What You Need To Know Before Doing Business With An Online Bank

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Are you thinking about opening a checking or savings account with an online bank? Does the idea of banking with an entity that has no physical locations make you nervous?

In this article, we’ll answer some of the most common questions people have about online banking, so you have the information you need to decide whether doing business with one is right for you.

What is online banking?

Online banking allows you to manage your banking relationships on a computer or mobile device. This includes doing things like depositing checks, transferring funds and paying bills. Most banks and credit unions offer online banking even if they have physical locations.

What is an online bank?

An online bank is one that you can access only through the internet. It has no physical branches where you can do business or interact with employees in person.

What are the benefits of online banks?

Online banks don’t spend money on physical branches, which are costly to staff and maintain. It allows them to charge lower or no fees, and pay better interest rates on their accounts. The rates can be significantly higher than those offered by regular banks.

In addition, many people like the convenience online banks offer. You can access your accounts and bank services on your computer or mobile device virtually any place, any time. Online banks often provide better online experiences and apps than traditional banks.

Are online banks safe?

If your online bank is insured by the Federal Deposit Insurance Corporation., your deposits are protected by the government in the same way they are if you do business with a traditional brick-and-mortar institution.

Beyond this, research a bank’s security policies before you sign up for an account. Check that security measures like encryption are in place to ensure your personal information is kept safe. Make sure your online bank offers fraud monitoring, so account breaches are identified immediately.

Tip: Use good security practices to avoid scams and hacks. Avoid public Wi-Fi networks, look out for suspicious emails or text messages and regularly update your anti-virus software.

Can I use ATMs?

Most online banks are part of an ATM network. Networks like Allpoint or MoneyPass have thousands of fee-free ATMs located across the United States. You can find nearby ATMs online.

What if I need help?

Most online banks offer support over the phone or via online chat. However, there is no in-person assistance available. If you’re someone who prefers to talk to a teller and banker in person, an online bank is probably not right for you.

What products and services do online banks offer?

Most online banks streamline their product and service offerings to keep operating budgets low. If you need a specialized type of account, you may be better off working with a traditional bank.

How do I deposit cash?

There are three ways you can deposit cash into your accounts.

  1. Use a networked ATM affiliated with your online bank.
  2. Put the cash into a traditional bank account, then transfer it into your online account.
  3. Use the cash to purchase a money order, then deposit it using your online bank’s mobile app.            

Can I have accounts with more than one bank?

Many people who do business with online banks also have relationships with traditional banks. This allows them to take advantage of the low fees and higher interest rates paid by online banks and the in-person service provided by traditional ones.

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