Originally posted on 21stFinance.com
The age of technology is upon us. In today’s society, there are a multitude of ways that you can manage your money. Within this technology spectrum, there are various online methods that people use to manage their money. Today we are going to go more in depth as to why storing your money in an online checking account may just be the smartest thing you ever do.
The old adage goes that storing your money in a standard checking account is a great way to keep your funds secure, and to ensure that you have money available in case of an emergency. This old advice couldn’t be more wrong and there are various reasons why online checking accounts are the future of banking.
This is the biggest and most obvious selling point when it comes to online checking accounts. The average interest rate in a traditional checking account is averaged at 0.04%. The fact that online only banks don’t have to account for the costs associated with brick-and-mortar locations allows them to have significantly higher interest rates. The average rate that someone can get through an online only bank is around 1.00%. You are literally earning 25 times more interest by storing your money through an online account.
Many of those against online checking accounts believe that there are many more security risks associated. While it is very important to keep your passwords and personal information safe, online banks provide a multitude of opportunities for security. Like any normal bank, online banks are insured through the FDIC, protecting the average person against theft and debit card fraud. Online banks are also improving their authentication methods, ensuring customers have more than one method of proving it is their account. While an online bank may not have any physical location, larger online banks, such as Ally, provide around the clock customer support.
One thing to consider when choosing a checking account is the availability of ATM’s and fees associated. The nice thing about larger online banks is that they incentivize customers by covering their ATM fees per a certain period, and that they also partner with many ATM services to provide zero fees! If you compare this service to smaller, local banks, you will be surprised the larger outreach that they provide. If you are planning on using a national bank (Wells Fargo, US Bank, etc) then you will have a higher availability to ATM’s than online banks. Like stated previously, online only banks combat this with special offers to their customers.
These are just a few of the reasons why online only banks can provide you great value. By far and away the biggest selling point to online banks is their exceptionally higher interest fees. When it comes to choosing a trusted and secure online only bank, there are many options out there for everyone. Many accounts have differing account minimums, basic fees, and interest rates that are based upon many factors.
Just remember, before you consider using a traditional brick-and-mortar bank, check out many of the great online banks that can earn you more money for doing nothing!
Top Online Banks
#3: TIAA BAnk