Here’s a Good Reason to Start Banking Online ASAP if You’ve Never Done So

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Not used to online banking? Read on to see why it pays to get on board. 

Certain habits are hard to break. If you’re someone who loves to stop for coffee on the way to work, it can be difficult to get into the habit of brewing your own at home and sticking it in a to-go mug. And if you’re used to sleeping on a certain side of the bed, it can be difficult to compromise on that if you partner up.

Similarly, you may find that certain financial habits of yours are hard to break — even if they’re pretty old school. If you’re someone who tends to file taxes on paper, for example, then you might struggle to switch over to filing electronically, despite the convenience and ability to potentially expedite your refunds. Similarly, if you’re someone who’s always used a physical bank, you might struggle to open a checking account online.

Data from the FDIC reveals that around 23% of consumers used online banking as their primary method of accessing their accounts as of 2019. But if you’ve been on the fence about using an online bank, you may want to make a switch sooner rather than later.

Take advantage of those higher rates

Right now, savings account and CD rates are higher than they’ve been in years on the heels of a string of interest rate hikes by the Federal Reserve. This applies to brick-and-mortar establishments as well as online banks.

But online banks tend to offer more competitive interest rates for savings accounts and CDs in general. So it pays to switch to an online bank at a time when rates are so high.

Why do online banks tend to offer better interest rates? It’s simple. These banks are often able to keep their overhead costs to a minimum. They don’t have to pay rent for a physical storefront, nor do they have to pay for utilities.

It’s true that online banks still need to hire customer service representatives. However, because that’s work that can often be done remotely, online banks might have more leeway with regard to the wages they have to pay.

All of this means that you, as a customer, have an opportunity to benefit from the cost savings online banks tend to pass along to the people who open accounts. So it pays to look at banking online at a time when some of the best high-yield savings accounts are offering close to a 5% APY — or more.

How to find the right online bank

If you’re used to banking at a physical location, then switching to an online bank might seem like a big leap. Your best bet in finding one is to do two things — pay attention to which savings account and CD rates are most competitive, but also, try out different platforms.

When you bank online, you have to use your institution’s platform and/or app to get your banking done. So you’ll need to make sure it’s user-friendly and easy enough to navigate.

The challenge is that some banks don’t let you use their platform until you actually become a customer. But reading reviews could help. So could asking your friends and family members who bank online what their experience has been like. And definitely make sure any bank you choose is FDIC-insured.

There are benefits to banking online no matter when you start. But because of the way interest rates are trending today, it pays to jump on that bandwagon ASAP. Interest rates are likely to drop over time. It pays to capitalize on the opportunity that’s available now.

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