Personal Finance

How to Choose an Online Bank

The world is going digital. Or, rather, the world has gone digital; you can do virtually anything from grocery shopping to finding a life partner on the Internet these days. As such, it’s no surprise that banking has gone virtual as well.  Your traditional banks all offer “online checking” now, and there are even some banks that operate entirely over the Internet.  With the oftentimes dizzying array of options open to consumers nowadays, what are some basic things a shopper should look for when deciding to bank over the Internet?

We’ve compiled a few must-have pointers that every online bank should offer you if you choose to sign up.  Read on, and be informed.

  • FDIC Insured.  Never, never, never, and we mean never give your money to a bank that isn’t recognized by the Federal Deposit Insurance Corporation.  Be sure to check by running a search on the FDIC Bank Find tool.  Note that the majority of international banks won’t be FDIC insured – it’s an American corporation, after all.
  • Physical locations.  It’s generally better to have a bank that also operates as a physical institution in addition to virtual.  Just because a bank has an actual location doesn’t necessarily make it better or safer; but it is more convenient if you have problems to go and interface with a teller.
  • Reviews? Try Bankrates Safe & Sound Ratings for a good review of any online bank you’re thinking of depositing your money in.  Many banks offer a variety of options when it comes to interest rates, benefits, and bells and whistles that they attach to their accounts; be sure to shop around and read reviews before you choose.  This way you’ll be armed with knowledge about the different banks and be able to make an informed decision regarding which one is right for you.
  • Fees? Minimums?  The majority of online banks demand no fees and require no minimum balances.  This is the optimal choice for obvious reasons, so make sure that you read the fine print and are totally aware of what the bank does or does not require of its clients.  In general, it’s best to go with the freebee banks unless you have a seriously compelling reason to bank with an institution that you have to pay for.
  • Give it a whirl.  Since most banks offer free checking or savings accounts online, there’s no harm in opening a few accounts with 20 dollars as a balance and playing around with it.  You might like the interface of one bank as opposed to another; one might offer better customer service.  All of the reviews and research in the world can’t compare with knowing directly how much you like a bank’s service.  And if it’s free to try – why not?  Just make sure that it is FDIC insured first, and you’re good to go!

Online banking can be an exciting, convenient adventure that might even be able to net you a pretty profit in interest rates if done correctly.  Happy banking!