If you are considering opening a new bank account, you may be wondering whether a traditional, brick-and-mortar bank or an online bank would make a better choice. Here’s a breakdown of the pros and cons of both types of banks.
One of the top advantages of opening an account in an online bank is that you’ll likely get a higher interest rate for your deposits. While traditional banks offer rates between 0.10% and 0.50%, online banks can offer rates up to 1% (some even interest rates around 2%). While this may not seem like much, the interest can add up over time, especially if you keep a lot of money in your account.
Online banks also don’t charge a lot of fees, unlike traditional banks, since their operating costs are a lot lower. These savings are typically passed on to customers like you. With a traditional bank, however, you’ll need to be prepared to pay some extra fees to maintain your account.
One of the best perks that online banks offer is 24/7 service, which means you can access your account and perform banking activities from anywhere, and at any time. Also, if you need customer support, most online banks also offer 24//7 support to customers.
With a traditional bank, you can always drive up to the nearest branch to deposit check. This is a great option to have if you aren’t very tech-savvy. In comparison, online banks will require you to either make an eDeposit or mail in your check. While it is simple enough to do, it may not be something that everyone is comfortable with.
Traditional banking helps you develop a personal relationship with your banker. This can be extremely useful since you may be able to stay in the loop about any new products or services that the bank may be launching. With online banking, however, you don’t get to interact in-person with a banker. So, if you prefer to deal with someone who knows your financial history and can give you personalized advice, a traditional bank may be a better choice.
Weigh out these pros and cons of both traditional and online banks, and pick a bank that seems right for your lifestyle and requirements.