What to Look for When You Open an Internet Bank Account
Banking online helps you earn more interest, and it's convenient. But which internet bank account is right for you? The fact is that most online banks offer a great product and it's hard to go wrong. That said, it's always nice to find a good fit, so let's review some of the most important things to consider as you shop for a new account.
What Is It?
What exactly is an internet bank account? For our purposes, it means an account that's only offered online. While you may be able to bank with the same institution the old-fashioned way (in person), internet bank accounts are usually only offered to online users.
Aside from the ability to bank in your bathrobe, what are the major advantages of internet bank accounts? The answer is simple: a better Annual Percentage Yield (APY). By conducting your transactions online, you save the bank money which it ideally passes on to you in the form of higher savings rates. What's more, virtual banks don't have the same overhead as brick-and-mortar institutions.
When shopping around, focus on the features below, and put extra weight on the things that are most important to you (not all of these are necessities). Some banks really shine in a few of these areas, while others don't even offer some of these features.
- APY: Usually the most important attraction for rate shoppers
- Access to money: If you want to take it and spend it, how much work do you have to do?
- The number of linked accounts: Can you set up a network of accounts and zap money back and forth through your internet bank account?
- Additional products and services: Can you buy CDs, get a mortgage, or pay bills online? Do you receive a debit card for spending money?
- Leverage of existing banking relationships: If an institution that you already deal with has an internet bank account, you may qualify for some extra perks by keeping all of your business in one place.
- Customer service options: How easy will it be to get questions answered (given your schedule)?
- Automatic savings plans: Can you put it on auto-pilot and let the money accumulate automatically?
- Safety and security: Is the bank FDIC insured, and do you trust their security process?
Once you compare the features of various internet bank accounts, you can decide which one is best. For example, you may decide that maximizing your interest earnings is more important than anything else. Therefore, you wouldn’t care about many of the features above — you’d just pick the bank with the highest APY. Be sure to consider reasons to avoid online bank accounts, before you make the jump.
Here you’ll find reviews of some of the most popular internet bank accounts. This is not an exhaustive list — it’s just to get you started and provide some information for doing your own research.