Which is better, an online bank or brick and mortar bank? About 700 million people have signed up for a bank account since 2011. While it’s the most common place to keep your money, many people are opting to bank online instead of going to their local traditional bank or credit union.
Personally, I like online banking because I feel it’s more efficient. I also understand why some people would prefer to have a traditional brick and mortar bank as well.
If you’re wondering which one would be best for you, here are some factors to consider.
Both Are Pretty Secure
A common fear is that online banks are not as secure as the traditional ones, but this just isn’t true. Sure, sharing your personal information on the web can be seen as risky. However, most companies are storing data digitally anyway but also using better security systems and encryption software to protect users’ data.
All national online banks are very secure and protect your personal information on the web. Most times, simply just logging in with your username and password won’t take you straight to your account, especially if you use a different device that the system is not familiar with.
There are levels of security questions and verification requests that each bank will implement if they suspect anyone other than you is trying to log on. For both types of banks, the funds that you deposit are FDIC insured up to $250,000 per depositor.
Customer Service or Bank Teller?
If you have questions about your account or need some help, you’ll probably want to talk to someone from the bank who can give you assistance. Online banks have a customer service line where you can speak with a representative during regular business hours.
If you prefer to talk with someone in person, you may prefer to go to a traditional bank and speak with a bank teller or private banker. Either way, you’ll get helped. It all just comes down to preference.
Deposits and Withdrawals May Have a Learning Curve
If your bank is local, it will be easy to stop by and deposit your paycheck or make a withdrawal. You’ll also likely get free withdrawals at your bank’s ATMs in various locations. With an online bank, you can often make a digital check deposit by taking a picture of your check details and uploading it to your online banking portal.
This may require some extra work and effort on your end, but you can definitely set up direct deposit with your employer to make it easier. Your online bank should also have in-network ATMs as well. This means you can look up which ATMs in your area will allow you to withdraw money fee free. Your other options would be to get cash back when making transactions or just use your debit card to pay bills and make purchases just like you would normally to spend money from your account.Which is better, an online bank or brick and mortar bank? Click To Tweet
Online Savings Account Generally Have Better Rates
One reason you may want to switch to an online bank is simply due to the fact that online banks will give you a better interest rate for your savings and checking accounts.
The best thing about online savings accounts is that they offer industry-leading interest rates so your money will continue to grow and earn extra dollars instead of just sitting in a regular, low-interest savings account and earning nothing or just a few cents per year.
Online banks don’t have to fund branch locations all over the country and pay employees to work at them. This means they have more money to offer better benefits to their accountholders – hence competitive interest rates for both checking and savings accounts.
Yes, you can earn interest on the money in your checking account as well. Why aren’t you taking advantage of it?
Other national banks like Chase, Wells Fargo, and Bank of America only offer a very low .01% APY. Online, high-interest savings accounts are great for long-term savings goals like an emergency fund, health expenses, or vehicle repairs or a new car.
Online Savings Accounts Typically Offer:
- Competitive interest rates that are compounded daily
- Multiple ways to deposit and access your money
- Up to 6 free withdrawals each month
- 24/7 access to your money
- FDIC Insurance
Ditch the Brick and Mortar, ASAP
I was a bit hesitant myself to ditch my savings account at my brick and mortar bank and switch to an online bank but I’m so happy I did. When I first started trying to save more, I wanted to open a savings account at my brick and mortar bank. They wanted a minimum opening deposit of $250 for the account and I didn’t have it.
Most online banks have low or no fees or minimum opening deposit requirements. I was able to open a checking and savings account online with CapitalOne 360 no deposit minimum and no minimum monthly balance or fees.
Some other top online banks that offer the best rates for savings accounts include Goldman Sachs Bank USA (currently 1.90 APY), Barclays (currently 1.90% APY), and Ally Bank (currently 1.85 APY).
Some of these banks have an easy application process to open a savings account while others don’t. Check out each bank to compare features and interest rates to determine what is best for you.
Do you like online banks or traditional brick and mortar banks? Do you feel like the current interest rate for your savings account could be better?