bank. Ally offers free checking and savings accounts with no minimum balance requirements, while Chase charges fees ranging from $ 5 to $ 20 per month if monthly balance requirements aren’t met. Additionally, Ally’s savings accounts average an annual percentage yield (APY) of 0.99%, compared to Chase’s average APY of 0.01%.
The harder your money works for you, the better positioned you’ll be for financial success.
Online Banking Services Are Innovative
Internet banks are leading the way with innovation to track and analyze our money behaviors. Such services include budgeting and spending forecast tools, investment analysis, loan calculators and other financial planning capabilities that give customers a more practical way to manage their money.
Some make it easier for customers to work toward targeted savings goals. For example, Capital One 360 lets customers open up to 25 free sub-savings accounts and name them to match their purposes.
Customers Benefit From Ease of Use
Signing up for an Internet bank account usually requires no more than inputting some personal data on an online form and signing with an electronic signature, though applicants undergo a similar approval process to traditional banks. Most Internet banks even allow customers to link their Internet banking account with their accounts at other banks and transfer money to and from those accounts via electronic funds transfers, making it easy to move money back and forth when necessary.
Internet banking is not without its drawbacks. For example, some customers might prefer to build a personal relationship with the branch manager or loan officer at his local branch. Additionally, complex transactions or complicated problems can sometimes be easier to handle in person rather than over the phone or by email. Even with these drawbacks, Internet banks are growing in popularity due to their convenience, efficiency and low-cost banking services.
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