Online banks are becoming mainstream. However, choosing the right online bank for your needs can be tricky.
Online PR News – 05-November-2012 – Missouri, MO – Between 2009 and 2014, 66 million households are expected to begin using online banking, according to WWWMetrics. On top of that, in 2011, market research company Javelin found that 54% of consumers pay at least one bill a month online. Online banking is solidly in the mainstream, and online banks are a growing part of that equation.
With many consumers unhappy about the fees charged by the big banks, low-cost online banks are becoming more popular. “Online banks don’t have the same overhead that brick and mortar financial institutions have,” Jason Larkins, a financial advisor and blogger at WorkSaveLive.com, said. “These banks are truly online, not just brick and mortar banks offering online banking services.”
As more consumers turn to online banking, it becomes important to make sure that they are choosing the right bank for their needs. “Not all online banks are the same,” Larkins said. “Consumers need to comparison shop to make sure the bank really will fit their needs.”
Looking for the best online bank can be a little intimidating, but the following tips can help consumers find an institution that meets their needs:
1. Look for FDIC insurance: The most important thing to do when choosing an online bank – or any bank – is to check for FDIC insurance. Verify, through the FDIC web site, that the online bank is protected. That way, your money is protected, up to lawfully imposed limits, in the event of bank failure.
2. Read customer services reviews: Because you can’t just go down to the local branch, read the customer service reviews to ensure that you will receive good customer service. Read about the pros and cons of various online banks before making your decision.
3. Compare interest yields on deposits: For many consumers, especially savers, the interest yield is important. Most online banks offer yields higher than what you would see with brick and mortar counterparts.
4. Understand minimums: While it is tempting to just choose the online bank with the highest APY, think about the minimums. In order to receive a specific yield, you might need to maintain a minimum. It might be worth it to accept a slightly lower rate on an account without minimums.
5. Check for limits: In some cases, the best yield is only reserved for balances that don’t reach a certain limit. You might receive the best rate on balances up to $50,000, but receive a lower yield on amounts beyond that limit. Carefully consider this situation if you have a large amount of money you plan to deposit.
6. Learn about the ATM network: If you want to withdraw cash, you will need to use an ATM. Find out about the ATM network, as well as whether or not the financial institution has partnerships that allow you to make use of teller services. If you plan to frequent the ATM, you will need an online bank with an extensive network.
7. Debit card accessibility: In many cases, it’s possible to get a debit card so that you can more easily access your money. Find out if this is an option with your prospective online bank.
8. Read up on fees: Most online banks don’t charge monthly fees, or other maintenance fees. However, you might be subject to ATM fees. Some online banks refund any ATM fees, though. Find out about these types of fees – and whether or not they are waived.
9. What other products are offered? Don’t forget to check into other products offered by the bank. Some consumers want a wide variety of products, from checking accounts to auto loans. Make sure that your online bank has the products that are most important to you.
“An online bank can provide you with a number of the same services that brick and mortar banks provide, and with greater convenience and more perks,” Larkins said. “My tips can help consumers identify whether or not an online bank is right for them, as well as compare their options.”
WorkSaveLive.com is a web site run by financial expert and Certified Workplace Money Coach Jason Larkins. WorkSaveLive.com offers practical and timely financial tips for consumers looking to make the most of their money.