Internet banking is no different than banking with the traditional brick and mortar banks. The only difference is with online banking you do not have access to any physical location. This does not mean your access to the money is limited. The money is available 24/7 and whenever you need it.
Nowadays more than 90% of our transactions occur online, therefore the online banks are no different than brick and mortar banks in any shape or form. In this post, I would like to discuss why I started using online banks in conjunction to traditional banks.
No monthly fees or minimum balance
The traditional banks have a minimum balance requirement of $500 to $1500 that you must maintain in your account to avoid fees. Banks charge you a monthly maintenance fee if the minimum balance is not maintained in your account. They usually have a process to avoid the maintenance fee either by setting up a monthly direct deposit of $500 or more, using debit card at least 10 times a month or maintaining the minimum balance.
This is funny (and rather absurd) to get charged for your deposit instead of getting an interest. This is one big reason why I started using online banks.
The online banks usually do not have any monthly fees and you can literally open an account with zero dollar. This is exactly how banks supposed to work. The interest rates on internet banks are better than the traditional banks but the rate is still low therefore, that’s not my focus.
You can rename your account
It may not be the most exciting feature, but it’ll have impact on your saving money mentality to some extent. You can rename your online banks to the name of your liking like – sinking fund, Home down payment or Kids college fund.
I opened an online bank account and renamed it as Home Improvement when I decided to ditch my Home warranty. You can read here why I think Home Warranties are not worth your money and I didn’t renew it.
Renaming your account also helps to keep your multiple sources of income separate and manageable.
Open as many accounts as you want
This also supports my requirement of keep all the money that comes in separate. We have an Amazon seller account, an Esty account and eBay seller account where we seller products. It makes sense for us to have separate accounts for each marketplace, so that we can just go to individual account and see how money we made each month.
The online bank accounts can handle all the online transactions the same way if not better than traditional brick and mortar banks. Another good thing about online bank and if you signed up multiple account with the same company is that you only have one log in credential to maintain. This single log in credential will take you to all of your accounts within the same provider. Therefore, you do not have to remember all the log in credentials for each account.
If you’re thinking about opening an online banks or internet banks, I’m sure you’ll have doubts. No being able to go to a physical location and talk to a banker might scare you but internet banks are no different than the brick and mortar banks. You can always have your saving account with traditional banks and start using online banks as your checking account. Below, I’ll list answers to some of the questions related to online/internet bank accounts
Can I open a bank account online with no deposit?
The answer is yes if you are opening an account with internet banks. There is no minimum deposit required and no monthly maintenance fee on these accounts. You can not do this with the brick and mortar banks.
Are internet banks safe?
Yes, the internet banks are legit and safe. In fact, most online banks are FDIC-insured by the Federal Insurance Corps. It covers up to $250,000 per account for each customer.
What are the list of good online banks?
I do not want to list out all the online banks out there. This is not possible and I do not recommend all of them either. The following are some of the online banks that I trust which do not have any account minimum balance requirement or monthly maintenance fee.
These online banks gives fairly higher interest rates than the traditional brick and mortar banks. Anyone can go to their website and signup for an online bank account and get setup in couple of minutes:
- Ally bank
- Capital one
- Discover bank
- Charles scwab
Do you have internet bank account? If you do not believe in internet banks, please let me know in the comments what has been keeping you from signing up for an online account now?