An online bank is a financial services provider that is accessible through the internet. Online banks provide most, if not all, of the same services as a physical bank, and are an added convenience for customers because they can be accessed anywhere an internet connection is available.
How to Choose an Online Bank
Choosing an online bank can be a frustrating decision considering the number of choices available. If you are in the market for an online bank account, here are some things to pay attention to when making a decision.
Some online banks require a monthly fee to maintain the account. These fees are pretty standard and can range from as little as $5 a month to as much as $30 a month, but they can sometimes be waived if you setup direct deposit to your account. Online banks may waive the monthly maintenance fee if you maintain a minimum balance in your account.
One of the advantages of online banks is that they often do not require you to have a minimum balance in your account. Online banks with a physical presence may require a minimum balance to open an account as well as to keep the account open. This is primarily done to offset costs they incur for maintaining and servicing accounts.
When using an online bank, one of the most important things you should check is whether your account is FDIC insured. The FDIC, or Federal Deposit Insurance Corporation, is the US federal government’s way of ensuring your trust in the US banking system by insuring the money in your account. This means that if your bank were to go bankrupt for any reason, up to $250,000 of your money is insured by the federal government. Making sure your online bank account is FDIC insured is especially important in the current economy because a number of reputable banks have recently filed for bankruptcy.
With competition increasing amongst online banks, looking at the additional features a bank offers may offer a good way to decide upon which one to choose. Some additional account features offered by online banks include SMS text or email notifications, short-term loans, credit building programs, account rewards, prepaid mobile minutes, and other such features designed to bring convenience to your life.