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Advantages of Saving Money at an Online Bank

By Edited Nov 13, 2013 0 0

Online Banking Savings

Saving Money at an Online Bank
If you are trying to save some money, there are advantages of saving money at an online bank that you should be aware of. Unlike the brick and mortar bank down the street, the online bank is a different way to bank, but those differences turn into advantages.

For many people online banking of any kind can be scary, but many banks have worked with an online model for many years and have become trusted names in the industry. Here are the greatest advantages of saving your money at an online bank.


The Advantages

It's Free!

The best part of most online banking accounts is that they are free of charge. Many big banks are raising fees, particularly on small accounts, but the vast majority of online banks operate without charing monthly fees. That saves you money and allows you to save just a little at a time without the money vanishing in bank fees.

Higher Interest

Online banks tend to pay a slightly higher rate of interest due in large part to the fact that they don't have as much overhead to pay for in terms of real estate and employees. You should also compare how often they compound the interest on your online savings. A monthly interest payment is worth more to you than a quarterly payment if the interest rate is the same since you get to earn more interest on that money.

Easy to Track

Paper bank statements are ugly and obsolete. Online banks have easy to read only statements that make it easy to track your savings. Also, you can usually open several accounts to separate your money into different accounts for no other cost, so saving a little money for furniture or vacation is separate from the money for a new computer.

Automatic Savings

Almost all banks have an automatic savings plan, but online bank are made for this so they interface is very simple. You can set up a $10 per month transfer from your main account to your online banking account with ease, and increase it or stop it any time. Online banks make saving easy and fun, and you can make the changes without help from a banker.

No ATM Card

With an online bank you can skip the ATM card which is a great idea. These accounts can be tied to your primary checking account to allow you to transfer money to checking. By avoiding the ATM you will not have everyday access to your savings. That's a good thing, because there is no possibility of an impulse buy this way. You can get an ATM, of course, but if you are saving money why would you?

Kid's Accounts

With online banks it is easy to open up extra accounts for various reason, including the kids. In fact, many banks have kid's accounts that allow you to open an account for them, tag it with a kid's name, and give them login access to view the account balance. Meanwhile, you still maintain control of the transfer process. This is a great teaching tool for kids.


The Disadvantages

Access

The biggest disadvantage of saving money at an online bank is that you can't drive there and take a withdrawal. However, ATM cards are available for this. Do consider skipping the ATM card on your savings account, however. You are much less likely to take money out and reduce your savings if you don't have this easy access.


Online Banks Are Great For Saving

When you compare all things, online banks are a great way to save money. With free accounts, higher interest, ease of use, and the ability to initiate savings plans and separate funds easily and intuitively, the online bank is the best place to save up for that special purchase that you are working for.

As you can see, there are many advantages of saving money at an online bank.


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