The absence of a physical structure is what characterizes an internet bank. Its most tangible presence is its website or app. Online-only banks are similar to traditional banks in many ways. You can access your account online for both types of banks. With the use of your computer or mobile phone, both types of banks allow money transfers or perform other tasks. Both are subject to the same laws and regulations. They are both secure, employing measures like encryption to protect your funds and identity.
However, despite the similarities, there are important distinctions as well. Online-only banks have lower costs and so they can offer better interest rates, and lower fees. Brick-and-mortar banks, on the other hand, has many options for deposits and other transactions including offering face-to-face service at your bank branch.
Below are some of the benefits of internet banks.
There are higher interest rates provided for in online-only banks because of their lack of infrastructure and lower overhead costs. It offers a higher percentage of interest more than what you will earn at a traditional bank account. With a high percentage of interest, your balance will become higher when the interest adds up. High-yield savings accounts, certifications of deposits, and no -penalty CBs for early withdrawal are being offered by internet-banks.
Internet banks don’t charge a wide range of fees. Traditional banks charge fees for keeping an account open with a low balance, fee for making direct deposits, or paying by check or debit card which internet banks don’t charge. Since there is no minimum balance, then internet banks don’t charge any service fees.
Although traditional banks are now improving their virtual presence and service which includes launching apps and upgrading websites, internet banks have an edge when it comes to the online banking experience. The quality of their banking experience and the speed and simplicity of transactions have made internet banking have an edge over traditional banking.
Since it costs you nothing to open an account in an internet bank, you can open as many accounts as you need. This is a good tool for personal finance. You can open a separate account for your future house, your car, your retirement, etc. Allocating a certain percentage for each account is easy to do. It is more satisfying to be able to split your savings according to your financial goals and be able to easily mark the progress. You are encouraged to stick to your financial plan. For a traditional bank, it can be costly to set up different accounts since you will have to pay fees, minimum balances, etc., for each account. So you simply group your savings and tally mentally how much is being allotted to each goal.
Because it is very much accessible online, internet banks have become very attractive to client. They have above-average services compared to traditional banks.