We’ve talked about banks, but I heard about something called an online bank. Is it just another fancy name for online banking?
Online banking is the ability to view your account activity, pay bills, transfer funds, deposit checks into your bank account, etc using the internet, either from a computer or a mobile device. Most banks and credit unions offer the facility of online banking in addition to their branches.
On the other hand, an online bank is an internet-only bank. You can access your account only through the internet since the bank has no physical locations or branches. Online banks are also known as direct banks or virtual banks.
Why would I ever use an online bank? Are there any advantages?
Because online banks don’t have physical branches, the have much lower costs compared to traditional banks. Therefore, most charge lower or no fees, and offer higher interest rates on deposits. Most online banks are also part of ATM networks, which means their customers can access a large number of ATMs without paying any fee.
Are there any disadvantages of online banks?
Since there are no bank branches, all your interactions are either online or over the phone – you cannot get a teller’s personalized help for your transactions. Your options for depositing cash could also be limited – it would be done either using an ATM or through online transfers.
Do online banks give loans as well?
Yes, some online banks do offer loans.
Are online banks safe?
Some of the better online banks implement the latest security measures, and are as safe as traditional banks. Most online banks are also FDIC insured.
Podcast: What is an Online Only Bank or Internet Based Bank
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about an Online Bank or Internet Based Bank: What is an Online Bank or Internet Based Bank, How is an online / internet bank different from online banking, Why should you use an online only bank – are there any advantages, Are there any disadvantages of online banks, Do online banks give loans as well, Are internet based banks safe, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-is-an-online-bank-or-internet-based-bank/
