How often do you have to go into the bank? While the friendly faces behind the counter are encircled with offerings of lollipops, the brick and mortar financial institutions are on their way to becoming obsolete. On the off chance that you do wander into a fluorescent lit corral at your local bank, you’ll be swarmed with options for new accounts, new lines of credit, and a home mortgage consultation. The next time you receive that $10 birthday check from Great Aunt Erma, you’ll deposit it via cell phone at your kitchen counter in order to avoid a long line and an onslaught of the sales pitch. While you can escape the physical building and do a majority your banking online, it may be time to take your accounts to the web. Exclusively.
A new banking option
Online banks are viable option in these times of financial institution scrutiny. The online bank provides a solution to the brick and mortar hassle. As the overhead cost is eliminated, the customer reaps significant additional benefits.
Higher Interest Rates
Online operations don’t have the same operating costs as conventional banks. There is no building to lease, no lights to keep on, and no tellers to pay. Where they save on fixed expenses, savings are passed to customers. Online banks are able to offer higher interest rates on checking and saving accounts and lower rates on personal and business loans.
Currently your brick and mortar savings account will yield around .06% interest. An online bank can offer around 1.10% interest. The difference is staggering.
The cost savings continues with less fees applied by online banks. Whether it’s a minimum balance or overdraft charge, your online provider is likely to not apply the fee or it will be lower. If you get hit with a service charge from your traditional bank, it is likely to outweigh the interest you accrued.
Consider this savings scenario:
If you have $10,000 in a savings account. The brick and mortar account with .06% interest will generate $6. If you miss the minimum balance one time that year and are hit with a $10 surcharge, your hard earned interest is zapped. The online account with 1.10% interest earned is $110. Even with a surcharge payment, you’re still earning on your savings.
Online banking is convenient
Online banks don’t close: “banker’s hours” are antiquated. As long as you have an internet connection, you have access to your accounts. Any time of day or night you can deposit or order checks, pay bills, transfer funds. While there are no handfuls lollipops offered, there are also lines to wait in.
What about ATMs?
Without the standard staffed structure, online banks have had to team up with national ATM providers, creating a network no-charge ATMs. Access to cash is critical. Using a machine that is not in the network may result in a charge, but the traditional bank charge comes in higher than the online bank’s fee.
If you are comfortable with technology and foregoing the personal interaction at your local branch, online banking may be an ideal solution for your banking needs. Increasing convenience while earning more interest is a triumph! We’re all searching for convenience and extra money: we can negotiate your monthly bills for you. It’s easy and puts more money in your pocket.