If you are interested in opening a new online bank account you have hundreds of online banks to consider. Here are some tips on what to look for when selecting an internet bank.
1) FDIC Guarantee
The Federal Deposit Insurance Corporation is a quasi-governmental entity which provides deposit insurance to member banks. As a depositor looking for an internet bank account, the FDIC is very important. Depositing money in a bank without an FDIC means you have little recourse if the bank decides to close and run off with depositors’ money. An FDIC identifies the bank and a legal operation and ensures that your deposits (up to $250,000) will be protected in the event the bank fails.
You can easily check if an internet bank is insured under the FDIC program through the FDIC Bank Find website. Simply enter the name, or physical address of the institution in question and the FDIC Bank Find website will return the matching results. Avoid any institution that does not appear on this list as it is quite possible you are dealing with a fraudulent operation.
2) Easy Deposits and Withdrawls
The major downside of an internet bank is that it can be very difficult to made deposits and withdrawls. All internet banks allow for the physical mailing of checks, but this process is cumbersome and time-consuming. The best online banks allow for an electronic funds transfer from another financial institution. For most consumers, this means having a checking account at a local bank or credit union, then using the free electronic transfers to move money to and from your main internet bank.
Some internet banks allow you to perform a certain number of ATM transactions each month. Regardless of which bank owns the ATM, your internet bank will cover the ATM transaction fees. This service can be very convenient for withdrawing money, but some consumers have reported difficulty in making deposits with this method.
3) No Fees
The primary concern for a depositor in an internet bank should be the monthly account fees. Because there are a large number of legitimate online banks, you should never pay a monthly fee for a basic checking or savings account. All institutions are required to provide information about fees, minimum balance requirements, and contact information prior to opening an account. Be sure to study the fees and balance requirements closely. There are some banks which offer high interest rates on savings accounts, but require $10,000 or more as a minimum daily balance requirement.