Online checking accounts are a great way to save money, with higher interest rates than traditional banks. This guide will explain how online banks stack up against traditional brick-and-mortar banks and how you can start using an online savings account today.
Online Banks Offer Higher Interest Rates Than Physical Branches
The most obvious reason is that online banks can save on overhead costs. They don’t need to pay for physical branches, which are expensive to run, and they don’t have to employ as many workers in the form of tellers, managers and other staff members. As a result, they can afford to pay higher interest rates than traditional branches.
Another reason why some people choose an online bank over a physical one is convenience. You don’t have to worry about finding an ATM near your house or work and making sure it has enough money before you go there—you log into your account from home or work (or even from the park!).
As per Lantern by SoFi, “That coverage is automatic whenever a deposit account is opened at an FDIC-insured bank or financial institution up to $250,000.”
There Are No Extra Fees Charged At Online Banks
Online accounts don’t charge any extra fees for doing business with them. You won’t get charged for making deposits, withdrawals, or even the occasional overdraft. They also don’t charge you if you stop using your account entirely—and they aren’t in the business of charging you extra to check your balance, either!
Online Banks Typically Offer Fewer Account Options
When you compare accounts, you’ll find that many traditional banks offer more account options than online banks. For example, you can choose between a passbook account and an online savings account with different rates of interest or different minimum balance requirements. In addition to these differences in features, some traditional banks also allow their customers to use their accounts for loans and business transactions (for example, by depositing checks received from clients into the same bank account).
Getting Started With An Online Checking Account Is Quick & Easy
If you’re looking to just get started, an online savings account is a great place to start. Unlike traditional interest-bearing accounts, which require a long application process and paperwork, online accounts are the easiest to open and fund. That’s because there’s no waiting around for your money to be approved—you can do it all online or through your mobile phone.
Online Interest-Bearing Accounts Have Fewer Service Charges & Associated Fees
The best accounts are those that are not only easy to use but also have no extra fees. So if you’re looking for such an account, choose an online checking account. There aren’t any over-the-counter fees associated with these types of accounts, and they also don’t require a minimum balance to be kept open. This means you won’t have to worry about incurring additional costs for being a customer.
There are many other perks associated with online interest-bearing accounts as well:
- They don’t charge monthly fees
- They don’t charge ATM usage fees
- They don’t charge overdrafts (and if they do, it’s usually very low)
There are many benefits to using an online account, including higher interest rates and more flexible terms. For example, suppose you have been considering opening up a new interest-bearing account. In that case, we hope this article has helped you understand the pros and cons of online versus traditional financial institutions.