Choosing An Online Bank: Here’s What to Look For
Learn how to choose the right online bank. Compare online vs traditional banks, check FDIC protection, competitive rates, low fees, and ATM access to maximize savings.
If you are looking for better convenience, better interest rates on your savings accounts, and lower fees, then choosing an online bank is a good step for you. Compared to a traditional bank, online banking offers 24/7 access to transfer funds, pay bills, and manage your accounts from any location, given that you have an Internet connection.
Read on to learn more about how to choose an online bank and what to look for.
Online Banks vs Traditional Banks – What is Different
Before we explore what to look for when choosing an online bank, let us learn more about how online only banks differ from traditional banks. You should know that an online-only bank differs from a traditional bank based on how it operates without having a physical branch. Essentially, an online bank offers convenience as you get to access your accounts from any location.
An online bank also comes with lower fees. On the other hand, a traditional bank is focused on providing in-person services and in-person customer support.
You might want to check out SoFi online banking, as it offers several benefits, including high-yield savings rates and no monthly fees.
Essential Things to Look Out for When Choosing An Online Bank
Now that you are ready to choose an online bank, here are the top things to look out for. Starting with the most important consideration, you must ensure that your deposits with the online bank are protected by the FDIC. You should know that the FDIC insurance protection covers up to $250,000 per ownership, which means that you will not lose your money, even if the banking system fails.
Watch for Competitive Rates
The prospect of highly competitive rates is the one thing that online banks really outshine traditional banks. Typically, the annual percentage yields offered by online banks are at least five times higher than the average percentage yields for traditional banks.
You should know that online banks can actually afford to pay those higher interest rates, and they do not have costs related to maintaining their physical branches, which is why online banks provide customers with those savings in the form of higher percentage yields.
Analyze their Fees
Of course, you can only benefit from high interest rates offered by online banking if you do not have to pay them back in the form of fees. Typically, online banks do not charge the common fees that are charged by traditional banks. When selecting an online bank, look for the monthly maintenance fees and fees related to minimum balance or excessive transactions.
Make sure that your selected online bank does not charge any overdraft fees.
Assess the ATM Networks
When choosing an online bank, make sure to assess its ATM networks so you can access cash whenever you want or need it. Fortunately, many online banks offer great ATM access compared to traditional banks, which is made possible through large networks, including pharmacies, major retailers, and other potentially convenient locations.
You should know that many online banks do not charge their customers for their own ATM fees, which can help save money, especially if you need cash frequently.
