Banks have long been an essential element of economic life. People rely on them to save money, earn interest, transact with others, and take out loans. However, the way that banks operate has changed dramatically over time. One significant change has been the advent of online banking. Today’s customers can make payments, conduct other financial transactions, view their account information, pay bills, and access many other features online.
Here, traditional brick & mortar banks because they are still widely used, and then move on to online banks and some tips for choosing one.
Online bank
An online bank is simply a brick & mortar bank that has extended its services into the realm of the internet. This allows customers to access their accounts and complete transactions through the internet instead of physically visiting one of their many branches or ATMs which are also located across the United States. As you probably guessed, this type of bank offers several advantages over traditional branch-based banks like shorter wait times (due to fewer employees), lower fees (because physical branches aren’t needed), and much more flexibility (especially if your work schedule doesn’t allow you time during normal business hours).
One downside associated with online banking is safety; because everything is done online, hackers are also able to gain more access to people’s personal information. A lot of banks have extremely advanced security systems protecting all of their customer’s data, but it is important to do your research before committing to an online bank. This is a relevant concern when you are sending money to Chime account since you are linking your savings or checking bank account. Bank clients want to access their money securely. For those who move their money around from savings accounts to checking accounts, etc., an additional convenient feature would be a free transfer. You may want to include this in your checklist when looking for online banks.
Traditional brick & mortar (or offline) banks
Bank branch: This is the most common type of brick-and-mortar bank. A branch is a physical location where customers can go for many banking needs including opening accounts, making deposits, withdrawing funds, etc. Banks usually have hundreds of different branches in cities across the United States so it’s usually very easy to find one close by. Because each branch is limited only to services offered at that specific location, oftentimes there are long wait times when trying to talk with a teller or waiting for paperwork to be processed before leaving the bank with your new account information. It’s also worth mentioning that because there are so many branches for each national bank, fees tend to be higher than online banks.
Online-only banks
Pure online-only banks are still relatively new in the financial world. They vary very little from traditional brick & mortar banks because they both require physical offices where employees work at desks and use computers for most tasks involving financial transactions. The biggest difference between pure online-only banks vs traditional ones is that most offer many different types of accounts including savings, checking, CDs & IRAs (traditional only provide these last two), etc. This allows customers to consolidate all of their banking needs into one place.
Some of the pros associated with choosing an online-only bank are that they do not have physical locations which reduce overhead costs, their interest rates tend to be much higher because there is no branch infrastructure to maintain, and wait times for transactions are typically very low due to fewer employees needed. A significant concern is a safety; since everything is done through the internet you must research each bank’s advanced security system before committing.
How to Choose An Online Bank That’s Right For You
Selecting the best bank can be subjective due to the varying preferences of bank clients. To help you make better selection decisions, here are five questions that might help you choose which type of online bank best suits you based on what kind of banking experience you’re looking for.
How often do you receive or pay bills?
Choose a bank that offers direct bill payment too! So this would be one less thing for you to worry about when it comes to managing your finances online.
Are there certain products (like credit cards) you want access to but don’t qualify for them right now?
There are plenty of online banks that offer an array of financial products like credit cards, home loans, and investments that can help improve your financial health in the future. Some require lower fees than others, some charge higher fees for services, some offer rewards programs and some don’t.
Do you want to earn interest on your money?
Look for banks that offer checking accounts with interest or direct deposit options that accrue interest. By the end of this article, you should have a better idea of what type of online banking will best suit your financial needs. If you remember and follow some of the points discussed here, hopefully, you’ll avoid some common pitfalls associated with choosing an online or traditional brick & mortar bank!
