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Choose the Best Online Bank

Online Banking

The best online bank for you may be one with a branch in your neighborhood, or it may be one you've never heard of before. Online banks have different advantages and disadvantages, and which one you should choose depends on what factors are most important to you.

There are two kinds of online banks: online only and 'brick-to-click' banks.

Online only banks have no physical locations. They only exist electronically; they don't have a vault somewhere with cash in it. Because these banks don't have the overhead of brick and mortar locations, they generally offer better interest rates than traditional banks. These banks also make it easy to compare all their products to those of other banks. If you're interested in getting the highest return possible on your savings, an online only bank may be right for you.

Think about this
Customer service can be a problem with an online only bank. You may go years without needing to speak to a live person, but when you do your only option is the toll-free number. When you call an online only bank, you don't know if the individual answering your call will be able to solve your problem or not.

Deposits can be slow to clear. If you have a physical check to deposit, you may have to mail it and wait for the deposit to clear. You also won't be able to get a cashier's check to make a fast payment.

If the website goes down, you have limited options. You can call the toll-free number, and should be able to use your debit card, but other access to your accounts will have to wait.

Make sure they're legitimate
If the best online bank for you is an online only bank, make sure their deposits are insured by FDIC. Look, too, at their rating on www.bankrate.com.

Brick-to-click banks are traditional banks that offer online services. The initial set up period can take a few days but once you have access, most of the functions that tellers can perform in person can be executed online. You can see what checks and deposits have cleared, check your balance, transfer money and pay bills.

Think about this
You won't have the problem with deposits and cashier's checks that you might have with an online only bank. And if you have a problem you can go to the bank in person to solve it. Because these banks have the higher overhead of physical locations, however, they generally do not offer rates as favorable as online only banks. They may also not post all the rates for all their products online, making it more difficult to compare their rates to other banks.

Shop around. If interest rates are most important to you, be aware that customer service and speed may be the sacrifice. If customer service and a backup plan are your priority, be aware that you may not get the best rates. Whatever factors are most important, look carefully and you'll find the best online bank for your needs.

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