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atm.jpgHuman beings are creatures of habit. If we’re used to paper bank statements and live bank tellers, it can be a major psychological shift to move to online banking. Unfortunately, though, even when our habits stop working for us, we continue to use them. This is especially true of how we handle our financial lives. When it comes to money, many people are risk-averse. They want to be sure a new method or investment is safe, before they are willing to commit to it. Online banking has now made that shift from novelty to a mainstay of modern day banking as it increases in popularity with the average consumer. If you haven’t been willing to use this new tool because you don’t know what it’s like and worry about trying something different, here are some pros and cons of the online banking system to help you decide on whether now is the time to jump into this newest way of doing business.

Pros

Low overhead - Online banks usually do not hire tellers or rent office space. The savings on overhead is used to help offer their customers higher yields on their savings or certificates of deposits.

Worldwide access and products - Online bankers don’t just serve the United States. They are an international presence on the Internet. For that reason, some can offer certificates of deposits in foreign currencies, helping you to diversify your holdings. Since they do have customers worldwide, you can be sure to be able to continue doing your banking even when you are on vacation – as long as you have an Internet connection available.

Online bill pay - Online banks let you manage and pay your bills online, saving money on stamps and allowing you to set up alerts and automatic payments from your accounts.

Good resource - Online banks also seek to educate their customers to the latest types of financial products and markets. If you are interested in diversifying your portfolio, you can log into some online banks to see what each product can offer you and how to appropriate new types of investments.

Compatible - If you are used to taking care of your finances on your pc with Quicken or MS Money, you will find that you might be able to export information from your accounts into these programs. This can make running budgets or doing your taxes easier.

Convenient - Online banks don’t have banking hours. They are available when you are available, even if that is at 4 a.m. in the morning in Bangkok.

Cons

Limited or variable services - Don’t expect to have a wide range of financial products available from an online bank. Some specialize in savings and CDs and forego checking accounts. Others have IRAs, money market accounts, and no home loans. The types of financial products and services will vary from online bank to online bank. They usually do not have an ATM network of their own. So, you end up being charged for any ATM withdrawals from other bank’s networks.

Complex and lengthy registration - This is probably the most nerve-wracking part of online banking. Since security is highly important to these banks, you will be asked to provide a lot of information to set up the account. They will eventually have to send you a PIN via snail mail to confirm. Lose your password and it can be a major hassle getting it back.

Lack of the human element - If you prefer having someone to talk to when you make your transactions, online banking will most probably feel sterile to you. Before you decide to go with any online bank, check out their headquarters to see if they do have an office anywhere. Understand whom to contact and how should you have a problem with your account.

Changing habits - You are changing your known habits when you go from a brick-and-mortar bank to an online bank. Give yourself time to become accustomed to the new way of doing business. Learn how to use the online tools properly to keep your frustration to a minimum.

FDIC insured - Not all online banks are FDIC insured. To be legitimate, check out the business carefully and check for the FDIC logo to ensure your deposits are safeguarded. You don’t want to get into a situation where the bank exists one day and the next it’s gone, along with all your money.

Security - Online banks do take great care to make your transactions secure. This can mean adding additional steps to your process to keep hackers from getting into your account. You may be asked additional questions, for more than one password, or even have trouble closing an account without further information. This can be a big hassle for people who don’t have a very good memory for details.

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