Guide to Online Banking - Your Money and the Internet

Cash on the Computer

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.

What is an Online Bank?

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.

Plan Ahead

  • 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.

Find out now!

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?


Possible Disadvantages to Online Banking

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.

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Comments 15 comments

Stacie Naczelnik profile image

Stacie Naczelnik 8 years ago from Seattle

We are considering opening a saving account with an online bank because the interest rate is higher. Your tip about making sure the bank is insured is so important.

Kat07 profile image

Kat07 8 years ago from Tampa Author

I also like the BankRate website above because they have safety ratings for the banks on their lists - it helps to determine the financial solvency of the institution.

Mystic Biscuit profile image

Mystic Biscuit 8 years ago from Phoenix, AZ

Great hub, Kat. I have been using an online bank for several years. (ING Direct) I love it. High rates and I have had absolutely no problems with service - in fact, they give excellent customer service! Better than my bricks and mortar bank! I have slowly switch almost everything to my online accounts. It affords me great flexibility in location and hours I do my banking.

Kat07 profile image

Kat07 8 years ago from Tampa Author

If you can set up direct deposit and have easy access transfers, it's a pretty sweet deal! Just gotta find the right account!

C.M. Vanderlinden profile image

C.M. Vanderlinden 8 years ago from Metro Detroit

This is really good, useful information Kat! Thanks!

Eileen Hughes profile image

Eileen Hughes 8 years ago from Northam Western Australia

Good ideas do online banking. I pay all my bills online. But I am still very careful to get rid of all my tracks before logging off. Whenever I go into my account I log out then Click on Tools, Internet Options, and clear out all the cookies, delete files, and clear history. and then click ok. That way you are preventing anyone following your tracks. You never know who is watching and following those footsteps. So be careful. Good Hub

Kat07 profile image

Kat07 8 years ago from Tampa Author

Thanks, C.M. and Eileen! I appreciate your visits! Good tips, Eileen - I never thought of doing that.

Amy_Roberts 8 years ago

Gr8 info! thanks for the tips!!

amy jane profile image

amy jane 8 years ago from Connecticut

Really useful information - thanks! :)

beachbum_gabby profile image

beachbum_gabby 8 years ago

Thanks Kat, this really a good information.

Kat07 profile image

Kat07 8 years ago from Tampa Author

Amy, Amy and Gabby - thanks so much!!! : )

JPSO138 profile image

JPSO138 7 years ago from Cebu, Philippines, International

Very nice tips. I have an online account and I really appreciate what you have shared.

queen cleopatra profile image

queen cleopatra 7 years ago

I find online banking very convenient because I don't have to go out to pay bills. Security-wise, we chose a bank that has a branch near to our home. Thank you for all the helpful tips. :)

Sanimi profile image

Sanimi 7 years ago from Hiding in Atlantic Ocean

The lack of a bank location makes me hate online banking. And since it is online, they might give a machine to first talk to me before I can speak to a live person.

prasetio30 profile image

prasetio30 7 years ago from malang-indonesia

thanks for share. great topic. I like it. It useful to prevent on online banking activity, for more secure.

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