Benefits of Online Banks

Online-only banks have multiplied in recent years, in part because of the high-yield savings accounts some offer. Online banks can offer higher returns to savers along with lower fees compared to traditional banks.

This combination can help you grow your money faster, while holding on to more interest you earn. But online banking is not the right option for everyone. If you are looking for a place to store your savings, take a look at the pros and cons of choosing an online bank over a traditional bank.

Benefits of online banking

High Yield Interest Rates

The main benefit of using an online-only bank is usually the interest rate. Interest rates on your savings accounts are almost always higher because your overhead costs are lower. There are no branches to maintain, cashiers to pay, branch managers, or cleaning staff. Without these additional expenses, banks can pass the savings on to customers in the form of higher interest rates.

When comparing APYs to high-yield savings accounts, make sure they are ranked based on account balance. Some online banks require you to keep a certain amount in your high yield savings account before higher rates appear.

Opening an account is quick and easy

Being completely online, everything you need to do can be done online at any time. If you want to open a new CD on Sunday night, you can. You don't have to wait for a branch to open, you don't have to drive to the branch, wait in line and fill out paperwork, or meet with a banker. You can carry out your banking transactions on your own terms.

Minimum fees

In addition to the higher fees, online banks also generate another benefit in the form of lower fees. Compared to a traditional savings account, which may have a monthly maintenance fee of $ 5 or $ 10, online banks may not charge monthly fees. No minimum balance requirements and low minimum deposits to open an account add to your appeal.

Although you may not pay any monthly fees, be aware of other fees that online banks may charge. For example, the bank may charge a fee for excessive savings withdrawals or wire transfers.

Superior online website interface

Online banks often have very sophisticated websites with many features and a very fast response time. They also have mobile apps that offer convenient and simplified account management on the go.

Many brick-and-mortar banks offering online capabilities often do so as an afterthought, although some big-name banks are revamping their online and mobile banking systems to keep up with online competitors.

 

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