Choosing an online bank can be a little daunting at first, but like with anything it usually benefits you to do a little homework. Here are ten easy steps for helping you choose an online bank:
1. FDIC Insured – The number one thing you should is make sure the financial institution is FDIC insured in order to protect your money in case the bank fails. You can verify the online banks status by going to the FDIC website and verifying that it is compliant.
2. Bank Stability – The banks stability is another important factor to consider when choosing an online bank. Even if a bank is FDIC insured, you don’t want to have the hassle of dealing with the bank failing. it is important to find out how long the bank has been in business and their financial rating. If the bank is publicly traded its stock price and financial reports can be another determining factor.
3. ATM Networks and Fees – An important factor to consider is whether the online bank has a network of ATMs for its customers to use free of charge. If they don’t you will want to research whether or not the bank will reimburse customers for ATM withdrawals. These charge can range up to $5 per withdrawal so this is definitely a hidden fee customers should look out for.
4. Security – Security is important whenever you are doing your banking online. The bank should have strong standards for passwords and have backup authentication in case you ever lose access to your account or someone else tries to access it without your knowledge. You can setup alerts for whenever transactions are made over a certain limit or when someone logs on from outside your geographical region. A little preventative security could help protect you from identity fraud down the road.
5. Customer Service – Research what options you have when it comes to contacting a customer support agent with the online bank. Since you don’t have the option of walking into a local branch and talking to someone face to face, you want to make sure it is easy for you to reach a banking representative for any upcoming needs or concerns you may have. E-mail, phone, and live chat support with 24/7 support will ensure that you can reach your bank in case an emergency arises.
6. Checkbooks – One thing you may want to consider with online banks is whether you will need a physical checkbooks. Not all online banks offer free checkbooks, so if this is something that you will require it is important to review the online banks terms regarding this. If you make regular payments that require a physical checkbook, you probably want to choose an online bank that offers this service.
7. Check Deposits – If you get paid with a physical check you may want to double check how your online bank handles such deposits. A lot of online banks now offer you the ability for customers take a picture of a check with their smartphone or home scanner and send it to the bank to be deposited. This is much quicker than having to physically forward or mail your check to the online bank for deposit.
8. Interest Rates – Most online banks have relatively low overhead compared to brick and motor banks, because of this they usually offer higher interest rates on deposits. Compare online banks interest rates and terms such as minimum balances in order to obtain the higher rate.
9. Additional Services – Do you require online bill pay services? Do you need the ability to make person to person payments online? Is having the ability to access your account via mobile phone important? You want to make sure that any additional services you require are offered by the online bank and review any terms or fees that may go along with these additional services.
10. Other Products – Does the bank offer certificates of deposit? Do they offer money market or savings accounts? How about credit cards or lines of credit? Most online banks do not offer as wide an array of services as traditional banks as a way of keeping their overhead down, so you want to make sure if you require any of these additional banking related products that the online bank you choose offers them.