Online Bank Accounts

  • 15 months ago
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Online Bank Accounts

Online Bank Accounts

Whilst good arguments can still be made for the existence of brick and mortar banking establishments, savers are increasingly entrusting their money to online banks, and the benefits are many.

What Is An Online Bank?

First of all, let’s ask what exactly an online bank is, and how this differs from online banking services that may be offered by your traditional bank.

An online bank does not have a brick and mortar presence. You’re not going to be able to take a stroll into town and drop into the offices of an online bank.

An online bank is available via a website or an app only.

Here’s the principle difference. Your regular bank has offices in your city, maybe in the next city, and depending on how big the bank is, cites all over your country and the world.

They probably also have an app or a website, and a range of services that you can access online, but this is an extra...

Benefits Of Online Banks

There are several very good reasons to move your money from a traditional account to an online bank account.

Free Checking

The first of these is free checking. Most online bank accounts offer free checking accounts - accounts without a monthly service fee that most traditional banks charge.

Whilst you can find brick and mortar banks that offer free checking, you’ll find that these are often smaller establishments and there will be criteria in place, such as keeping a minimum account balance.

These are criteria that most online banks don’t impose.

Interest

Secondly, online banks offer much higher interest rates on your savings.

Putting your money into an account with most brick and mortar banks at the moment will give you a very, very low interest rate.

Online banks on the other hand, don’t have the overheads of a traditional bank. There’s no buildings to maintain, fewer staff and much lower outgoings. As a result, they can offer competitive interest rates that make it attractive to save with them.

Online Security

It’s very easy to assume that, whatever the situation, larger banking institutions are going to be more secure when it comes to managing your money online.

Turns out though, that this is not necessarily the case.

Security concerns affect most mobile banking apps – more so on Android than iOS. But these concerns are going to be there whether you are using a mobile banking app from a large traditional bank or a smaller online only bank.

The difference is that the online banks are more agile and able to incorporate security changes into their apps much more quickly that the bigger institutions.

Downside To Online Banking

Very often, the things that are advantageous to one person are the things that present a problem to another.

If you are tech-savvy and  happy to conduct your financial life via a web site or app, then an online bank is great for you.

On the other hand, if you want or need the experience of a real person to guide you in your finances, then an online bank is not going to be right for you.

If you want the security of being able to speak to a real person at your branch, you’re not going to get that with an online account.

​​​​​​​​​​​​​​Conclusion

If you are happy dealing with your finances online, and are looking to get a little more out of your money than a low interest savings account with a traditional bank can offer, then an online bank may be right up your street.

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