Pretty much everyone uses some form of online banking nowadays. According to Discover, 82% of US consumers have used online banking in the past 30 days. They also say that 68% visited a physical branch in the same time period. Both of these participation rates are surprisingly high.
But there are some differences between traditional banks that offer some kind of online banking and banks that are only online and don’t have any physical branches. According to The Dough Roller, here are some things to consider when deciding which is the best bank for you:
This is one of the biggest concerns for consumers. Many people fear their information could be stolen. And based on this BankScoop article, they have a reason to be concerned. But the security fears apply to both traditional and online banks as either could be hacked at any time. As long as you are careful about your own information you should be fine. Use secured connections, not public WIFI, and make sure the bank you choose is backed by the FDIC.
With access to your accounts 24/7, online banking is definitely more convenient than traditional banking. Both traditional and website based banks offer this access.
But convenience difficulties come into play when you need to deposit a check that is for more than the daily limit for remote deposits (assuming the bank allows remote deposit). Most banks have a maximum remote deposit amount, a daily remote deposit limit and even a total allowed per month. Those limits have increased since remote deposit was introduced, which makes convenience concerns disappear for the most part. There is also the option of mailing in checks, which is not as convenient as pulling up to the drive-up at a nearby bank.
Another convenience issue is cash. Either depositing or withdrawing cash. Customers of web-based banks can’t deposit cash at all. And, while both types of banks have ATMs everywhere, there is a limit of how much cash you can withdraw from ATMs in a day (usually $500). Branches don’t have these limits–you can stop by a bank branch and withdraw the cash you need. When it comes to cash, traditional banks win.
Want great interest rates? Online banks win this one, hands down. Because they don’t have the overhead expenses of running a network of branches, they have lower costs. They can pass those savings on to you by paying higher interest rates. On average, online-only banks pay 5 to 6 times higher interest rates than traditional banks, according to The Dough Roller. And they usually pay high interest rates, no matter the size of your account. No “must have $10,000 to earn the highest rate” going on there.
Online-only banks typically have lower minimum-balance requirements and charge lower fees than brick-and-mortar banks. Some don’t require a minimum balance balance at all. And don’t forget that bank fees are on the rise, though there are ways to avoid or minimize those fees.
Which is the Best Type of Bank for You?
Depends on what you are looking for and what your needs are. And nobody is stopping you from having both. Whatever you decide, do your research. It’s your money and you need to find the bank that best fits how you like to save or spend it.
Click here for the full article from DoughRoller.