There are many reasons why opening bank accounts online is a solid idea. Some people have credit problems and find it difficult to open an account at their local bank. Others prefer the convenience of an online account, and still, others prefer the higher interest rates you can typically get with an online account. Whatever your situation is, or your reason for opening an account online, remember that you have to be just as diligent about which bank you choose to partner with as you would if opening an account at the bank down the street. You may need to be even more diligent.
For this post, when I talk about an online bank, I am referring only to those banks that do all of their transactions online. I am not referring to a bank that has a traditional brick and mortar location and also have online banks. Since online banks have fewer expenses, they can pass those savings on to their customers, generally in the form of higher interest rates. But interest rates are only one aspect of your overall banking experience. Here are some things you need to know before you choose which bank to open an account with:
Interest Rates
- What is the bank’s interest rate? This is usually the number one thing people look at when comparing banks.
Accessibility and Fees
- How accessible is your money? Can you get to it virtually anywhere, 24/7? Are there fees associated with depositing or withdrawing your money? Are you restricted to only using certain ATM’s and if so, do you have a lot of those in your area? What fees will you pay when you use an ATM? Does the bank have an application for smartphones?
Multiple Accounts
- Can you set up several accounts, such as savings and checking, and transfer money back and forth between them all with a click of your mouse? This can be a great way to manage your money. If you are like me, you will find it easier to keep most of your disposable money in a savings account. If I keep it in my checking account, I find I spend it more frivolously, but if kept in my savings account, I am very reluctant to pull it out. With a linked account, I can keep all my disposable income safe from myself, but I still have the option of easily transferring it if I need it in just a few seconds. Using this method has allowed me to save more than I did before. Again, if the bank has an application for a smartphone, this can be done easily.
Services
- Does your online bank offer other services such as mortgages, online bill-pay, or CDs?
Today the internet offers more options, in every aspect of life, than ever before. Having bank accounts online is just one of those options. There are a lot of good reasons for opening an account online. Just make sure that you know what you are getting into. Do not be afraid to take a little time and compare all the benefits and features of several banks before making your choice. After all, it is your money; you have the right to make sure it is working as hard for you as it can.
Online banking has come a long way in the last decade, and some that I am knowledgeable about is Capital One’s online banking division, which has shifted to brick and mortar sites as well. They still offer slightly better rates on their checking and savings accounts over more traditional banks. And one that was excellent at the start of the year paying, at the time, great rates is Marcus owned by Goldman Sachs. They just last week reduced their interest rate to 0.60%, which is still better than a traditional bank.
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If you have any questions or need any assistance with finding reliable online banks or about Worthy Bonds, feel free to contact me directly. If you are interested in having a values-based comprehensive financial plan done by a fee-only Registered Financial Consultant, please contact me as well for more details by making an appointment, https://calendly.com/kgmeyer/15min.