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- These days, it’s easier than ever to meet all your banking needs without ever going to a branch.
- With the ability to deposit checks by taking a photo with your phone and use virtually any ATM, proximity to a physical branch is no longer a requirement when choosing a bank.
- Here’s what you need to know about online-only banking and why it might be right for you.
As one of the cool kids in school, I started collecting coins in fifth grade. I remember going to the bank with my mother to get rolls of coins to sort, looking at dates and years to fill in the boxes in my blue coin collection albums. This, alongside my business owner parents, sent me on many trips to local banks. But over time, my number of visits to the bank dropped to zero.
These days, I stick with an online bank only as my primary bank. I don’t have a single branch available. Although it seemed strange at first, it was easy to get used to.
Let’s take a look at the pros and cons to help you better understand if you could survive with online banking alone.
How Online Only Banking Works
With online-only banking, you are the cashier and representative of new accounts for yourself. Instead of going to a bank branch, you manage your own banking transactions from your computer or smartphone, as you would with many traditional banks.
Online banking uses secure connections, so as long as you use strong and unique passwords, it is completely safe to bank online. The best accounts let you deposit checks from your phone, transfer funds to or from any account at any bank at no cost, pay bills online, and avoid fees common to traditional banks .
As long as you get paid by direct deposit or check, rather than cash, online banking should easily meet all of your financial needs. Now, let’s take a closer look at how some of the features work so you understand how they replace your old banking experience.
Manage your money with mobile banking
You don’t have to go to a specific location when you have online banking. Instead, every online bank uses a website and offers a mobile app to manage your banking from anywhere. It doesn’t matter if you’re about to leave work, sitting on the couch at home, or standing on the beach on vacation, you can log in and manage your banking with just a few taps on your screen.
Once logged in, you can view balances, pay bills, make transfers, and deposit a photo check. If you have other accounts in the same bank, such as credit cards, loans or investments, you can also manage and make transfers to these accounts.
With online banking, it’s easy to have all your accounts under one roof. But even if you don’t, it’s easy to manage it all with handy mobile apps.
Learn more: The best bank cards to open in 2018, according to The Points Guy
Cash and online banking
The only real downsides to online banking are the loss of the in-person banking option and depositing cash with a teller. If you have a job where you’re paid mostly in cash or tips, such as a restaurant server or valet, online-only banking probably isn’t viable for you.
However, it is easy to withdraw money from an online bank account. More
do not charge fees for ATM access, and some reimburse fees charged by other banks’ ATMs. Some popular accounts that offer free ATM access include Ally Bank (up to $10 per month refunded) and Charles Schwab Bank (unlimited refunds).
To deposit money, you might want to consider pairing your online bank account with a favorite local credit union. More
offer a basic no-fee checking and saving option, which you can use to deposit money and transfer to or from your online banking account.
Even online banks that do not charge fees usually offer an extensive network of free ATMs. Through memberships in various banking networks, Capital One (39,000 free ATMs), Discover Bank (60,000 free ATMs), and others usually have a convenient location near your work or home.
Expect better interest rates and lower fees
Traditional banks spend a lot of money on human tellers and sophisticated branches. They tend to pass these costs on to customers in the form of less favorable fees and interest rates. If you’re willing to ditch the human on the other side of the desk or counter, you can save a bundle.
For example, most major banks charge huge fees for overdrafts. Online banks charge lower fees, if any. Capital One gives you four options for managing overdrafts to help you avoid or manage fees. Simple and Chime do not charge these fees at all – in fact, the only fees Simple online banking charges are for using a foreign debit card. Otherwise, you won’t pay them a cent. Never.
Capital One and Ally generally top the charts in terms of interest rates, but other online banks aren’t far behind. Online savings rates are usually around 20 times better than what you get from large traditional national banks.
Learn more: The Best Credit Card Rewards, Bonuses, and Benefits of 2018
Does online banking make sense to you?
If the idea of better interest rates, lower fees, and managing your own online banking appeals to you, online banking might be the right choice.
For starters, you can keep an old account in addition to your new online account, slowly shifting your banking. Alternatively, you can get an online account and maintain a local credit union account for your physical banking needs. The truly daring dive without looking back.
Online banking might sound new to you, but it’s been around since the early 1980s. It’s safe and secure and it’s the future of money management. As long as you don’t need to deposit money regularly, online banking can be a great decision for your financial needs.