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
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
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
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
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
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
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
8. Instant alerts
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
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
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.