How to Choose an Online Checking Account
February 21, 2010
With the growth of Internet banking in the last decade, the number of online checking options is expanding.
Online banks that started off by offering great savings rates have expanded into interest checking and are continuing to add to their product portfolios. Ally Bank, for instance, announced in January 2010 it will offer an interest online checking account which requires no minimum balance, offers free access to any ATM nationwide, and features no monthly fees.
Forrester Research estimates that by 2011, roughly 76% of US households with Internet access will bank online. It's no surprise why online checking has a growing fan base. Overhead for online banks is lower than for brick-and-mortar branches, and that often translates into higher yields and lower costs for the customer.
But there's more to consider than just initial costs and interest rates. As you shop around for the best deals on online checking, consider these other factors, too.
Online Checking Account ATM Fees
Don't let ATM fees wipe out yields on interest checking accounts or cost you big time on regular accounts. Find out which ATMs you can use for free, and how convenient those locations will be for you. Also ask about fees. How much will you pay to use an ATM outside the free network?
Automatic Savings Account Transfers
Ask about automatic savings plans, which let you transfer money automatically to other accounts at fixed intervals--weekly, monthly, or quarterly. Automatic deductions are one of the best ways to save because you're less likely to spend the money if it's not parked in your checking account. Average Americans are behind on savings for both short-term emergencies and retirement, so anything that can encourage saving is a good thing.
Personal Finance Planning
If you like to manage your finances on your home computer, ask about compatibility with your personal finance software. Some systems let you upload data from your checking and savings accounts to use with software for tracking and managing your money.
Checking Account Deposits
How easy is it to deposit a paper check? Althea Chang at Mainstreet.com points out that depositing checks is one transaction that is typically more cumbersome with an online checking account. With some online banks, you have to snail mail paper check deposits at your expense. Others let you deposit money in certain ATMS. How fast will you get access to your deposits?
Customer Service
Although you can conduct business online without a hitch most of the time, occasionally you'll need to talk to a human being. How easy is it to get through to customer service representatives? Is help over the phone available 24/7? And do you get through to someone right away, or do you have to go through a maddening automated maze to get to the person who can help you?
New on the scene just a decade ago, online checking is definitely here to stay as a viable option. Shop carefully to get the online checking account that best meets your needs.
