Internet banks, sometimes referred to as online banks, offer consumers a way to manage their money without ever having to visit a physical bank location.
There are two distinct types of online banking.
- Account through a brick-and-mortar bank that has an online program so he or she can conduct bank business online, from a web page or smartphone app.
- Account with a virtual bank that has no actual physical banking centers.
Both types of accounts are set up the same way and offer the same kinds of convenience features. You may find that a virtual bank is able to offer better incentives than a brick-and-mortar institution.
Setting Up An Online Account
Those who have a checking and/or savings account with a traditional bank are now able to make deposits, transfer funds, make payments, and view available balances online. Nearly all banks have an online web page that allows the account holder to enroll simply by setting up a username and password. Verification requirements include entering the account number and answering some security questions.
Once this is accomplished, the user can log in at any time and review all pertinent account information. Monthly payments that were once made by mailing a check can now be paid online. These include mortgage payments, credit card payments, utility payments, and so forth. Each type of payment setup will require the account holder to enter specific data regarding the electronic address of the party to whom the payment is to be sent. Customers can print out bank statements directly from their home computer. Most transactions can be made from a cell phone as well by using the special apps that these institutions make available.
Virtual banks offer some very substantial discounts when it comes to monthly fees. Because there are no physical bank locations and therefore very few bank employees, the financial institution has lower monthly expenditures of its own. Some traditional banks require very large savings account balances in order for the customer to enjoy free monthly checking. This is not always the case with a virtual bank. Interest rates on linked savings accounts tend to be higher for virtual banks that do not have physical locations.
Safety And Security
Online banking is very safe in terms of secure information transfer. The data is heavily encrypted before it reaches the bank's serving system. The one danger of online banking is the possibility of being drawn in by phishing attempts. Unscrupulous parties often pose as a genuine bank entity and send fraudulent emails to the account holder. So long as these are not responded to, no sensitive information can be gathered by these crooks.
Internet banks offer the same level of account insurance as a traditional brick-and-mortar institution. So long as the bank is backed by the FDIC, account holders are covered for losses up to $250,000. Internet banks generally offer excellent rates for utilizing third-party ATMs. However, before setting up an account with a virtual bank, it is a good idea to find out which ATMs can be used for rapid cash withdrawals. Some Internet banks may not allow transactions from most of the ATMs located in the customer's immediate vicinity.