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Would You Use an Online Only Bank?

by . (Posted in: Banking / Personal Finance News)

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A new poll that outlines the best online banks was released this week. Many are unaware that online-only banks exist. Most consumers believe online banking is simply an extension of the traditional bank they use in their communities. There is a growing number of banks, though, that are keeping it virtual.

The Pew Research Center says 63 million Americans conduct their banking business online and 78 percent of those who do say they are very satisfied with their online banking models.

All Banks, All Online

Nearly all of the national banks in the United States offer their customers the opportunity to engage in online banking. For more than a decade, online banking has been defining its own presence in a virtual world. It’s been a slow process; steady, but slow, when it comes to consumers developing their own appreciation of these opportunities. Naturally, safety is the primary concern. With so many advances, however, there are many benefits to online banking that should at least give those who’ve steered clear a second though.

Let’s face it – long bank lines, bank hours that never seem to be enough and for those of us who appreciate the familiarity of home, the frustration of having to get up, brush our hair and then enter the real world to deposit those checks you’ve been carrying for a week now should be enough incentive for anyone to consider online banking. Throw in a rainy day or below freezing temps and suddenly, the convenience of a virtual option is suddenly top priority.

A Few Good Reasons

Another reason many like doing business online is the around the clock nature of it all. In fact, not only can you move money around, apply for a mortgage and open a savings account for your new baby, many banks also offer live customer service around the clock.

Don’t forget the organizational aspect of it all. Every single bank statement is maintained in your cloud, ready for download and emailing to the accountant at the end of the year.

Two words: online shopping.

Automatic bill pay is another reason online banking has managed to keep its presence alive and kicking.

Text and email alerts keep you posted on what’s going on every minute of every day, which is extraordinary if you ever become a victim of having your credit or debit cards stolen – you’ll know in real time where your cards are being used.

Then there are the environmental benefits. No more gas used to go back and forth to the bank, no more paper statements and for many of us, no more check writing. Seriously – I write one check a month and that’s to the small business that maintains my lawn every week.

So, now that we know a few of the many clear benefits of online banking, the question is – which online bank is best? This is where a new poll comes into play.

Capital One 360

We wanted to include Capital One 360 in our list, partly because in recent days, it bought out ING Direct, the definitive online bank that many insist paved the way for online banking. Great interest rates, no minimum account balances and online mobile banking are just a few reasons why this is a force to be reckoned with. The buy out is important and should be for consumers, but from what we’ve gathered in these early days, it’s been a seamless transition and there have been precious few complaints. This might be the way to go for many consumers and it’s certainly worth consideration.

Ally Bank

This online bank is consistently ranked high in consumer satisfaction. Most importantly, interest earned on savings accounts is one of the highest in the industry. Also the fees are lower, too. We like the fact that there’s no minimum deposit amount, so that means you can try it without tying up a lot of cash. Withdraw six times a year fee free, too. You can bank online and via your smartphone, set up text alerts, transfer funds and Ally now offers picture deposit – where you snap a photo and with a couple of commands from your smartphone, you funds are deposited. Customers receive their Ally debit cards and even if you use an ATM outside the network, your fees are reimbursed. Doesn’t get much better than that.

Bank of Internet

There are very, very few banks – online or otherwise – that don’t include fee structures that can be frustrating at best and maddening to most. Why would anyone be happy about paying to get to their own money, right? Bank of Internet is the one place where “no fees” actually means “no fees”. Your ATM/debit card, issued by Visa is free, you’ll enjoy free overdraft protection, free online transfers, no monthly fees, no fees for your checks and you even can receive free postage paid envelopes. It’s a revolutionary way of doing things in a fee-hungry industry, but it’s working and it’s working well. These courtesies are yours if you open an account with at least $100.

Also banking customers earn up to 1.25% APY on their checking accounts and 0.80% APY on their savings accounts. You’re also afforded a host of different CDs with what are the highest earning opportunities found anywhere. A CD with maturity dates of between three months and sixty months earns you between 0.15% and 1.59% on your deposit.

Of course, we strongly encourage you to do your due diligence before entering into any contract and certainly when it comes to managing your money. Only you can know what’s best for your specific needs. Do your research and then decide and if you’re already using a bank that offers online banking (and there are very few that don’t), delve into what it offers. You might be surprised at what you’re missing.

Do you conduct your banking business online? Has it always been easy? Let us know what you think and whether or not you’d ever go back to traditional banking practices – including getting in your car and making your deposits in person.

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