10 Reasons You Should Consider a Switch to Online Banking

A woman looks at her bank's business hours and promptly contemplates switching to online banking

Online banking saves you time and energy | Tim Boyle/Getty Images

Trust in the banking system is eroding. Banks that have been around for generations are becoming embroiled in scandal after scandal, and customers are justifiably concerned. Wells Fargo, for example, was recently caught opening up fake accounts for customers in order to extract more fees from them. That seems relatively tame considering what HBSC has been up to in recent years. That bank was actually caught laundering money for drug cartels.

Needless to say, if you’re skeptical about the big banks, nobody would blame you.

As a result, a new crop of banks and financial institutions are popping up — many of which have no physical locations. They’re online banks. These banks exist entirely online and use modern technology and the ubiquity of smartphones and computers to facilitate transactions.

So, if you’re looking to move your money, this might be a viable option. You can get even with big banks, as some people have. Or, you can take your business somewhere else — like to the internet.

Of course, there are advantages and drawbacks to using an online bank. But the pros are starting to outweigh the cons in many respects. If you’re interested, you can start looking at which online banks are winning the most people over. Ally Bank is popular, for example. Or, if you want a more familiar name, you can move your money to State Farm Bank, or Discover Bank.

If you need further convincing, here are 10 reasons you should consider making the switch.

1. No lines

Pedestrians walk past an embossed bank sign

Online banking means never waiting in line again | Afabrice Cofrini/AFP/Getty Images

The most obvious difference between physical and online banking? The distinct lack of the physical. No more brick and mortar locations. And that means no more waiting in line to speak to a teller. Some people might miss this aspect, but if you’re spending a lot of time waiting in line and traveling to the bank, you’ll win some of your time back.

2. You can stick it to the big banks

A woman walks past a Wells Fargo branch

You’ll feel satisfied knowing you’re not supporting the big banks | Frederic J. Brown/AFP/Getty Images

With all of the controversies surrounding the big banks, removing yourself from their customer ranks can be satisfying. Companies like Chase, Bank of America, and most recently Wells Fargo have been sticking it to their customers for years, and by opting to go with an online bank, you can ensure you’re not supporting them.

3. No fees

Frank Reynolds from "Always Sunny" ignites his money -- similar to paying bank fees

Frank Reynolds from It’s Always Sunny in Philadelphia ignites his money — similar to paying bank fees | FX

This doesn’t apply to all online banks, but there are several that don’t charge fees for certain services. Traditional banks make billions off of fees, whether it’s for having a debit card, transferring money between accounts, or overdrafts. Several online banks don’t charge these fees and can save you some serious money in the long run.

4. No business hours

A man walks to a Citibank branch

You can do your banking at any time when it’s online | Jewel Samad/AFP/Getty Images

Since an online bank doesn’t have a physical location, it can’t be closed when you need it. Most transactions can be done instantaneously (though there are some waiting periods involved). But you don’t need to scramble to get to the bank between nine and five.

5. Intuitive app designs

Girl wrapped in a blanket sitting managing her finances through an online banking app

Banking apps should be easy to navigate | iStock.com/Kladyk

Traditional banks have apps, but they often leave a lot to be desired. Online banks are native to the internet. And because of that, their apps and interfaces are designed to attract and keep customers instead of merely serving as an extension of their current service. Customers no longer have to simply put up with bad banking apps.

6. Up-to-the-minute balance details

Businessman presenting financial analysis with charts

Online banks are quick to update your balance | iStock.com/NicoElNino

No need to balance a checkbook. Your current financial picture is crystal clear with up-to-the-minute balance details. Online services are working in real time, and you can get a better idea of how much money you have (or don’t have) using the cloud.

7. Better rates

Pedestrians pass by a sign advertising low refinance rates at a US Bank office

Online banks can help you save money | Justin Sullivan/Getty Images

Perhaps the most attractive thing about online banks is that they have high interest rates for savings accounts. And if you’re looking to borrow, you can generally get a good rate as well.

8. Instant alerts

A woman checks her phone for alerts

Get instant alerts on your banking info when you use an online bank | iStock.com/LewisTsePuiLung

One major concern about switching to an online-only bank? Fraud and security. But you should know that if your accounts are compromised, you’ll probably know about it faster than you would with a traditional bank. Instant fraud alerts are rather ubiquitous these days, and with up-to-the-minute balance details, you’ll be on top of any tomfoolery.

9. Automate bill paying

Couple setting up online payments

Online banking makes paying bills a breeze | iStock.com

Many banks offer automatic bill paying these days. Online banks, though, have naturally incorporated that service into their models rather than having to adopt it. Set it and forget it.

10. Sync with other accounts and apps

The Mint app for iPhone

You can sync with your other apps when you use an online bank | Intuit

If you like to use personal finance programs like Mint, LearnVest, or You Need A Budget, you’ll find online banking syncs well with your existing processes. Moving your money to an online bank probably won’t present much of an issue for you if you’re already doing most of your banking and budgeting online. It can actually make banking easier and more convenient.

Follow Sam on Twitter @Sliceofginger and Facebook

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