10 reasons to switch to online banking
Say goodbye to physical banks
If you’ve stuck with your bank branch, maybe it’s time to throw it to the curb.
The number of online banks in the United States is increasing. And the number of consumers using branches has declined over time. According to a to study According to JD Power, 29% of retail banking customers have not visited a branch in the past 12 months, up from 22% in 2015.
As the line between online banks and their physical competitors begins to blur, digital financial institutions still offer unique advantages.
Here are 10 reasons why you should switch to online banking.
Online banking is convenient
The convenience offered by online banks makes them attractive to consumers. As long as you can connect to the Internet, you will be able to view your bank statements, pay your bills and transfer funds at your own pace.
Stopping by a branch to make a deposit or complete an application is something you can permanently remove from your to-do list. This is useful, especially if you are constantly on the move.
“Getting to a branch isn’t always the easiest thing to do on an otherwise busy day,” says Nicole Lorch, COO of First Internet Bank of Indiana and its parent company. “With the branch hours that are somewhat restrictive anyway, it works just as well for them to do their banking remotely. “
Compare rates now if you’re ready for a new checking or savings account. Before committing to online banking, check their website. Look for features like live chat that make it easy to connect with representatives when you have questions.
No need to change bank when you move
Once you’ve swapped out your physical account for one that’s primarily available online, you may never have to change banks again.
If your bank serves customers across the country, you can keep your accounts even if you leave town.
“You don’t have to worry about changing banks if you change jobs or move across the country or whatever,” says Damian Dunn, founder of NextGen Financial Life Planning, based in Auburn, Indiana. “Your money follows you everywhere. “
With a regional bank that only has local branches, keeping your account when you move might not be that easy.
“If you do business with smaller banks, like you know regional credit unions and so on, if you leave their network, it could create significant problems accessing your funds,” says Jeremy Walter, Founder. Financial Fident, a fee-based investment advisory firm in Lancaster, Pennsylvania.
Look for online banks that have tools that make it easy to find ATMs when you’re in different cities. This is an important step to take in addition to considering products like loans and money market accounts.
Savers can earn a higher return
Without the expense of operating a branch network, online banks save money. This gives many of them the opportunity to offer savers better interest rates.
“Overall, online banks are just able to pay a higher percentage on savings accounts than physical banks, simply because they have a lot less overhead,” says Walter. “They don’t pay leases or mortgages. So you see these savings rates are a bit higher than what I’ve seen from brick and mortar. “
Compare shop to access the most competitive rates on CDs and savings accounts. To be sure you’re getting a good deal, calculate the potential return on your investment.
“Some people move money around and don’t really do the math,” says Mark Wilson, president and founder of MILE wealth management in Irvine, California. “Is it worth going from the one who gives them $ 20 a year to the one who takes it to $ 30 a year?” “
You will avoid high fees
Some physical banks have accounts with high fees. And waiving these burdens is not always easy.
Switching to an online bank can eliminate this problem completely. Lower operating costs can translate into lower costs.
“I recommend that most of my clients – whether they’re millennials or even some older clients – go with a bank account that isn’t going to cost them a dime, that won’t have or low cost, “says Ben Brown, founder and CEO of the fee-based investment advisory firm Entelechy. “Usually it will be online banks. “
Before switching to online banking, read the terms and conditions to understand if there are any hidden fees or expectations associated with savings and checking accounts.
They are generally technologically advanced
Online banks tend to cater to digitally savvy customers who crave innovation.
“In terms of technology, trying new things and adding new services, an online bank will be able to do this much more efficiently and with much more success than a traditional bank,” says Timothy Michael, associate professor of finance at the University of Houston-Clear Lake.
Many traditional banks are strengthening their online and mobile product offerings. But online banks continue to make strides in providing advanced tools and services.
“Even as bricks and mortar adapt to newer technology, it’s not like online banking is standing still,” says Walter. “They are progressing more and more.
The reduction in overheads also gives online banks the opportunity to invest in cutting edge products. But don’t assume they’re all at the same technological level.
If you want a great digital experience, don’t open a checking or savings account online without first visiting bank websites and reviewing app reviews.
Online Banking Can Help You Reach Your Financial Goals
When you can access your accounts day and night, it’s often easier to set goals and track your progress toward them.
The ability to bank from anywhere is a plus. On the other hand, not being able to physically enter a branch could be a useful barrier for those with a bad habit of dipping into their savings.
“(If) you don’t want to have immediate access to that money, that’s just another little obstacle for you to get in and sabotage yourself,” Dunn says. “If it’s online, it’s a little harder to access that money. You can access it of course, but it’s another good way to set up a savings plan.
In addition to comparing the rates of CDs and money market accounts, consider experimenting with the tools and calculators offered by many online banks before breaking away from your traditional bank.
Online banking makes money management easier
Online banking makes it easy to manage money. You can perform some tasks transparently, like paying bills, when your accounts are mostly or all in one place.
If you’re in the process of choosing a bank to switch to, make sure it fits your lifestyle and individual needs. Ease of use is essential.
“I would look for the possibility – from this home page – of being able to not only view your account balances, but also pay an invoice, transfer money, send a person-to-person payment, without having to go to a special tab, ”says Mark Schwanhausser, director of digital banking at Javelin Strategy & Research.
If you need multiple savings accounts for various purposes, choose an online bank that allows you to open a series of accounts at a time that you can give different names to.
You can be more satisfied
Switching to direct banking – a bank without branches – might actually make you happier, new research from JD Power finds US Retail Bank Satisfaction Survey.
Using a 1,000-point scale, JD Power found that the overall satisfaction of direct bank customers (865 points) is higher than that of retail bank branch users (824 points) and retail bank users. non-branches of retail banks (797 points).
However, an online-only experience is not for everyone.
If you still enjoy meeting a cashier face to face, find a bank that offers this type of service with a branch nearby. Or find an advisor who can address some of your financial concerns.
You can still get great customer service
You can still benefit from quality service even if you choose a bank without a branch.
“It will be more critical for them – for a purely online bank – to have the best customer service known to mankind,” says Michael, associate professor of finance.
As digital financial institutions, they can easily collect data and make changes based on customer wishes.
“The moment someone visits our website to look at products and services to learn more about First Internet Bank, we’re able to take all of that data and actually use it to make our decisions,” Lorch, of the First Internet Bank of Indiana, says. “Because we are able to really follow the customer journey, we can use that information and reuse it to create a better experience. “
Take a look at the package that an online bank can offer you. Check out its high-yield savings rates, loan rates, and specifics.
Online banking is environmentally friendly
Are you trying to reduce your carbon footprint? This is another reason to switch to online banking.
Physical banks tend to use a lot of resources compared to online banks.
“Going all digital generally means a lot less paper,” says John Buran, President and CEO of Rinsing bank. Her bank’s new online division, BankPurely, plants a tree in New York State for every verified email sign-up and every new account it opens.
In addition to saving paper, online banks consume less energy overall.
“You save on lighting. You save on air conditioning, ”says John Stewart, chief of staff at Flushing Bank. “All those little costs that add up a lot when you’re trying to serve customers in a branch network. “
Going with an online bank to help protect the environment could be a good thing. Remember to look for a Federal Deposit Insurance Corp. member bank. You’ll want your deposits to be safe if your bank goes bankrupt.