Avoid These 12 Mistakes When Choosing an Online Bank

In the Internet age, online banking makes more sense than ever before. Anyone in the market for an online bank account should realise that online scams are hard to detect. Any deal that looks too good to be true should be avoided. Promises of exorbitant interest rates for very large deposits can be the indication that the bank is fake. Transferring a large sum of money on the first day the account is open could be disastrous if the new bank customer has committed one of these deadly mistakes.

Choose the most advertised bank  – Every online bank has been rated and compared to other banks. Just because the name is familiar does not mean that the bank offers the services that are right for the depositor. Potential customers should determine the online bank’s headquarter location, length of time in business, listing on the stock exchange and how to contact customer service.

Ignore the FDIC designation – A bank that is not insured through the FDIC presents a significant risk to depositors. Every bank account in an FDIC insured bank is protected against loss. In the history of the FDIC, not one depositor has ever lost a penny when a bank is closed.

Select an online bank without ATM access – Access to funds saved in an online bank account is important in emergency situations. Having to wait multiple days to gain access to funds can be catastrophic if bills are due, or the car must be repaired. Even though banks like Clydesdale Bank are regional, they still allow their customers to access their bank account at ATMs globally. So don’t write off regional banks, although it is worth checking that a fee isn’t charged if accessing account functions through another bank’s ATM, which is a growing trend.

Fail to determine which ATM network – An online bank can offer an ATM network that is not available in the local market. The potential customer should determine which ATM network is used.

Forget to find out how deposits are made – Some online banks require wire transfers from another bank account. This can be limiting to the customer who does not have direct deposit for his salary. Some banks require prepaid deposit envelopes.

Ignore the minimum balance requirement – Certain online banks require at least $1,000 as a minimum balance on every account. Other online banks do not require a minimum balance. Few depositors can maintain large bank account balances at all times. Savings accounts are easier to place money in for the long term.

Neglect to investigate interest rates – Online savings accounts can yield higher interest rates because the bank assumes the customer wants to save money. Each bank will pay a different amount of interest on each type of account. Higher interest rates are paid when the depositor agrees to make very few deposits. Some online banks exist to provide a safe place to save for long- term goals without withdrawing funds.

Dismiss the importance of the local branch – Some online banks have brick and mortar branches throughout the country. For some depositors, this model is important. Access to funds and banking services can be helpful for various types of transactions throughout the month.

Place all funds in the online bank – Existing bank accounts should remain open until the new online bank depositor is sure the new method will work. Various types of transactions could be more difficult with an online bank account.

Fail to research deposit speed – Some online banks are slow to record deposits received from customers. In some situations, these lags can be costly because of outstanding checks. Large sums can lose interest if the bank does not increase the balance upon receipt of the deposit.

Sign up for wrong bank – Minimal deposits should be made in the online bank to prevent significant impacts to financial dealings. The new customer who moves all funds to an online bank with the wrong combination of services will have difficulties.

Refuse to make a change – After the online bank is selected, the new depositor should feel free to leave the bank for a better situation. Discovery of a problem should not be ignored. Funds can be moved while the situation is addressed through the bank.

Prior to making a choice between online banks, the potential depositor should determine the reasons for seeking the right online bank. A list of financial goals can assist with the final choice. Savings and checking accounts are available through reputable online banks that pay better interest rates than traditional banks. Multiple accounts are encouraged because of the various uses for each account.

Online banks offer many convenient services that meet unique needs for depositors. The final selection should be an online bank with most of the sought after services that will support the personal financial goals of the depositor. Large depositors must be aware of the FDIC limits on the insured deposit amount, which is currently $250,000.

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