Banking

If you’ve never set up a bank account or aren’t sure how to choose a good bank, here’s what you need to know.

What is Online Banking?

For the most part, online banking works exactly like traditional banking. The only real difference is that every transaction happens online, over the phone, or from a mobile app. Account-holders can open a checking or savings account and usually receive a bank-issued debit card.

Online Banking Advantages

• Convenience: You don’t have to wait for the bank to open to make transactions. Some online banks are open 24/7.
• Security: FDIC-insured online banks benefit from the same federal protections as traditional banks.
• More competitive interest rates: Some online-only banks have high-yield savings accounts with better interest rates than traditional savings accounts.
• Lower fees: Since there’s less overhead, online banking usually comes with fewer fees. Many online accounts have no maintenance or annual fees. Others don’t have a minimum deposit or account balance requirement.
• An extensive network of ATMs: Online banks can have hundreds or thousands of in-network ATMs. This means you can still make transactions at an ATM for free.
• Additional services: Most offer checking accounts and savings accounts. Some often have other services like money market accounts, certificates of deposits (CDs), loans, and lines of credit.

Checking account

A checking account is an account where you can store your money digitally for convenient use. This makes it easy to pay bills (ex. utilities or rent), set up a direct deposit with an employer from the comfort of home. Other features may include setting up auto payments, a debit card for your disposal, and personal checks.

Savings account

Most online banks let you set up a savings account and a checking account simultaneously, making the whole process more convenient.

Unlike checking accounts, savings accounts are meant for saving money. The interest rates on savings accounts vary widely. The higher the APY, the more your account could gain in interest.

Certificate of Deposit

A certificate of deposit (CD) is a type of savings account with a higher interest rate. The main difference between a traditional savings account and a CD is this:

You cannot access the money you deposit in the CD for a certain period of time, usually at least 6 months. Once that period ends, you’ll receive the initial deposit plus any interest gained. Withdrawing the funds early could result in a financial penalty.

Here are some things to look for when shopping around for an online bank:

• Its online reputation
• If it’s insured by the Federal Deposit Insurance Corporation (FDIC)
• How many in-network ATMs does it have, and their location
• Any fees (ex. account maintenance or closing fees)
• Whether there’s a mobile app you can use to access your accounts
• How long does it take to receive money from direct deposit and internal/external transfers
• Business hours and customer support
• Other banking services offered (ex. auto loans or money market accounts)

Once you’ve found a bank that suits your needs, go to its website and create an online profile. This usually requires the following information:

• Account name or username
• Password
• Security questions
• Full name
• Basic contact information (ex. email and phone number)
• Social Security Number
• Another form of government-issued identification (ex. driver’s license)

During this process, you’ll be able to choose which types of accounts you want to set up, such as a checking or savings account, and choose whether you want a joint or individual account.