An online-only bank has no physical brick-and-mortar structure. Its website or app is its most tangible presence. Online-only banks are similar to traditional banks in many ways. Online access to your account is offered by both. Both allow money transfers or perform other tasks using your computer or phone screen. Both are governed by the same laws and regulations. There is security in both since they employ measures like encryption to protect your fund and identity.
But they also have their differences. Online-only banks have lower costs and so they can offer better interest rates, and lower fees. Brick-and-mortar banks, on the other hand, has many options for deposits and other transactions including offering face-to-face service at your bank branch.
There are many benefits to internet banks and here are some of them.
There are higher interest rates provided for in online-only banks because of their lack of infrastructure and lower overhead costs. The interest rates they offer is higher than what you will earn at a traditional bank account. With a high percentage of interest, your balance will become higher when the interest adds up. Internet banks only offer savings accounts, but they offer high-yield savings accounts, certificates of deposits (CDs), and no-penalty CDs for early withdrawal.
Internet banks don’t charge a wide range of fees. Some fees charged by traditional banks which internet banks don’t charge include fees for keeping an account open with a low balance, a fee for making direct deposits, or paying by check or debit card. Since there is no minimum balance, then internet banks don’t charge any service fees.
Internet banks have an edge over traditional banks when it comes to online banking even though traditional banks are now improving their virtual presence and service which includes launching apps and upgrading websites. The advantage of internet banks over traditional banks when it comes to online banking experience is the quality of the banking experience and the speed and simplicity of transaction.
Internet accounts often cost you nothing so you can open as many accounts as you need. This is a good tool for personal finance. You can open a separate account for your future house, your car, your retirement, etc. And it is easy to automatically allocate a certain percentage for each account. You get more satisfied to split your savings account according to your financial goals so that you can easily see your progress. It gives you greater motivation to stick to your financial plans. In a traditional bank, you will have to pay each account fees, minimum balance, etc., so it can be quite costly to open separate accounts. You simply need to have one account for your savings and mentally tally how much is being allotted to each goal.
One of the biggest attractions of internet banks is the level of online accessibility. Their services are just above average.