Online Banking
Online Banking is a relatively new phenomenon for personal banking customers, although electronic access to bank services has been available to corporations and business banking customers for many years through a number of different service providers.
The accepted definition of Online Banking nowadays relates to accessing account details, information, making transactions and other normal banking facilities through the use of a home computer or other electronic device that is connected via a network to the bank.
There are a growing number of online banking services in the US. Online banks can be divided into two types: traditional banks which also offer online banking, and online-only banks.
Online Banking through Traditional Banks
Advantages
- It's easy to set up an account. Most banks will allow you to do this totally online, avoiding all paperwork.
- Many banks allow datae transfer between their program and popular accounting software packages, such as Intuit's Quicken or Microsoft Money, making record-keeping a cinch.
- Most accounts allow customers to perform all routine transactions, such as bill payments, balance inquiries, account transfers and stop-payment requests. Some will even let you apply for a credit card or loan online.
- Once bill payment information has been entered, it doesn't need to be re-entered for similar subsequent actions, and you can schedule future payments to occur automatically.
- You can access your account information anytime - day or night - and you can do it from anywhere. Some online banks update their information in real-time, while others do it daily.
- Online fees tend to be about the same as with a typical checking account; however, overall it works out cheaper as you don't have to pay for postage for bill payments, or the gas to drive to the branch. As online banking continues to gain in popularity, the fees should reduce, as the banks should be able to pass to their customers the money they'd otherwise be spending on tellers and real estate.
Disadvantages
- Some banks only offer online banking in a limited area.
- It can take some time get used to.
- When you pay bills online, you may have to put in a request as much as two weeks before your payment is due. However, the bank may take the money from your account the day the request is received, meaning you will have lost up to two weeks of interest on that payment.
Online-Only Banks
Online-only banks have all of the advantages and disadvantages described above, with the following additional considerations:
Advantages
- The costs are usually lower for online-only banks than for online banking with traditional banks, as the cost of running an online bank is much lower than maintaining physical bank branches.
Disadvantages
- Traditional banks tend to have more extensive ATM networks than online-only banks.
- By definition, online-only banks don't have branches, so there's no friendly face to help you if you have questions, and you will have to mail in any deposits. However, almost all will offer phone support.
- Some services are difficult or impossible for online-only banks to offer, such as cashier's checks and traveler's checks.