Saving money via online banks? Seven key facts you need to know

Are you looking for a way to save money but don’t know where to start? Find out why online banks may be the answer, and some key facts you need to know.

With the rise of digital banking, more people are turning to online banks for their savings needs. But before you jump on board, there are some key facts about online banking that you need to understand to make sure your money is safe and secure. 

So let’s explore some important things you should know about saving with online banks so that you can make an informed decision when it comes time to choose a savings account – fees, interest rates, FDIC insurance coverage, customer service options, and more. 

1) Savings accounts

Online banks offer a variety of savings accounts, from high-yield savings to money market accounts and certificates of deposit (CDs). Depending on your financial goals and needs, you can find an account that works for you.

Many high-yield savings accounts are offered through online banks and they also offer competitive interest rates. This is especially important for those looking for a place to store large sums of money.

When creating a savings account with an online bank, make sure to read the fine print so you understand all of the fees and minimum balance requirements. And while you may be drawn in by high-yield savings accounts, it’s important to remember that you should still have access to your money in case of an emergency.

2) FDIC insurance coverage

One of the biggest advantages of online banks is that they are FDIC insured. This means that your deposits are protected up to $250,000 per account in the event of a bank failure. It is also important to note that if you have multiple types of accounts with one online bank, each account will be covered separately and up to $250,000 for each type.

So for example, if you have two savings accounts and a checking account at one online bank, each would be insured up to $250,000 under the FDIC insurance program. FDIC also includes a dispute resolution process which is helpful if any discrepancies arise.

3) Low fees and transaction costs

Online banks typically have few or no fees associated with their accounts, so you can save money on monthly maintenance fees and other transaction costs. Some online banks may charge a fee for certain services such as ATM withdrawals, but the fees are usually much lower than those of traditional banks.

Additionally, many online banks do not charge overdraft fees or foreign transaction fees, which can significantly reduce your overall banking costs. This will help you save money in the long run and put more money into your pocket. 

4) Online security

When it comes to online security, online banks use the same encryption technology as traditional brick-and-mortar financial institutions to protect customers’ personal information from hackers and cyber thieves. These digital security measures help keep your data safe from unauthorized access and ensure that all transactions are secure.

For example, banks use encryption technology to scramble the data exchanged between computers, so any information that you send or receive cannot be read by anyone other than the account holder. 

Additionally, many banks employ two-factor authentication and other extra layers of security to help protect their customers’ accounts even further. Online banking is also continually monitored for suspicious activity and flagged transactions are immediately brought to the customer’s attention. 

5) Mobile banking

Mobile banking is becoming increasingly popular with online banks, and many offer mobile apps or web-based services that allow customers to manage their accounts from anywhere with an internet connection.

These apps include features like check deposits, transfers, bill pay, and money management tools so that you can easily keep track of your finances on the go. Additionally, most online banks also have customer service teams available via phone, email, or chat should you need assistance managing your account. 

Apps are usually free to download and they make it easy to keep up with your finances while you’re away from home. And a great thing is that you can also scan IPS codes when paying bills.

6) Interest rates

When it comes to savings accounts, online banks tend to offer higher interest rates than traditional financial institutions because they have fewer overhead costs and do not have to maintain a physical branch network.

The exact interest rate will depend on the type of account and the specific online bank, but it can be a great way to maximize your savings. It is important to note that interest rates are not guaranteed and may change over time. 

In addition, some online banks offer promotional rates that are only available for a limited time. While these promotional rates can be a great way to get started, it is important to find an account with a stable and competitive interest rate in the long run. 

7) Customer service options

When it comes to customer service, online banks often have a variety of options available, including phone support, email support, and even live chat support during normal business hours. If you need help with an account or have questions about fees and other details, most online banks will be able to assist quickly and efficiently.

Additionally, many banks also offer self-help resources like FAQs and tutorials on their website so you can find answers to common questions and learn how to use their products more effectively. 

It’s important to check the customer service options available from any online bank you are considering before you open an account, as some banks may have better or more convenient customer service than others. Furthermore, if you prefer a more personalized banking experience, it’s worth looking into banks that offer face-to-face meetings with bankers in local branches. 

Online banking can be a convenient and cost-effective way to manage your finances. With features like higher interest rates, mobile apps, and 24/7 customer service options, online banks make it easier than ever to stay on top of your finances wherever you are. However, it is important to research the fees and services offered by different banks before you decide on one to make sure it is the right choice for you.