In the last couple of years a steadily growing preference for online banking has been witnessed. An ever-growing segment of small business owners and indeed the general population now seldom has to visit local brick-and-mortar branches to do its banking.
Thanks to advances in technology, banking has become increasingly accessible. Tools like apps, direct deposit, online account management and ATMs have been instrumental in helping to make the banking experience more convenient, flexible, cheaper and less complicated.
Nevertheless, not all banks with online presences are worth doing business with. Again, there’s a lot more to think about than no-fee services and how high the annual percentage (APY) yield offered is.
What therefore should you consider when selecting an online bank?
Make no assumptions; be sure your bank of choice is legitimate. Genuine banks have secure websites and are insured by the FDIC.
2. Banking limits
You need to find out what the caps for withdrawals and deposits are and whether or not these will work for the types of amounts you routinely transact.
What, for example, is the mobile deposit cap at the bank you are considering? Will this figure suffice for the check amounts you regularly need to deposit? If not, you’ll probably be better off finding another bank.
3. Cutting-edge security
While losing money is quite impossible thanks to the backing that organizations like the FDIC provide for online banks, the real concern has to do with data compromises. You must therefore opt for a bank that has put effective measures in place to forestall the threat of personal information exposure and sharing.
Such an online bank’s website will typically be protected by multiple safeguards and firewalls, coupled with fraud alerts and intrusion-detection monitoring. You also want to find out the Secure Socket Protocol (SSL) you’ll be using to access your account. Industry standard 256-bit SSL encryption guarantees highly secure transmissions with regards to personal data and online transactions.
4. Account set-up
You probably assume that opening an online account is easy everywhere.
Many customers have in their reviews about online banks expressed how difficult it was to get going at their respective banks. Absurd requirements and copious documentation are the typical tell-tale signs of such banks.
In such a case simply find another bank where all that’s required is your personal information, and checking and routing numbers of an existent bank account.
5. ATM network
If you regularly need to withdraw cash make a point of choosing a bank that has a lot of ATMs in your vicinity, not too far off. It is also a good idea to scour the market for banks that refund all ATM fees monthly.
6. Fees and payments
Conventional banking is characterized by an assortment of payments including ATM, service, overdraft and monthly fees, and the amounts can be quite considerable. Online banks, on the other hand, generally tend to keep fees at a minimum for chargeable services.
A look at the fine print will let you know what you can expect to pay for monthly maintenance, low balance penalty, check writing, transfers to outside banks, customer service calls, etc.
7. Customer support
It is important to know to what lengths your online bank will go to make your banking experience convenient. Some of the pointers to check out for here include 24/7 telephone customer service, live chats, online bill payments, online calculators, real-time customizable account alerts, and a checking account product.
Find out what to expect at your bank from comments people have made on social media and from websites such as Consumerist. The FDIC website’s Bank Find feature will provide you with specific information about the bank you have in mind.
8. BauerFinancial ratings
You ideally want an online bank that has a rating of three and above on the Bauer scale. BauerFinancial has for 32 years independently analyzed US banks and credit unions performance. From these ratings you can make a comparison of how well or poorly a certain bank is performing in relation to the others.