Is an online checking account right for you?
You'll find more to online banking than savings accounts. Because you can transfer your money from a traditional bank to online savings quickly (and painlessly), and having your nest egg somewhere other than your primary bank can be the nudge some of us need to let it grow, online banks are becoming more and more popular.
It's also become more common for online banks to offer electronic checking accounts as well, and their benefits are worth considering when you're looking for the best way to manage your day-to-day finances.
Benefits of online checking
Think about how you use your checking account. It is likely a destination for your paycheck, which you often can have deposited directly by your employer. It can also be your source for paying bills since the use of online bill payment continues to grow.
The benefits of online checking accounts are showcased in these particular circumstances: when paper never has to enter or leave your hands, and when you rarely need to talk to a teller.
What about deposits?
Do you still get paper checks from a side job? What about that rebate check for your new TV? Things can get a little trickier in these cases, but online banks are working to make these efforts easier.
Mailing your check to the bank is one option, though you may not be willing to wait if you need to cash that check quickly. You also can transfer money electronically from a local bank. This process is quick and simple, though it involves maintaining a second account with that bank.
Some banks allow you to make a deposit with nothing more than a scanner or even your smart phone. USAA's Deposit@Mobile service lets customers deposit a check by snapping a picture of it with an Android phone or iPhone and sending the image wirelessly to the bank. Alternatively, you can make deposits using a scanner and PC at your home or office.
However, these benefits can come with strings attached. For example, USAA customers are required to have a USAA loan card or credit card, and must have, or be eligible for, property and casualty insurance from the company in order to take advantage of these benefits.
Better interest rates and free checks
Banks are sweetening the deal for online checking accounts by offering perks that are becoming rarer at your local brick-and-mortar institution:
- Better interest rates
- Free checks
- Free ATM use at both in- and out-of-network machines
- Free bill pay services
Not every online checking account comes with the same perks, so consider which are most important to you when you start your research. Many banks offer a "paperless" checking account: you pay all bills electronically, no checks are issued or accepted. EverBank offers a guaranteed competitive interest rate, but online bill pay incurs a fee if your average daily balance drops below a limit.
Interest rates on checking accounts also may be tied into maintaining a certain balance, something you may want to consider if your account serves only as a brief rest stop for your income.
Customer service in the age of Amazon
One oft-cited concern about online banking is the lack of customer service. Some may consider a friendly face at the teller window as a banking necessity. However, in the era of Amazon.com and Netflix, this visual can seem about as dated as George Bailey's neighbors politely making a run on the bank in "It's a Wonderful Life."
While you may want to hold someone accountable if you have a question or concern, online checking accounts usually come with greater access to customer service, with 24-hour responsiveness instead of traditional banking hours.
Big players in online banking
Many online savings account players offer checking options. Compare these:
- Ally Bank: Free checks and unlimited check writing, interest-bearing
- Capital One: Interest-bearing and also available with paper checks, if you prefer to have them
- USAA: Mobile phone app, refunds of any ATM fees, a partnership that allows deposits at neighborhood UPS Stores
- EverBank: Guaranteed competitive interest rates (with a minimum deposit), deposits by PC with a scanner
Although Internet banks are a perfect fit for savings accounts, you may find that these institutions are worth considering for checking accounts as they continue creating benefits to win your business. Keep them in mind when you choose the best checking accounts for your needs and your money.