With the Internet ruling over the land today, traditional and online banks are blurring the lines between their core differences. Nearly every bank has an online presence, but that doesn’t make it a textbook “online” bank. Get to know the differences between these banks so that you can make a sound decision when moving funds. Their features define your service experience.
No Building Upkeep
The biggest difference between traditional and online banks is the building upkeep. Online entities don’t have to support a building, its maintenance and employees throughout. Any costs to cover these items aren’t part of the customer experience. However, some consumers see the lack of a building as a drawback. You can’t walk into the bank with a question. Everything is completed online through chats or email. If you lack an Internet connection at some point, you’re cut off from your money.
Lack of “Human” Touch
It’s a fact that some consumers want to deal with a real person when certain financial matters come up. Talking with a banker over a cup of coffee is an expected experience, especially when you’re dealing with a lot of money being moved around. The online world is manned by real people, but they may not be in the same state as you. Give them a call or chat through your online connection. There’s still a human touch, but a physical meeting isn’t possible at this point.
The Fee and Interest Differences
An area that’s of greatest concern is the fees and interest. It makes sense that traditional banks will have larger fees because of the building support that’s necessary. Online banks only support their hardware and software. Consumers are left with fewer fees and higher interest rates as a result. It’s difficult for traditional banks to offer high interest rates when their costs are much different. Today’s consumers are flocking toward those generous, interest rates, which gives them a greater return over time.
Finding an ATM might be difficult with some online banks. There are no buildings supporting dedicated machines. Online banks rely on remote ATMs and contracts with the operators. As you shop around for any new bank, learn about the ATM access. If you must travel a long distance just to deposit or withdraw money, that online bank may not be the best choice. A traditional bank can be helpful in these cases.
Always remember that legitimate and best banks have financial coverage by the FDIC. Your money is always protected when the balance is $250,000 or lower. Try different banks until you find the one that serves your needs. Every consumer has unique requirements when they deal with financial investments.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.