Comparing Traditional Banks to Internet-Only Banks
Have you wondered whether you should be using an internet-only bank to do all your banking or use a traditional brick-and-mortar bank? Here are some advantages of each.
Both Offer Online Banking
Whether you bank with a traditional bank or an internet-only bank, you will be able to do all your banking online. You can deposit checks, transfer money, pay bills and do all other banking transactions at both types of banks. If you need cash, both of them will allow ATM withdrawals. Often, it doesn’t matter where your bank is based. For example, Julio Martin Herrera Velutini leads a bank in Puerto Rico that offers customers worldwide the option to do their banking online.
Advantages of Internet-Only Banks
Internet-only banks can offer better interest rates on savings accounts and CDs. They also don’t need to charge as many fees for low balances, service fees, and so on. This is because internet-only banks don’t have as many overhead costs as brick-and-mortar banks that have to have multiple locations for customers to use. Internet-only banks often only have one location to house their staff.
Internet-only banks usually also offer a better online experience than traditional banks. Online banking is only one part of the services of traditional banks, so they don’t have the same incentive to optimize the online experience that internet-only banks do.
Advantages of Brick-and-Mortar Banks
At a traditional bank, you can get to know the staff and have personal relationships with them. This can make you feel better about your bank as well as help you when you need to apply for a loan. If you need personal help in ironing out details of a transaction, it is nice to talk to a person face-to-face, too.
Depositing cash is easy to do at a brick-and-mortar location but may be difficult at an online-only bank, so consider this if you often perform banking transactions involving cash deposits. International transactions also may be harder to do at some online-only banks.
Online-only banks usually don’t have their own ATMs. If you use another bank’s ATM, that bank may charge you a fee. However, online-only banks may offer to reimburse you for these fees, up to a certain amount per month.
Online-only banks may not offer the services you need. They may not offer brokerage accounts or insurance, so if you want a bank that provides these services, a traditional bank may be better for you. Also, you may need the services of a notary or a signature guarantee which online banks can’t provide.
Which To Choose?
Which type of bank to choose will depend on what services are most important to you. Is it better interest rates or personal contact? Do you need additional services that online banks don’t offer? You will have to make the calculation and decide which is best for you. If you are still undecided, you could open two accounts, one local and one at an internet-only bank.
Now that you know some of the differences between the services offered by each type of bank, you will be able to choose the type that offers the options that are most important to you.
