Nowadays, you can do anything online. While some brick and mortar banks allow you to manage aspects of your account online, there are online-only banks that let you open online checking accounts. What’s the difference between these exclusively online banks and the traditional banking experience? Let’s take a look at online checking accounts.
What is an online checking account?
It’s easy to confuse a wholly online checking account with a traditional bank account that you can access online. You can access both of them on a computer or smartphone. You can also do basic functions like transfer money or order checks. If you can do the same things with a traditional checking account and an online-only checking account, what marks the difference?
In this context, an online checking account belongs to an exclusively online bank such as Ally Bank or iGoBanking. Unlike a traditional banking account, there are no physical branches that you can visit; everything is done online. There are pros and cons to banking online; after weighing the benefits and drawbacks of an online checking account, you may be interested in opening one.
Advantages of Online Checking Accounts
- Excellent customer service
To make up for the lack of physical bank branches, most online only banks will have great customer service lines. In addition to 24/7 call-in customer service (often with very little wait time), many online banks have representatives available via instant message. This is a good way to handle everyday inquiries.
- Intuitive Mobile Applications
More and more people are using their phones to manage their bank account. While many traditional banks lag behind in creating user-friendly mobile applications, online-only banks come with state of the art smartphone applications.
- More freebies, fewer fees
Many online banks will send you a replacement debit card for free. They may also allow you to order as many checkbooks as you like; compare that to the cost of buying a single checkbook from your traditional bank! If the free goods aren’t appealing enough, many online checking accounts come with decreased fees—that is, if they charge fees at all! Some will reimburse ATM fees or carry overdraft fees under $20.
Disadvantages of Online Checking Accounts
- Lack of a personal touch
Since there is no in-person correspondence, you lack the personal touch of knowing your own banker.
- Reliance on Mail
You can change your account details online or on the phone, but simply setting up your online checking account can take a week. If you encounter any issues with your account, such as a fraudulent charge, it can take up to two weeks to resolve the issue—and that’s just to get dispute paperwork! If you had a traditional bank account, you could walk into your local branch and resolve the issue within the hour.
- Not Cash Friendly
Wondering what to do with the cash gift you received? Did you friend pay you back for something in cash? Unfortunately, online banks won’t allow you to deposit cash. There’s no physical branch for you to deposit the money, and you aren’t allowed to mail money.