Online Only Banks: The Perks of Going Virtual

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Posted on 11/06/2013

When was the last time you walked into the branch of a bank? Or even talked to a teller at the drive-thru? People are becoming more and more comfortable with virtual banking. Research firm Novantas reports that online-only banks saw deposits increase to $364 billion in 2012, up 32 percent from 2010. That's an increase of more than 400 percent from 2004. Wondering if you should go virtual with your money? Here are some perks of online-only banking.


Higher Savings Yields
Online-only banks can offer savers higher yields. Online banks don't have the infrastructure of physical branches and they're not paying staff members to work there. Since web-based banks have lower expenses they often pass that on to customers in the form of higher interest rate returns, often five times that of typical banks.

Universal ATM Use
Many online-only banks offer universal ATM use without fees. Whereas a more typical bank may require customers to use their specified ATMs, online-only banks have a broader network. For example, with Simple, a web-based bank, customers can use 55,000 ATMs nationwide completely free of charge.

Lower Monthly and Overdraft Fees
According to a survey from money-rates.com, the average monthly service fee at a traditional bank is now $12.43, and the average overdraft fee costs $31.60. Compare that to online banks and you'll see a significant savings. Online banks charge an average of $9.49 for monthly service fees and $25.50 for overdrafts.

Free Checking
Free checking accounts are getting harder to find, but they're still available. In fact several web-based banks are offering them to customers. Of the online banks surveyed by money-rates.com, nearly 79 percent had no monthly fees. Only 28 percent of brick-and-mortar banks offered free checking accounts.

Convenience
Perhaps the biggest perk of going with an online-only bank is the convenience. Online bill pay is a free service when you bank online and if you ever relocate you won't have to go to the hassle of changing banks. Of course online only banks aren't for everybody so do your research and decide whether going virtual is right for you.

By Alison Storm

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