Online bank accounts are a great way to save time and money while gaining new services. However, those thinking of opening them need to know what to look for in an online bank, what the potential pitfalls to online bank accounts can be and how to protect themselves while making the most of the service.
Many of the benefits to online banking are obvious. The ability to bank 24/7 from the safety and comfort of one’s home in pajamas is one major attraction. There is also the perk of being able to handle one’s banking from anywhere in the world. Furthermore, one can expect higher interest rates with an internet bank account.
The ability to pay bills with online checking accounts is perhaps the single biggest reason people are attracted to online banking. It takes much of the tedium out of paying bills and saves money too by eliminating the need to buy stamps. Furthermore, it can be safer too since it eliminates the risk of the check being stolen from the mail by thieves who wash the ink from checks and cash them.
However, there are drawbacks to online banking. One is the loss of face-to-face interaction, and the requirement to deal with faceless customer service. Also, the online interface, although usually pretty user friendly with most banks, can be annoying or difficult for those who are more digitally challenged. There is also the possibility of other technical difficulties with the site.
Furthermore, if the bank does not have a branch to go to, all check deposits have to be sent by mail. This adds days to the time it takes checks to clear.
The greatest concern most people have with online bank accounts though is security. There are a lot of bad people online and many of them target online bank accounts. One of the most common types of scams is called phishing. Criminals use phishing scams to trick people into giving them their bank information (usually with fake emails) or implant malicious code on their computers that will capture sensitive account information.
Keeping the risk in perspective though, regular bank accounts are also the targets of scams. Most banks use encryption and other security measures, such as sending the account holder an immediate alert every time there is an account transaction. Most scams can be avoided by exercising proper caution. For example, one should never respond to emails asking for personal information from an unknown source (it is never a good idea to respond to any email from any unknown source). Other security measures such as only logging on from a private computer with a firewall and using difficult passwords also greatly increase security.
In worst case scenarios, banking laws do protect individual customer accounts from unauthorized transactions.
Things to look for when deciding on an online bank account
With so many banks now offering online accounts, there are plenty of options available and one can be choosy. Be wary of unknown banks that offer rates much better than their competitors. Check out the account interface and the bank’s reputation for customer service too. Make sure the bank offers all the needed services and competitive interest rates.
Online bank accounts are a great way to bank. Just be sure to choose the right bank and exercise caution with security.
