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Review on Online Banking for Beginners

Triston Martin

Nov 26, 2023

Most branch-based banks and credit unions now provide online account access to their clients. However, most major online banks and service providers now only allow mobile access. You won't be able to talk to a human bank teller, but you'll always have access to your money via your computer or mobile device. A deeper dive into the world of internet banking.

Try to find a place to open a new online account. Don't bother with the bank anymore because there will be no more waiting in line. Use one of the recommended online banks by NerdWallet and go paperless. Participant of the Federal Deposit Insurance Corporation

Advantages of Using an Online Bank

Reduced costs Since online banks don't have to cover the costs of maintaining physical locations; they can offer competitive rates with few or no hidden fees. A good number of online accounts, for instance, don't charge overdraft fees and don't charge monthly subscription fees.

Large traditional banks often assess a monthly service fee of roughly $10 for checking accounts. However, this can sometimes be waived if you satisfy specific criteria, such as maintaining a daily balance of $1,500 or more. Furthermore, a 2019 NerdWallet survey found that the typical overdraft cost at significant banks is $35.

Increased rates of interest

The annual percentage yields on deposit accounts are often greater at online banks. Typical annual percentage yields (APYs) for the top online savings accounts are 0.45%. That's much better than the average savings rate of 0.13 percent or the meager annual percentage yield (APY) offered by some significant traditional banks.

A few percentage points difference might not seem like much, but it becomes significant when your balance grows greater. For example, if you deposit $10,000 for a year at 0.01%, you'll get $1 back; at 0.45%, you'll get just over $45.

The interest you can receive from a cash management account you set up online is another way to maximize your savings. Brokerages and other non-bank financial institutions are the providers of these goods. They can be a cross between a checking and savings account and investment, often providing a higher return on your money.

Regular banking operations

Even though online banks offer better interest rates and lower costs than their brick-and-mortar counterparts, many of them nevertheless provide the same standard banking services as their brick-and-mortar counterparts.

Use of an Automatic Teller Machine. A reliable online bank will have thousands of fee-free ATMs countrywide through an ATM network like Allpoint or MoneyPass. Some virtual financial institutions will even cover the cost of the ATM owner's fees if you have to use a non-network machine.

Security. Using a reputable online bank with industry-standard security measures is just as safe as using a brick-and-mortar bank. Look for encryption and fraud detection protections, and ensure the FDIC covers your funds before opening an account. Avoiding public Wi-Fi networks and using up-to-date anti-virus software are two more ways to safeguard your finances while banking online.

Accessibility. Your bank accounts and banking services are available 24/7, no matter where you are, so long as you have access to a computer or mobile device and the internet. In many circumstances, phone support is available around the clock, seven days a week.

Issues with Online Banking

No limbs. Be aware that your options for in-person assistance may be limited if you bank online. Many banks now provide phone-based client assistance in place of in-person interactions. You can get help from some banks via online chat and social media.

It may be challenging to deposit cash. Depositing cash at an online bank can be lengthy and complicated. An ATM that accepts deposits could prove necessary. You might even fund a regular bank account and transfer the funds to your virtual one. A money order can be purchased with cash and deposited digitally via a mobile app for an online bank.

Several providers have partnered with third-party services like Green Dot to facilitate cash deposits at shops and convenience stores. However, there is usually a deposit fee of roughly $5 with these services.

You might be wondering if you should get an online bank account

An online bank may be a good option if you're looking for better rates and reduced fees, but don't anticipate needing to use the bank's physical locations very often. Bear in mind that if you decide to open an online account, you don't have to close your traditional bank account. You might get the best of both worlds by maintaining accounts at traditional and internet banks.

You might take a more drastic approach and switch to a bank only accessible online. This article explains how to change financial institutions and provides the necessary steps. Setting up a new online account is quick and easy and gives you instant, anywhere, anytime access.

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