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If you browse the Internet often (I’m guessing you do since you’re reading this), chances are you’ve seen the display and banner ads for various types of online checking and savings accounts. Often they advertise high interest rates, low or no fees, and a variety of other incentives to draw you toward their business.

The Good

Higher interest savings and checking accounts are always a great thing. This is especially true if you have high balances in your accounts, but want the money easily accessible instead of in a Certificate of Deposit (CD) or investment. Online banks are typically able to pay these higher interest rates to handle your money due to the fact that they exist only as an electronic entity or have very few brick & mortar locations.

Another benefit of this type of bank is most of them offer some sort of ATM fee reimbursement. Obviously if the bank is mostly online, they won’t have many of their own self-branded ATMs, and this becomes more and more useful.

The Annoying

Deposits. One thing that I found incredibly annoying about having an online checking account was having to remember to mail my deposits to an post office box in the middle of nowhere. This is frustrating on multiple levels, considering the fact that checks can get lost in the mail and mail in generally has become less and less reliable over the years to physically transport much of anything. Some banks allow you to scan your checks and email them to an account representative, but this isn’t quite mainstream yet for consumers.

The (Potentially) Ugly

I want to preface this by saying most of the online banks I have encountered do NOT have this problem, the opportunity is there. Due to the lack of physical locations, the necessity for providing top-notch and industry leading customer service is incredibly vital. It can be difficult for an online bank to respond to customer questions in a quick manner, so occasionally there can be long wait times. Many online banks alleviate this by providing multiple channels of communication with their customers, including live chat, telephone and email.

All in all, an online bank can be a very flexible option if you tend to move a lot or have your time split between two places (like many students often do.) If you decide to spring for an account, make sure you do your homework and know what resources are available. And of course, if you have any questions, feel free to ask them in our Student Platinum forum!

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