Traditional Banking Is Old School: 10 Reasons to Consider an Online Bank

Accessing your money shouldn’t mean giving up your lunch break, much less risking exposure to Covid-19. The good news is, you can now do all your banking online.

Sure, you might appreciate a friendly teller, but does that outweigh all the advantages of online banking? Does a smile make up for smaller interest payments? Probably not.

You be the judge. Here are 10 reasons you should consider switching to an online bank:

1. Better Rates

Online banks offer significantly higher interest rates on your savings. In some cases, their annual percentage yield is a full percentage point higher than that offered by traditional banks. On $10,000, that’s an extra $100 per year in your pocket.

How is this possible? By running almost entirely online, digital banks don’t have the same overhead and operational costs that traditional ones do.

Instead of pocketing those savings, online banks pass them on to consumers. The result is that your money grows faster than it would sitting in a typical brick-and-mortar bank.

2. Fewer Fees

Not only do online-only banks offer better interest rates, but they tend to charge smaller fees than traditional banks. Shelling out less for banking services means more money in your pocket.

Some of the fees you can expect to shrink when you switch include overdraft fees, maintenance fees, and ATM fees. International transaction fees may also be reduced or eliminated.

3. Better ATM Access

Banks in your area often provide on-site ATMs so you can deposit or withdraw cash. To compete, online banks have developed enormous networks of fee-free ATMs.

ATMs are universal. Even if the owner didn’t issue your debit card, you can still use it to withdraw cash. Some online banks even cover non-network ATM fees to effectively expand their no-fee networks.

4. Completely Paperless

Online banks default to digital communication methods. Many of them don’t even offer the option of paper statements. This practice saves them money, which they again pass on to customers in the form of lower fees and better interest rates.

Plus, going paperless also helps the environment. If you’re worried about the planet and want to do your part, switching to an online bank is a step in the right direction. You’ll see less clutter on your countertops as well.

5. Better Online Support

While many traditional banks do offer online support, it isn’t typically a go-to service channel. You get your best customer service when you go to one of their brick-and-mortar locations.

Online-only banks funnel a lot more resources into online support, knowing that it’s how their customers prefer to do business. Many offer not just email-based support, but real-time chatbots to help customers solve their own issues. Who likes waiting in line or on hold?

6. Streamlined Application

Like online support, this is another aspect of banking where traditional banks are a step behind their online counterparts. With online banking, advanced mobile tools let you sign up and access your account directly from your device. This makes banking easy and efficient.

Online banks invest more in their mobile apps because they rely on these apps more to provide value to their customers. For physical banks, apps are often side projects that don’t receive as much attention.

7. State-of-the-Art Security

There’s reason to fear online hacking more than a bank robbery these days, but that doesn’t mean the traditional bank is necessarily the safer place for your savings. Online banks are, if anything, more secure when it comes to online activity.

Think about it: An online bank that suffers a data breach stands to lose a lot more than money. If customers don’t feel safe banking online, its entire business model is at risk. Fraud monitoring, two-factor authentication, and encryption are standard security protocols at online banks.

8. Better Analysis Tools

No brick-and-mortar bank teller is going to sit down with you to sort through your transaction history. If you want analysis tools that help you see exactly where your money is going, online banks are the way to go.

The reason goes back to the fact that online banks invest more in their digital tools. Spend analyzers encourage you to spend more time in their app, which acts as another hook in online banks’ digital ecosystems.

9. Convenience

How do full-time employees ever find time to drop by a bank? With limited hours, traditional banks can be downright difficult to access. And if you’re out of town, your bank may not have a branch in the area.

When it comes to managing your finances, nothing is more convenient than online banking. Moving money between accounts, depositing checks, and paying bills is as simple as tapping a few icons on your phone. No need to worry about business hours or location.

10. Trendiness

If you care about what the card in your wallet says about you, you might just have a ninth reason to make the switch to an online bank. Young, hip people are leading the exodus from traditional banks.

Being on-trend isn’t just about being cool, either. If your brick-and-mortar bank is acquired or goes bankrupt in the future, you may be forced to switch banks on short notice. If you’ve already switched, then there’s no risk of you being caught off guard.

Making the Switch

What if you’re still not sure about pulling your money out of a traditional bank in favor of an online one? Don’t switch everything at once. Test the waters by opening a test account.

Before closing your existing accounts, make a small deposit in an online checking or savings account. Treat it as an experiment: Do you like the user interface? Are you glad to find fewer bills in your mailbox each month? Do you actually miss anything about your traditional bank?

If you decide online banking is for you, then go ahead and migrate the rest of your money into that test account. If not, simply close the online bank account and consolidate your funds. Either way, you have nothing to lose. And frankly, you have an awful lot to gain.

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