Would You Trust an Online-Only Bank?
Would You Trust an Online-Only Bank?
Here’s What You Should Know
By Jamie Cattanach Contributor DECEMBER 4, 2019
Choosing a bank account is a big deal. After all, you’re handing the institution what’s most likely the majority of your money for safekeeping. You want to make sure it’s actually safe.
You also need to be able to access that cash for all your day-to-day operations, like paying bills or coughing up for your share of the pizza.
Along with choosing from multiple financial institutions, banking in 2019 and beyond means making another important decision: Will you use of one of the many all-digital, online-only banking options, or will you keep it old school by opening an account at brick-and-mortar facility?
Are Online Banks Safe?
In a recent survey conducted by The Penny Hoarder, more than 50% of respondents said they wouldn’t consider using an online bank, and more than 19% were unsure about using one. Given how much of our lives are conducted online these days, we found that data point surprising.
But on the other hand, we do understand having reservations when it comes to money matters. Walking into a stately, brick-built bank can make it feel less scary to hand over your hard-earned cash.
So are online banks safe? The truth is there are a growing number of online-only banking alternatives that are, indeed, legitimate and safe. Online banks like Chime and Simple are FDIC-insured for deposits up to $250,000, just like Bank of America and Chase.
And thanks to the magic of technology, you can do pretty much everything you might need to with your money without ever needing to visit a teller in person: depositing checks on your mobile phone, pulling cash from a network ATM or transferring funds to a family member or friend. You can even write paper checks… if you really, really have to.
It’s true, however, that you won’t be able to walk into a bank and talk to a teller in person. What are the other important differences between these two methods of banking?
Brick-and-Mortar Banking: Pros and Cons
Since nearly 72% of our survey respondents said they’d visited a brick-and-mortar bank in the past year, we want to give this option its due. Here are the drawbacks and benefits of patronizing and old-school bank — the kind you can walk into to open your account.
Traditional Banking Pros
Larger banks may offer “one stop shopping” for your financial needs: They often make it easy to take out a mortgage, open a credit card, or apply for a personal loan with the same institution you bank through. (However, these products may come at higher fees than you’d find by shopping around for independent lenders.)
Some users simply find it easier to walk into a bank and ask for the service they need. This may be a better option for you if you don’t like figuring out how to get what you need through an online banking portal or app.
Depending on the bank you choose, you may be supporting a local (or local-ish) business, or at least a nationwide business that provides jobs in your area. Credit unions in particular are often community-focused institutions that participate in local events and provide friendly, face-to-face customer service to account holders.
Traditional Banking Cons
Again, depending on the bank you choose, you may only be able to access your bank locally. That can present problems for those who travel or eventually plan to move out of state.
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