I’m constantly amazed at the people who are still super scared of online banks.
They’ve been around for awhile now and as time goes on, more and more people are beginning to use them.
But I still find people every single day who are hesitant.
And contrary to what you might think, a lot of them are in their twenties!
For some reason, we’re still freaked out by using the internet to conduct business and deal with money.
Yet, just about all of us have ordered something off the internet before.
How is that different?
But I get it. I do.
It’s weird to think about someone scribbling a few numbers on a piece of paper, me signing the back of that paper, then taking a picture of it with my smartphone and all of a sudden money appears in my account.
I know. It’s weird.
But that’s the way it is.
And it’s time you stopped worrying so much about it and start embracing it.
Online Banks Provide Huge Benefits
The benefits of online banking are huge.
Just a couple weeks ago I released a post all about how awesome the Ally savings account is and how to open one.
If you haven’t read it, you should check it out here.
But today I want to talk about all of the reasons that online banks freak people out and answer some common questions.
So let’s dive in.
Q1: What If The Bank Went Out of Business?
The thing you need to remember is that online banks really aren’t any different than traditional banks. As long as you are using a reputable bank that is FDIC insured, you’re okay.
Traditional banks are insured by FDIC (Federal Deposit Insurance Corporation) up to $250,000. This just means that if your bank fails, the government will take over and you won’t lose any of your money up to a quarter million. And even after that amount you will still recoup a lot of it.
Plenty of online banks are FDIC insured. You can actually use this tool to find out. But if you’re still not sure, you can always use the chat feature on the bank’s website or just call customer service.
The bottom line is, as long as the bank is FDIC insured, you have nothing to worry about. It’s absolutely no different at all than any other traditional bank or credit union.
Q2: Will I Be Able To Access My Money?
This is a super common concern.
A lot of people are really worried about not being able to get money whenever they need it. There’s something warm and fuzzy about being able to walk into your local bank and deposit money or get some quick cash.
And a lot of people worry about not being able to do that.
But this concern is a complete misconception.
Most online banks have 2 features that make dealing with your money even easier than traditional banks.
- You can use an app to deposit checks anywhere at any time, just by taking a picture.
- You have access to even more ATMs than you could imagine.
In today’s world, you no longer need to sign a check and carry it to the bank. With most online banks you can actually just sign the check, take a picture of both sides and then upload it to the app. Then it deposits your money without you ever having to leave your own home.
But let’s get real, you probably can’t even remember the last time you got a check. So you’re probably not worried about that.
On the other hand, not being able to run to the bank to get cash is scary.
Luckily, many online banks like Discover and Ally are part of ATM networks that don’t charge you ANY fees. All you need to do is download their free app and it will show you all of the ATMs that won’t charge you a dime.
These networks are huge. Both Ally and Discover are part of the Allpoint ATM network which gives you access to over 43,000 ATMs all across the country.
And if that isn’t enough, a lot of these banks will actually reimburse you for fees every single month if you needed to use an ATM outside the network.
There is just simply no argument for not being able to access your money. Online banks actually give you more ways to access your money than traditional banks do.
Q3: What If I Want To Physically Talk To Someone?
This is probably mostly just a generational thing.
As time goes on, more and more people are embracing the internet and all of the fantastic convenience it brings.
However, there are still a lot of people that associate phone calls and online customer service with horrid call centers and accents they can’t understand.
And I get it. I really do. That’s what we’ve been trained to think about online support.
But the fact is, in 2016, that’s just simply not the case anymore.
Most online banks have 24/7 customer service and are super responsive.
Think about it.
If you’re running an online bank you’re not stuck hiring the people who live in your town. You can hire the best of the best regardless of where they live.
And that’s exactly what they do.
I have had many phone conversations and online chats with customer service reps from both Discover and Ally and I’ve had nothing but great experiences.
And they don’t pay me a dime to say that.
Honestly, online bank customer service is extremely hard to beat. I would rather call or instant message customer service from an online bank than deal with someone in person who only half-way knows what they’re talking about.
If you don’t believe me, just try it.
Go to an online bank website right now and use their live chat feature. Just start asking questions about their accounts and you’ll quickly see what I mean.
The game has changed, most of the time you’ll find that online banks provide quick, polite, and helpful customer service.
Even better than what you may get at your local bank.
Q4: Won’t My Information Be Easy To Steal Online?
This is another huge misconception and I’m about to rock your world.
Your information is already online.
It’s hard to understand. You don’t want to believe it.
But it’s the truth.
We’re living in a time where massive amounts of data is stored in computer systems and transferred back and forth via the internet constantly.
And this is happening regardless of whether you’re the one doing it or not.
Your information is already out there and banking online isn’t going to make any difference.
Odds are, you’re already accessing information about your traditional bank accounts using the internet.
In order to be competitive, my local credit union has even started allowing mobile deposit for checks just like an online bank.
We live in a world that is run by the internet. And your information is already out there.
Like I said earlier, just choose a bank that is FDIC insured, and then stop worrying about it.
Q5: But What About Depositing Cash?
Okay, you win.
That’s literally the one area that online banks fall short.
But let’s get real here, just how much do you actually need to deposit cash?
Most of the time you’re probably using debit and credit cards. If you’re like the majority of Americans, the amount of cash you use on a consistent basis is minimal.
But if you’re really worried about it and want to feel safe, just do what I do.
I use a local credit union for my checking account. All of my income goes to that account first.
Then I transfer money from my checking account at the local bank to my online bank savings account. This online account gets 1% interest (which is 100 times more than the local bank!)
This way if I ever do need to deposit cash I can always use my local credit union. This is the only reason I even keep this account open.
And everything else I just do online.
What You Can Do
Whenever you’re using the internet for your finances you should be careful. And even though online banks are safe, it still pays to do some common sense things.
I’ll list off a few to consider.
Here’s a few:
- Always use strong passwords that are difficult to guess
- Don’t use the same password for all of your different online accounts
- Don’t access your financial accounts from public wifi hotspots like coffee shops and restaurants
- Double check that a website is secure by looking for the “s” at the end of the http:// – Always look for https://
- Sign up for paperless billing – this helps cut down on the amount of paper floating around that contains your personal information
- Log in regularly just to make sure that funny charges are being made
There are lots of ways you can protect yourself and it’s important to understand that Online banks do everything possible to protect you as well. Keep in mind, that it’s in their best interest to protect you.
Overall, most people are scared of online banking for no good reasons. They either don’t understand them or have an irrational fear of the internet.
Don’t fall into that trap.
Online banks are here to stay and you better take advantage of them. They offer lower fees, higher interest rates, and more convenience than traditional banks.
What’s not to love?
Let me know what you think about online banks in the comments below.