It's easy to be leery of online banks. It's one thing to do our banking online - paying bills online, making transfers online, paying loans online . . . it couldn't be more convenient. But a bank that is entirely online? Does your money really go there and will it really come back? The intangible makes this concept questionable. There are ways to find the right place, the right site for you and your needs.

An online bank is one that has no physical local branch offices. Online banks usually only have one to a few offices from which they run the entire operation, from customer service to check cashing. With smaller space to manage and less employees required, they can often times offer higher interest rates on checking, savings, and money market accounts because their own overhead is so low compared to chain banks.

• Shop for the best account you can get. Look for the account that has the features you want.
  • For checking accounts, look for things like opening minimums, service fees, ATM surcharges, online access, overdraft fees and more.
  • For savings or money market accounts, look for interest rates, opening minimums, check writing capabilities, etc.
  • Shop for the highest annual percentage yield (APY). Remember that these rates are usually variable and may fluctuate.

• Do your homework. Check out the bank and it's rating thoroughly.
  • Find out if the bank is FDIC insured. If they are, this means that your money up to a certain point is guaranteed to be returned to you should the bank or institution fail. The FDIC is a U.S. government agency.
  • Check for online security features. Read security statements to see if they fit your needs.

There are many things to investigate still! These are questions that should be asked before opening any account, online or not.

• Will there be charges for overdraft protection?
• Is there a fee to use the debit card at ATMs from other institutions?
• If the account earns interest, is it worthwhile for the rules that may apply?
• Are there fees if the minimum is not maintained after opening the account?
• Are there check-writing fees or limits?
• How are transfers completed?
• Can money be wired to/from this account?

• Can you transfer funds from your regular accounts to this account online or via mail?

Find out about these particulars before opening an online account.

1. You may have a more difficult time with customer service. Remember that the company is smaller due to the lack of physical offices/banks.
2. You may have a more difficult time transferring or withdrawing your money. This may depend to some degree on the type of account you establish. Check the details and fine print.
3. If you do write checks, they may be slower to clear. They may have to travel further and go through more routing. Ask questions ahead of time. Find out where the offices are located.