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Online Checking Accounts Basics

Triston Martin

Oct 22, 2023

A checking account refers to a deposit account that facilitates both withdrawals and deposits at a bank. Checking accounts are also termed as transactional accounts or demand accounts. Online checking accounts are relatively liquid. Customer can access their account in a variety of methods, like through checks, electronic debits, and automated teller machines (ATMs).

Online checking accounts are an easy option to keep your money in a physical bank. You can open and maintain your online checking account through a smartphone or computer. An online checking account allows you to check your account balance, transfer money to other bank accounts and pay bills without going to a bank branch. It also facilitates depositing cash or checks without going to a physical location.

You can photograph both sides of a check and deposit it using a smartphone. Additionally, many online banks have agreements with ATM providers that allow users to deposit cash via those companies' ATMs.

Benefits of Online Checking Accounts

There are various benefits of choosing an online checking account, regardless of whether you want to keep a large amount and frequently make checks or you simply want a simple checking account to get direct payments.

Online Checking Accounts Make it much easier to manage your finances.

An online checking account helps you to manage your finances easily, even if you don't use the budgeting app. With access to online transaction history and eStatement, you can keep track of your financial situation. Furthermore, online Bill Pay makes paying your utility bills and other payments on time easier.

Whatever your financial objectives are, online checking accounts can help you reach them.

Online Checking Accounts Offer High Yields and Charge Lower Fees

Online banks offer lower operating costs as compared to their traditional counterparts. Most online banks pass those savings through to their customers in the form of better yields and lower fees. The Federal Deposit Insurance Corporation (FDIC) estimates that the average annual percentage yield, or APY, for checking accounts is 0.03% in the U.S. for December 2021. However, some online banks offer APY of 1% or higher. Another important benefit of online checking accounts is lower fees resulting from overhead savings passed on to the customers. As online banks usually don't offer dedicated ATMs, many banks reimburse their consumers for the fees they incur while making out-of-network withdrawals.

Online Checking Accounts have High-tech Features.

Online checking accounts also benefit from high-tech features like budgeting support and connectivity with personal finance programs like Microsoft Money and Quicken. Many online banks allow you to automatically transfer a specific amount to or from other bank accounts weekly or monthly. This money transfer service may help you to save money or stick to a monthly or yearly budget.

Another important feature of online checking accounts is automatically downloading your account information to the best personal finance software. This feature will help you to make a budget and make filing your taxes considerably less tedious,

FDIC-insured Banks Keep Your Money Safe

When you open a checking account in an FDIC-insured bank, the Federal Deposit Insurance Corporation (FDIC) will protect the money in your checking account to the maximum amount permitted by law. Therefore, you remain safe even if the bank collapses.

You must check the security policy of your bank to determine what you might be responsible for if there is fraudulent activity or scam on your bank account.

Online Checking Accounts Allow you to Pay Bills Online.

You may have a rush of monthly bills, including car payments, utility bills, mortgage or rent bills, and credit card bills. It might be difficult to keep a record of all the invoices. Bill Pay is the best option. It is an important feature of online checking accounts.

Online bill pay permits you to build a profile on your online account for each bill you must pay. After entering and saving basic information like payment address and bank account number, you just go to your profile to pay monthly bills simply and quickly.

Disadvantages of Online Checking Accounts

Before registering to make a transition from a traditional bank account to an online checking account, you must know that online checking accounts also have some drawbacks, such as no in-person customer service. Visiting a personal banker at your local bank branch may help you deal with any problems that occur with your online checking account. However, all you can hope for with online banking is a call-center agent with a toll-free customer support number.

Some online financial institutions provide 24-hours customer assistance by phone, whereas others only provide their customer service during regular business hours.

Another concern is online account security. Your account information is among the most sensitive things you keep. And few things can get you in greater trouble if it goes to a dubious person's hand. Even though most online banks offer advanced security and encryption software, cyber criminals use viruses to hack the browsers of online banking customers and get user login and password details. If you manage your checking accounts online, keep viruses and malware off your mobile devices and computers.

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