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Virtual Banking

Posted on 21 August 2008

When was the last time you went to a brick-and-mortar bank to get cash, deposit a check or transfer some funds? If you can’t remember, don’t be surprised. An estimated 90% of today’s bank transactions take place somewhere other than a branch.

Think about it. Bank branches are expensive to maintain, what with rent, equipment and employee salaries. Online banks can consolidate operations in one place, while still offering the services you need, like ATM and debit cards. Why pay for a branch if you’re not using it? Web-only banks can save you about $200/year in fees, due to their lower overheads.

So what’s the hitch with Web-only banks? If you have a masochistic desire to stand in long lines listening to Muzak, then a purely virtual bank is probably not for you. Also, since online banks don’t have all the brick-and-mortar accoutrements, your fees can add up in other ways. For example, if you’re a heavy ATM user, you’ll either have to alter your withdrawal habits or get used to paying a service fee every time you take out cash.

Here’s a quick checklist of the basics to think about when investigating a Web-only bank:

  • Essential Products and Services. Look for features like checking and savings accounts, debit & ATM cards, fund transfers and electronic bill payment.
  • Fees. Understand how they are structured and how they compare to your existing bank. Since you could be paying additional ATM fees, ask if the bank provides any kind of reimbursement.
  • Ease of Use. Try a site demo to ensure you’re comfortable navigating the site.
  • Security. Most banks have excellent security systems, so there’s no need to worry – you’re at more risk of having your wallet stolen. Most sites have a section where they’ll explain their security measures, including encryption and data-encoding methods, automated log-off, e-mail alerts and password protections. SafeWeb Remote Banking Insurance is also a plus.
  • Customer/Relationship Service. Since Web-only banks have not built up the massive customer base of many traditional institutions, they’re much more likely to provide personalized service. Most Web-only banks have knowledgeable, informed, and friendly people available via phone or email, around the clock.
  • Web Reliability. The last thing you want when trying to access your account is a server failure! Ask about their rate of reliability and average downtime. It never hurts to ask.

The following is a list of the most popular Web-only banks. All banks listed have repeatedly received good rankings from trusted sources such as Smart Money magazine, Forbes and Gomez.com regarding the best in online banking.

BankOne

Features a new service called eMoneyMail, a safe and easy way to send money over the Internet, at no charge. They also offer competitive interest rates for checking and 12-month CDs, as well as free online bill payment and $5 a month in ATM rebates. And, although they are Net-only, their parent company, BankOne, offers a range of services through their branches.

NetBank

NetBank is launching a new 24/7 wireless service, allowing you to bank from your digital cell phone, Web-enabled phone, or Palm VII without having to log onto the Web. Electronic Bill Presentment is another service they offer (not all Net-banks do) that allows you to set up regular monthly bill payment (great for cable and other bills that don’t change from month to month).

First Internet Bank of Indiana

Estimates that they can save you $235 a year because they have no monthly fee and no minimum balance requirement. First IB credit cards are integrated with their other banking products so you can make payments by transferring funds from your checking account to your credit card, online or by phone. The bank waits until the due date to make the payment, and therefore maximizes the interest earned on your checking account.

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