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Is It Time to Switch Your Checking to an Online Bank?

Written by: Kristy Welsh

Last Updated: September 11, 2017

Just because your traditional bank offers online banking services doesn’t mean you’re reaping the benefits of a bank that operates exclusively online. But are you really ready to say goodbye to the tradition of brick-and-mortar banking?  Since online banks do not have the overhead associated with running brick-and-mortar locations, they can afford to pass on the savings to customers.

Where Online Banks Save You Money

Fewer/Lower Fees.  While you may still expect certain fee-free requirements, overall they are easier to avoid. For instance, the monthly minimum balance required for fee-free checking through an online bank is typically lower than that of a traditional bank. Also, most online banks have arrangements with ATM networks that enable them to waive or reimburse you for ATM withdrawals.

Higher Interest Rates.  While traditional banks offer interest-bearing checking accounts, you should expect the interest rate to be considerably higher through an online bank.

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Where Online and Traditional Banks Break Even

Just like your traditional bank, its online counterpart should be FDIC insured, meaning you are protected for up to $250,000. (Note, never do business with any bank – online or off – that is not FDIC insured.)

Where Online Banks Cannot Compete

If you love the physical aspect of the banking experience, you may have a hard time saying goodbye to your traditional bank. While an online bank representative may be just a phone call away, it’s not the same as being able to exchange a smile or look the teller in the eye. And there is something comforting about being able to walk into “your bank,” especially if it’s one of the big ones with locations you can visit pretty much anywhere in the country.

Tips for Choosing an Online Bank

Still not sure? Take it slow. Hold on to your traditional bank account while you give an online bank a go.

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