Complete Guide on How To Choose The Best Online Banks
When was the last time you went to a physical brick-and-mortar bank? It did appear weird. Bank branches appear like a ghost town at times. There are big, half-empty rooms having a bored branch manager and even more bored security guard! Most of us have preferred doing online banking from a home or office computer or web-enabled smartphone.
It’s just wondering, why to pay extra fees and maintenance charges to hold a physical branch when you have online banking at your fingertips! It’s required to be wise while choosing the best online bank as per your ease and needs. Not every online bank out there is supposed to offer you all features as per your requirements. To help you figure out the best online bank for you, below is a complete guide assisting you with the same.
What is an online bank?
Online Banking refers to managing bank accounts, money, and financial transactions online through the Internet on smartphones, tablet or computers. It enables you to carry out activities such as depositing checks, transferring funds, paying bills electronically, etc. quickly and free. You need not call or visit a bank branch. Online Banking is rather convenient and easy to use while being free and better for tracking spending.
Many banks offer their free apps to their customers, enabling you to make use of these services conveniently using tablets or smartphones. You can use your online account to carry out tasks such as:
- Make bill payments.
- Transfer funds to other accounts.
- Check your account balance at any time.
- Check any linked mortgages, savings accounts or loans.
- Check on any investments linked to your account.
Accessing your bank account online is generally safe. Perhaps, you must ensure to enter relevant and accurate details while making a transaction. You must never forget to log out of your online banking session. Try to make use of secure Wi-Fi connections to access your accounts.
Why should you use an online bank?
Online Banks enable you to use features you might not otherwise have access. Let me list some good reasons why you should use an Online Bank.
Organized Downloadable Reports: You can reconcile your financial statements with the help of downloadable reports. The reports inculcate transfers, deposits, ATM withdrawals, etc. You can keep your business records organized or serve as documentation for your accountant.
Technology: Banks tend to offer new features, when it comes to mobile banking, unlike the brick-and-mortar banks. Mobile Check Deposit is a feature for funding online bank accounts without having to mail in deposits. You can get free online bill pay and enjoy an ATM network, with all withdrawals free.
Schedule Regular Payments: You have the freedom to schedule payments ahead of time. You can set up your rent, salaries, and other fixed through your online banking account. The payments get automatically deducted in the amount you decide on the date of your choice.
Transfer Across Accounts: You can move money between different accounts when necessary, using online banking. You can even access funds instantly needed to make payments and purchase to run your business smoothly.
Types of Online Banks
There are three types of Online Banking, namely, Communicative, Informational and Transactional.
Communicative Online Banking: It refers to the communication between the patron and the bank. The fundamental interactions include new account updates, account inquiries, contact information updates, and balances, etc. It enables connecting with the bank’s main computer systems.
Informational Online Banking: This fundamental level of banking does not allow communication between customers and financial institutions. It does not permit patrons to view or maintain accounts as well. The bank provides information about its products and services, like a brochure, which is meant for marketing purposes only.
Transactional Banking: This is the most popular online banking type offering all benefits of a traditional brick-and-mortar institution. There is full control over your accounts, deposits, transfers, online payments, updates, etc. It is quite safe, secure and convenient to use Internet banking, especially mobile banking, with increased security measures.
Benefits of Online Banks
Online Banking has been in use for many years now. Let’s talk about some of the merits of online banks:
Better Interest Rates: Deposit Accounts tend to have higher annual percentage yields at online banks. The best online savings accounts have APYs around 1.50%. You can earn more interest by using online cash management accounts.
Lower fees: There is no such thing as branch maintenance in the case of online banks, which is why they have very low or no fees. On the other hand, mortar and large brick banks often charge high monthly service fees.
Standard Bank Services: You can experience basic banking features through online banking, available at traditional banks. Few of them include:
Security: Online Banks are just as safe as traditional banks. They inculcate features such as fraud monitoring, encryption, etc. You can also initiate certain measures from your side to incorporate security, such as keeping anti-virus software up to date and avoiding public Wi-Fi networks.
ATM Access: Good online banks are part of an ATM network with thousands of fee-free machines nationwide. Some online banks tend to reimburse fees charged by ATM owners, in case of cash withdrawal from a non-network device.
Accessibility: You can access your bank account anytime and anywhere in the world, wherever there is an Internet. Customer Service by phone is available 24 hours a day, seven days a week.
The main common benefits, which are the features of Online Banks are Mobile Banking, transferring money between accounts, viewing transactions and paying your bills online.
Factors to consider while choosing an Online Bank
There are a lot of factors to consider whether you are new to banking or feel the need for change. You should know your bank usage and individual preferences. Few factors worth considering when choosing online banks are:
Branch Availability: Choose a bank having a physical location nearby. Think about your needs and comfort, as well.
Minimum Balance Requirements: Some bank accounts require you to maintain a minimum balance while opening a bank account. Make sure that you can afford to pay the minimum required balance.
Online Banking Features: Choose an account which is free to pay bills online. In case of online money transfers to other accounts, make sure your bank is armed to process those transactions easily and quickly.
Ease of Deposit: Banks should offer mobile or home deposit services to make check deposits fast and straightforward, even if there is no physical location of banks nearby. Everyone has an occasional need to deposit checks or cash, even in this age of the direct deposit.
Security of your funds: Ensure that the Federal Deposit Insurance Corporation insures your bank. Do not use a bank that does not offer such privileges and protections. After going through the above guide, you would be equipped enough with the features and merits of online banking.
