Should you open a digital bank account? – words Al Woods

The internet and digital technology have changed how we live our daily lives. It’s changed how we communicate, how we shop, and how we manage our money. If you’re like most people, you’ve made the switched to online and mobile banking, which enables you to manage your finances from a computer or mobile device.

Taking things one step further, today there are banks that solely operate online. Known as online-only banks or digital lenders, these financial institutions conduct all business using the internet.

Interested in the idea of using an online bank? Keep reading to learn more.

 

The Benefits

One of the biggest benefits of opening a digital banking account is low fees. Most online banks don’t charge a monthly account maintenance fee and other fees that traditional banks charge. This saves you money each month!

Another perk of having a digital bank account is the high-interest rates. Because online banks don’t have any overhead costs of maintaining brick and mortar branches, they’re able to save tons of money. These savings translate into higher interest rates for account holders, which means your money will grow, and grow more quickly!

Aside from high-yield interest accounts, online lenders also offer lower loan rates. Getting a home loan or a personal loan with a reasonable interest rate can save you hundreds, possibly thousands of dollars over the life of the loan.

As with online banking through a traditional bank, a digital bank account enables you to manage your money at any time from anywhere. Most online banks offer websites and mobile apps where you can transfer funds, check account balances, pay bills, and even deposit checks.

Choosing the Right Bank

If you want to enjoy the perks of having an online bank account, the first thing you’ll need to do is to figure out which digital bank is right for you. There are dozens to choose from, so take the time to research to figure out which one best meets your need.

First and foremost, choose an online bank that is FDIC insured. You want to know that your money is protected in the event that the bank goes under. All of today’s most popular online lenders are FDIC insured up to $250,000 though some banks are insured for a much higher amount.

Another factor to consider is your financial needs. For example, if you’re looking for an account where you can put money aside and watch it grow, you’ll want to shop around for the best high-yield savings account.

One option to consider is CIT Bank’s Saver Builder account. This account offers up to a 2.45% APY, which is more than 10 times the national average. With this account, you’ll only need to deposit $100 to get started. You can read recent CIT Bank reviews to see what current customers have to say about this account and others.

Other notable online banks include Ally Bank, Discover Bank, and E-Trade Bank.

The last factor to consider is the bank’s support model. Are representatives available 24/7 to provide assistant? Are there multiple communication channels that you can use to get in touch with a representative? Since you can’t talk to someone in person, you’ll want to know that all communication bases are covered and that you can still receive quality customer service.

Opening an Account

Opening a digital bank account is quick and easy. It just takes a few minutes, plus you’re able to save a trip to your local bank branch. This is a huge convenience as you don’t need to leave your home to apply for and open a new account. You can open an online bank account using your laptop, tablet, or even your mobile phone.

In order to open a digital bank account you’ll need to provide:

  • Social security number (or another identification number for non-citizens)
  • Account number and routing number (to make the initial deposit)
  • Government-issued I.D. (i.e. driver’s license)

Once you’re ready to open an account, you’ll want to decide which account type best meets your financial needs. Looking to set money aside? Choose a savings account. Want to grow your money? Look into a certificate of deposit (CD).

When your account application has been approved, you can make your initial account deposit. Be sure that you have the available funds to meet the required minimum balance!

Conclusion

The biggest drawback to having an online account is the difference in customer service. While you won’t be able to talk to a banker or representative face-to-face, phone, email, and chat support is typically more than enough! If you’re interested in opening a digital bank account, be sure to keep this information in mind so that you choose the best option for you.

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