Online banks aren't intended for everyone. However,
traditional banks aren't for everyone either. Conducting the proper research is
always vital, particularly concerning choosing the right bank for your requirements.
Given below are the major significant areas in which the
traditional and online banks will differ.
Interest Rates
Interest rate paid by the online banks and brick-and-mortar
banks is the one major difference between them. Online banks do not have the fixed
cost and operating cost of traditional banks' physical branches, so on all
their products, they can offer better interest rates.
For example, according to www.bankrate.com, the rate of an
interest-bearing checking account with Bank of America was .10% on the
date of this writing. Meanwhile, on the same date, the rate offered on a
similar account with NetBank much higher at 1.30%.
Fraud Prevention
Security is a vital factor people expect in a bank. If a
person places money with a bank, they expect it to be there when required. The FDIC
(Federal Deposit Insurance Corporation) up to $100,000 of coverage, in case a
bank cannot cover its accounts insures the majority of banks (both online and
traditional). Protection from identity theft is another aspect of security.
For computer hackers, online banks are tempting targets, so
some people may think they are unsafe.
Identity theft can occur unfortunately whether you be a
member of an online bank or a traditional bank. Most banking websites are carrying
on secure server lines and have tough encryption preserves to prevent impending
lawbreakers.
Also, some traditional banks allow customers to access their
accounts online, demonstrating the need customers have for online access.
Customer Service
Qualify of the bank's customer service is another important
issue concerning banks. With traditional banks, during normal hours, one is
able to see a teller or customer service representative for questions or
comments.
By having customer service representatives available by
phone almost 24 hours a day, seven days a week, online banks offer a different
advantage to solve any problems that may arise.
Account Withdrawals
Frequent ATM (automatic teller machine) users may be surprising,
"How would I extract cash from an Internet bank? Cash withdrawals can be
made by means of surcharge-free networks, which allow anyone with an ATM card
to use.
For example, Washington Mutual is a savings and loan bank
that does not charge to use its ATMs. When making a purchase with a debit card,
some retailers permit cash back transactions. Most traditional banks also allow
customers to use their own bank's ATMs free of charge.
Account Deposits
Unlike traditional banks with physical branches that look
after deposits, to send deposits to the processing center, online banks use the
mail system. The negative aspect of this is the extended time it takes for the
deposit to clear compared to depositing at a traditional bank.
Enrolling in direct deposit, where the employer
automatically deposits the check to the bank is another option to help speed
the deposit process in a traditional or Internet bank.
Most banks (traditional or online) give the customer a
selected amount of personal checks as for bill payments to use as a payment
option. The newest technology is bill
pay, which allows for check-less payment.
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