I debated for several months before I finally “bit the bullet.” I opened an account with an online bank. Online banks have no brick-and-mortar branches.
It was interest rates that fi
nally convinced me to give an online bank a try. I wanted to earn interest on my cash savings. I wanted my money to be safe and liquid so I can access the funds quickly without penalties.
I had funds in a money market account at a mutual fund company earning a paltry 0.03% interest. Traditional banks’ rates on savings and money market accounts were not much better. Online banks, however, were offering up to 1.00% interest – not that great, but much better than 0.03%.
I had been resisting online banks. The concept of sending my money to somewhere in the cloud was frightening. How safe are online banks?
A couple of things helped me feel more secure about this switch. The online banks I considered are all FDIC insured. (All the literature I read stated that internet-only banks are as safe as their traditional brethren as long as they carry the FDIC seal.) I was able to call and speak to a representative at the bank I chose. I was connected to him within a minute and he was sitting in a building in the United States. While this does not guarantee security, it did make me feel better speaking to a US-based person. I also deposited a small amount just to dip my toe and test the waters.
What about someone breaking into my online account? I decided that this is no different from accessing my traditional bank online. I have to follow internet safety rules: keep my computer and internet banking sessions secure, keep passwords secure, check accounts regularly. I also set up text alerts so I am notified when any transaction over a certain dollar amount takes place.
I would not switch my everyday checking account to an internet bank, however. Transferring money between my brick-and-mortar bank account and my online bank takes a couple of days. If I need money faster, it is quicker to go to my my local branch. Perhaps more importantly, I believe that there is value in having a relationship with my local bankers. When they know their customers, they provide excellent service. But, for storing money that you don’t access regularly yet need to keep liquid, online banks are worth a look.
