In today’s ‘wired-in’ world, online banking has become very popular for simple banking transactions. With the vast number of computer and phone applications available, banks can make actively managing your financial life much easier. With an internet bank, you can monitor your accounts, pay your bills, and transfer money, all with the simple click of a few buttons.
But if you’re considering online banking for the first time, remember that internet (or “direct”) banks are not always a viable substitute for brick-and-mortar banks in all cases. To help you decide whether to switch to online, stay with traditional banking, or do a combination of both, let’s examine the advantages and disadvantages of internet banks.
Advantages of Internet Banks
- Convenience. Direct banking institutions are open for business anywhere there’s a web connection. Other than times when website maintenance is being performed, they’re always open. Your account balance and information are can be accessed with a just few keystrokes.
- Even when Internet service isn’t available, customer service is typically available 24/7 via telephone.
Disadvantages of Internet Banking
- Personal connections. A regular bank does offer a better opportunity to develop a personal relationship. These connections can help when you need a loan or other special service. Your local bank manager also has some discretion when you’d like an overdraft fee removed.
- Transaction issues. Complicated transactions and large cash transactions can be challenging with an online bank. Most Internet banks don’t have their own ATMs, though some have begun to form network alliances with traditional banks. But in most cases, ATM use is going to cost you.
- Available services. Some Internet banks may not have the full range of financial services that a traditional bank has, such as insurance offerings and notarization.
- Security. Internet banks are required to obey the same laws and regulations as a traditional bank, and the FDIC insures the bank accounts. However, having electronic access to your accounts always carries some additional risk to your data, regardless of whether you’re using a traditional bank or an Internet bank.
There are advantages and disadvantages to both online and traditional banking. Your ultimate solution might be to utilize both types of banks. Use the points above to consider your own situation to help you make an informed decision.