Is online banking better or should you stick with a traditional bank? Since 2011, about 700 million people have opened bank accounts, and many now prefer online banking over local banks or credit unions.
I personally find online banking saves a lot of time, but I understand why some people prefer traditional banks.
If you’re unsure which option is best for you, consider these points:
**Security Concerns**
Many worry that online banks are less secure than traditional ones, but that’s not entirely true. While sharing personal details online might seem risky, most businesses, including banks, use strong security systems and encryption to protect your information. Established online banks are highly secure, often requiring multiple verification steps if they detect unfamiliar access attempts. Both online and traditional banks offer FDIC-insured deposits up to $250,000 per depositor.
**Customer Support**
If you need help with your account, both options have you covered. Online banks have customer support lines during business hours, but if you prefer talking to someone face-to-face, traditional banks are better. It ultimately depends on what you like.
**Deposits and Withdrawals**
If your bank is close by, depositing a paycheck or withdrawing money is easy. Many banks offer free ATM withdrawals. Online banks allow you to deposit checks by taking a picture with their app. While this might take a bit more effort, setting up direct deposit can simplify things. Online banks also provide fee-free ATM withdrawals and you can get cash back using your debit card.
**Better Interest Rates**
One big reason to choose online banking is the higher interest rates on savings and checking accounts. Online banks can offer better rates because they don’t have the costs associated with physical branches. This means your money can grow more in an online savings account.
**Should You Switch?**
I was hesitant to switch from a traditional bank to online banking at first, but I’m glad I did. My traditional bank required a minimum deposit of $250 to open a savings account, which I didn’t have. Online banks, like Capital One 360, often have no fees and don’t require a minimum deposit.
Several top online banks offering great savings rates include Goldman Sachs Bank USA, Barclays, and Ally Bank. Their application processes are user-friendly, and comparing their features and rates can help you find the best fit for your needs.
Do you prefer online or traditional banking? Do you think your current savings account interest rate could be better?