Is Internet Banking the Best Choice for You?

While it's not the best choice for everyone, internet banking has some benefits that are tough to ignore.

Sep 1, 2014 at 11:00AM

With more of our everyday banking operations like depositing checks and paying bills going mobile, maybe it's time to ditch your brick-and-mortar bank for good and go with an Internet-based bank.

Before you do this, however, be aware that just like with most financial decisions, there are pros and cons to Internet banking. If the positives outweigh the negatives for your personal situation, maybe a switch wouldn't be a bad idea.

Positive: Your money can make more money
Banks that conduct most of their operations online don't have to worry about expenses like rent, office supply costs, and personnel to staff their branches.

As a result, Internet-based banks can offer some of the highest rates on deposit accounts, such as savings accounts and CDs.



Savings account interest rates in the United States are ridiculously low right now. In fact, the 0.01% interest you can expect from some of the big banks makes people question why they use savings account at all. But some Internet-based savings accounts pay closer to 1%.

For instance, Ally's online savings account pays 0.87% as of this writing. And some CDs pay even better rates, like a five-year CD from GE Capital Bank, which pays a 2.25% annual percentage yield. In contrast, Bank of America's best rate on a five-year CD is just 0.15%. Of course, these are just two examples, so do your homework first, but it simply makes sense to park your savings in an online account.

Negative: customer service concerns
If you truly enjoy some of the conveniences of traditional banks, this could be a big hurdle to overcome. No matter how advanced technology gets, some people (myself included) like being able to get in the car, drive to the bank, and talk to a real live person.

Call Center Pd

Source: Pixabay

As far as the customer service of online banks is concerned, some do have high ratings, but do your homework before opening an account. If I'm not getting anywhere with Wells Fargo's customer service call center, I always have the option of going to the bank. This isn't the case with online accounts, so make sure the bank you choose has a good reputation for customer service.

If you find out later that the customer service line is awful, there's really no alternative way of dealing with account issues. The site keeps a collection of reviews of the various banks, and is definitely worth a look before opening an online account.

What if you need cash?
Now, if you need to get cash out of your account, you may assume it would be more costly and inconvenient with an Internet-based bank. After all, when you go to an ATM your bank doesn't own, you generally get dinged with a fee. And most Internet banks don't exactly have a vast ATM network.

Atm Flickr Ota Photos

Flickr/ OTA photos

But a lot of Internet banks realize this and offer ATM fee reimbursement. This actually makes ATM banking more convenient than the big banks like Wells Fargo and Bank of America. Essentially, every ATM you see from these banks and others will be a part of your network and won't cost you a dime to use.

Some may make you wait until the end of the month before the fees are reimbursed, but it's still convenient knowing that you have free access to your money at whatever bank's ATM happens to be closest to you.

So, who could make the switch?
Basically, the best way to determine whether you could comfortably switch to Internet banking is to think of how many times you've set foot in an actual bank, or gone through the drive-thru, over the past year. And how many times have you experienced issues with your account that couldn't be solved with a call to customer service?

If the numbers are very low, chances are you won't have to change your banking routines too much to adapt to an Internet-based bank account. And you could actually end up saving money with the lack of ATM fees and the higher interest rates you can expect to receive.

Internet banking + Apple? This device makes it possible.
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its destined to change everything from banking to health care. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here

Matthew Frankel owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information