Online banking is one of the most significant trends in the financial services industry. Some online banks provide unique financial management tools, many of which are apps that provide fun new ways to save money or manage your monthly budget. Other online banks may not have all the bells and whistles, but they will provide you with a better place to park your savings.
Online banks typically offer services such as physical and virtual cards, transaction tracking, fund deposit and withdrawal, and the ability to send and receive money conveniently. If you’re considering switching to an online bank, you should first assess your financial needs and banking goals. However, before signing up for one, here are five things you need to look for in an online bank.
ATMs With No Service Fees
Not everyone is fond of paying ATM fees. Many of the best online banks provide access to extensive ATM networks, often without charging ATM fees for cash withdrawals from your account. However, other online banks may not provide ATM access, mainly if you have a savings account.
Consider your goals for using your online bank and which features are most important to you. For example, do you want to be able to use your online bank account for ongoing expenses and money access, or do you need a savings account to earn a higher annual percentage yield?
Savings Accounts With High Yields
Online banks lack the infrastructure and overhead costs associated with traditional brick-and-mortar banks. As a result, online savings accounts can typically offer higher yields on money savings than traditional banks. Before deciding on an online savings account, do your homework. Not all online banks can provide the same account features. For example, if you want your account to have an ATM or debit card, some of the highest-yielding accounts may not provide that option.
To qualify for the best APY rate, you should also understand the rules and requirements for your account. For instance, some high-yield savings accounts require a higher minimum deposit to open the account, an ongoing automatic monthly deposit, or a minimum balance to be maintained in the account.
Several Banking Products
Many people want to open an online bank account to achieve specific financial goals, such as earning a higher interest rate on their savings accounts. However, many of these banks provide a broader range of banking products and services.
So don’t think that online banking is only for savings accounts. Some of the best online banks offer checking accounts, ATM or debit cards, certificates of deposit, money market accounts, credit cards, currency transactions, loans, and other financial services.
Tools For Effective Financial Management
One of the most appealing aspects of fintech apps and online banks is their innovative tools and features for helping people manage their money. Several money-saving fintech apps, including round-up apps, provide specific ways for users to save more money.
Many of these apps also provide online banking services such as debit cards and checking accounts or are gradually introducing new banking services as their customer base grows. The evolution of fintech apps demonstrates how you don’t always have to go to the bank; sometimes the bank comes to you.
Assistance With Investing
Online investment management, also known as robo-advisors, is another online financial service that has grown in popularity. Companies use artificial intelligence (A.I.) technology to help manage clients’ investments and help people invest in a balanced portfolio of stocks and bonds based on their financial goals and risk tolerance.
Based on your needs, you can use robo-advisors to help you save and invest for retirement or get better returns on your short-term savings than a traditional bank. Some robo-advisors have also begun to offer savings accounts, which can allow you to invest in low-risk assets such as investment-grade corporate bonds, which tend to pay a higher yield than typical online savings accounts (depending on the company and the type of account).
Online banking is rapidly changing, and the lines between fintech apps and full-service banks are becoming increasingly blurred. The good news for customers is that they have more options than ever before, and more companies are competing for their banking business. This could include using an app to save money on everyday purchases, avoid overdrafts, or sign up for a more sophisticated financial management platform that can help you pay bills, save for the future, and invest in stocks and bonds.
Online banking and fintech apps are becoming more prevalent in the lives of millions of Americans. But, no matter what you choose for your online banking services, read the fine print, understand the possible fees, limits, and risks, and make an informed decision that aligns with your overall financial goals.