Online banking can be faster and more convenient than visiting a bank branch in person or conducting business over the phone. That's only become more true, as banks have added features to online banking sites and mobile apps like digital check deposit. Some online-only accounts also offer better interest rates and better terms than their brick-and-mortar equivalents.
Online banking sites and apps are typically available 24 hours a day and can be accessed from anywhere with a decent internet connection. Bank branches, on the other hand, are open limited hours and are becoming more scarce as more banking customers shift their business to the internet.
Bank branches also have limited staff and limited ATMs, meaning you may have to wait in line to do business like withdrawing cash or depositing checks if you go during peak hours. Online banking, on the other hand, is usually instantaneous. Even bank customer support lines may place you on hold to ask a question that you could answer immediately by looking online, like the status of a deposit or how much money is in your account.
Banks have also added features like mobile check deposit, which enables you to conduct more business using a smartphone, meaning fewer reasons than ever to head into a bank branch. More and more people are also receiving their paychecks via direct deposit, which means fewer reasons to make that trek to the local bank in order to get access to your salary.
Better Terms and Conditions
Many online-only banks offer better rates than their brick-and-mortar rivals, and some banking chains offer better terms on online-first accounts than on traditional alternatives. This is partly due to the reduced cost of servicing online-only customers.
The disadvantage, of course, is that you may not have access to a physical branch if you need to withdraw cash, ask an unusual question or otherwise get assistance, so banks are also effectively compensating you for giving up this luxury. But if your banking needs seldom require a physical interaction with a teller or manager, then you may be better off using an online bank. You can generally make a phone call to an online-only bank if you need to talk to a human, and some offer internet chat options as well.
Many online bank accounts also provide ATM fee reimbursement, meaning you can use ATMs of your choice to withdraw money from your account without having to worry about the cost.
- Reuters: Number of U.S. Bank Branches to Shrink 20 Percent in Five Years
- Charles Schwab: Schwab Bank High Yield Investor Checking Account
- Consumer Reports: Earn More on Your Savings Account at an Online Bank
- Wells Fargo: Mobile Deposit
- NACHA: New NACHA Survey Shows Adoption and Awareness of Direct Deposit via ACH Continues to Build
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.