Photo (cc) by 401(K) 2013
Is there any reason not to use a bank that operates solely online now?
A few: It can be hard to withdraw large sums of cash because of ATM daily limits, for instance. You may also lose out on other bank services, like notarizing documents. And when you’re confused about something, it’s nice to deal with someone face-to-face. (We should also note that some brick-and-mortar banks are providing ATMs that have teller service over video).
But the advantages might outweigh those considerations for some. Without brick-and-mortar locations to maintain, online banks have lower overhead costs, which can mean higher interest rates and fewer fees. But a reader asked CNNMoney: Can you trust them?
The answer is often yes. Here’s what to look for, CNNMoney says:
- FDIC insurance. Like traditional banks, reliable online banks will have Federal Deposit Insurance Corp. protection for amounts up to $250,000. The FDIC has a tool for looking up the banks it backs. If a bank name doesn’t turn up in the results, make sure it isn’t operating under another name. “BankFind does not contain all the trade names for these institutions,” the FDIC says.
- Imitators. Scammers often try to mimic the look and Web address of legitimate bank websites, CNNMoney says. Especially if it’s a bank you aren’t familiar with, make sure you’re on the right site by checking the URL against a search for the bank’s name. Avoid clicking on emailed links to banking sites. It might have been sent to you by a scammer.
- Encryption. Make sure the bank takes customer privacy and security seriously. The site should mention its security measures and use encryption to deter identity thieves. Look for a Web address that starts with “https” instead of “http,” sometimes shown with a lock or key icon.
Of course, you’d also avoid a brick-and-mortar institution that isn’t FDIC-insured or is careless with its customers’ online security.
When it comes to picking a bank, comparison shop the fees, services and interest rates. For starters, you can check out our savings account search and NerdWallet’s list of top online checking accounts.
Do you bank exclusively online, or would you be willing to try it? Let us know why or why not on Facebook.