Is it better to bank online or in person?
Online banks are better than traditional banks when it comes to minimizing fees and securing the most competitive rates. These banks also tend to offer superior websites and mobile apps with more features. When it comes to finding a full range of financial services all in one place, traditional banks tend to win out.
The lack of overhead gives internet banks advantages over traditional banks, including fewer or lower fees and accounts with higher APYs. Internet banks lack personal relationships, no proprietary ATMs, and more limited services.
Online banks make the customer experience pretty seamless. It takes less time to open an account online than it does inside a branch. Online banks make it easy to transfer money into and out of your accounts — and many come with apps that allow you to do your banking on a mobile device, such as a smartphone.
- No physical branches when you need help.
- Challenging cash deposits.
- No access to foreign currency.
- More Account Fees. Traditional banking is normally associated with higher account fees. ...
- Open Accounts In-Branch. You may be required to provide documentation at your local branch to open your ﬁrst account at a physical bank.
- Lower interest rates.
Traditional banks tend to have more customer support options than their online counterparts. Most in-person banks offer some kind of 24/7 support, and they usually let you contact support through phone, email, and online chat.
- Customer service lacks personal touch.
- Not an option for those lacking access to the internet.
- ATM options may be limited.
- Greater due diligence required to vet the bank.
An online bank not only typically provides a better virtual experience, but you will likely also get fewer fees and higher rates on savings accounts. Of course, the downside is that you don't get that access to in-person customer service, which some people might prefer.
Putting your money in an online bank could earn you around 300 times more than you'd get from many brick-and-mortar banks. For instance, the savings accounts at online banks commonly pay an APY of 3 percent, whereas many large brick-and-mortar banks pay just 0.01 percent.
Online banks are safe and offer competitive interest rates with few fees. They're a great option for many people, but it ultimately depends on how you prefer to bank. Online bank features may especially benefit users who have low checking or high savings account balances.
What are 5 bad things about online banking?
- 1 Higher Chance of Scams. You have a significantly higher chance of being victim to a scam when you use your online banking system and account. ...
- 2 Deposits Can Take Days. ...
- 3 Hidden Fees. ...
- 4 Annual or Monthly Fees. ...
- 5 Identity Theft.
The biggest risk of online banking is that someone could access your account by getting their hands on your username and password, hacking your account, exposing you to a virus, or using your debit or credit card to make a purchase. These risks exist for online and traditional banks offering online banking services.
As of 2022, 78% of adults in the U.S. prefer to bank via a mobile app or website. Only 29% of Americans prefer to bank in person.
Withdrawing and Depositing Cash
According to the GOBankingRates survey, 40% of Americans go to a physical bank branch to cash or deposit checks. In addition, 38% bank in person when they need to make large cash deposits. Making these transactions in person can also add an extra layer of security.
One of the major downsides of traditional banking is the potential for fees. Traditional banks often charge various fees for services such as overdrafts, ATM withdrawals, and account maintenance. These fees can quickly add up and eat into your savings if you're not careful.
|Forbes Advisor Rating
|Best for Avoiding Fees
|Best for ATM Access
|Best for Savings Tools
|Best for Combined Checking and Savings
One of the most compelling advantages of online banking is the access to high-yield savings accounts. Unlike traditional brick-and-mortar banks, online banks have lower overhead costs, allowing them to offer higher interest rates on savings accounts.
Short answer: Yes. Online banks are some of the safest places to store your money. In many ways, they're similar to traditional brick-and-mortar banks. But it's important to follow standard web best practices when banking online.
The fintech firm Galileo found that 65 percent of consumers use traditional banks for their primary bank accounts, while JD Power reports that 27 percent primarily use online banks, as of 2022. However, of the 65 percent using traditional banks primarily, 77 percent said that they keep some of their funds elsewhere.
Unless it's a hybrid bank like Capital One, online banks don't have branches you can visit, so you won't be able to access in-person financial services. The range of account offerings may be limited. Most online banks offer fewer financial services than you'd find at a full-service traditional bank.
Why do people not use digital banking?
Drawbacks to Digital Banking
Digital banks risk data security breaches, violations of consumer privacy rights, and internet fraud. These risks are also present for traditional banks but are higher for digital banks due to their online-only platforms.
The Bottom Line
Trading your brick-and-mortar bank for an online checking account has pros and cons. The pros include higher yields, lower fees, and high-tech features that help with account maintenance and budgeting. The cons include more difficult access to customer service, as well as online security concerns.
|Forbes Advisor Rating
|Checking, Savings, CDs
|Bank of America
|Checking, Savings, CDs
|Wells Fargo Bank
|Savings, checking, money market accounts, CDs
|Checking, savings, CDs
Using a Mobile App for Online Banking
Essentially, both are secure from the source, but it's up to users to avoid making mistakes that can give thieves easier access.
Most banking apps offer a bevy of features meant to protect your sensitive information and identity that traditional banking websites might not. Some of these cybersecurity measures include: Encryption: Most mobile banking apps encrypt, aka disguise, sensitive data like login information and bank statements.