Technology has made it possible to access your bank account and your money almost anywhere in the world. Indeed, just about anything you can get from your local bank branch you can get from an online bank.
Sounds like a perfect deal in light of that, doesn’t it? Not so fast. While online banks offer a number of benefits, they have their drawbacks, too. If you’re trying to decide if you should open an online account, here’s a look at the pros and cons you’ll face with an online account.
Some Clarification to Begin With
Nowadays, it’s possible to access a variety of financial services from a number of online vendors. Some qualify as legitimate online banks, while others may be something like online title loans or payday loans. These institutions do have many advantages, including allowing you to borrow money when your other options seem to be dwindling.
In light of that, it’s important to consider what kind of online financial services you actually need. It’s a more permanent place to deposit and access your money. The account will often have what your full-service brick-and-mortar bank has, meaning you can open a checking and a savings account with that bank. Other options include getting a credit card, buying CDs, or even retirement accounts.
Keep these things in mind as you look at the pros and cons of online banking in the next sections.
Pros of Online Banking
According to Investopedia, the advantages of online banking are numerous. First and foremost, most people open online bank accounts because they’re so convenient. Online accounts allow you to access information about your bank all day and all night, every day of the week for the whole year. This proves to be especially helpful if you happen to be out of town and need to access your money via an ATM.
Online banks tend to have lower fees than their brick-and-mortar counterparts. That’s because these institutions have less overhead. Many pay better interest rates because of it, which is another advantage to online banking.
Additionally, the website interface for their online banks is typically more user-friendly. This is attributed to the fact that most client transactions are conducted online. The website needs to have an intuitive interface for this reason.
Cons of Online Banking
Although there are advantages to online banking offers, Nerd Wallet points out that there are also a number of disadvantages. For one thing, if you have an issue with your account, your access to an actual live person is limited at best.
This lack of relationship also poses a challenge if you need to apply for a loan. A personal relationship with your banker can make the process much easier. You don’t always have that relationship with your banker when you bank online.
Additionally, you may not have a very easy time depositing your money, especially if you deal with a lot of cash. If your bank only has an online presence, you may have to figure out the best ways to make deposits.
Finally, due to their online nature, these banks can become the victim of online scams and hackers. People who bank online need to make doubly sure that their bank has tight security measures in place to avoid online theft, including identity theft.
Online banking offers you plenty of benefits like convenience, lower interest rates, and a friendly user interface. However, for all its benefits, online banking has its own drawbacks. It’s more difficult to develop a relationship with an online banker than with your local banker. It can be more difficult to make deposits if you want to deposit cash. As well, security can be an issue for online banks. Ultimately, it’s up to you to decide which type of banking, or combination thereof, will work best for you.