When the idea of online banking was first introduced, I was skeptical. How, I thought, could that ever be safe? While I’m not an expert on password security and all things technical online, I can confidently say that I’ve been banking online for nearly a decade without a single issue with ID theft, fraud, or any form of bank hacking. Is that because ING Direct is the safest bank?
Despite whatever reservations I first had in regards to online banking, I’m currently a big proponent of online banking for both the convenience and the ways online banking saves money.
Online banks are cheaper to maintain than traditional brick and mortar banks. As a result, they often pass the savings along to customers.
How Banking Online Can Save You Money
1. Helps You Pay Your Bills Online and On time
Paying bills with your online bank or through your personal finance software saves money in one of two ways. First, when your payments are automated, you don’t need to worry about forgetting to make a bill payment. Since you can easily pay $35.00 for a late payment, having a system in place that helps you automatically pay your bills is a valuable feature. Also, depending on your computer software, you can set up automatic bill payments using your software bill pay feature. I use Moneydance, and I know they have bill pay features.
A second way that using a bill pay feature saves you money is that you can avoid the cost of postage. While not a significant difference, it is a simple way to save money.
2. Send Cash Free
There was a time when the best way to send cash to someone else was by using a service like Western Union. The only problem is that this is also a very expensive way to send money. However, if you are using an online bank (depending on the bank), it is likely that you have some type of an online money transfer feature. If you happen to use ING Direct, you can always electronically send money to anyone who has a US bank account. With so many free ways to transfer cash, you shouldn’t need to use a pay service to send money.
3. Get a Competitive Interest Rate
The best banking interest rates are offered through online banking. In fact, I’ve noticed that it is not unusual to find online checking accounts that have a higher interest rate than brick and mortar bank savings accounts. While you won’t find high rates anywhere right now, you are likely to find a better rate by banking online.
As a sample, here are the current savings account interest rates (as of May 2010) for some online banks:
- Everbank – 1.26%
- ING Direct – 1.14%
- WT Direct – 1.16% (with $10K+)
4. Easy Account Access Worldwide
As I write this post, I’m at a hotel in Brisbane, Australia. While I was getting on the plane to fly here, someone called me about a bank transfer I was supposed to do, but forgot. Thankfully, I have an online bank, so all I need to do is sign in online and transfer the money. With a traditional bank, it would have been a huge headache to get the money to that person.
So how does that save money? I was able to save on the cost in phone calls and whatever fees my bank would have charged – if they even did the transaction.
5. Avoid Bank Fees
Now this one completely depends on which online bank you choose. I’ve used ING Direct for about six years now, and I’ve never paid a single bank fee. Just like Bob, I love ING. While it is possible to pay a fee, the fees are few and far between. A couple of years ago, I had a bank that charged me for downloading my bank information to Quicken. Those are the kinds of silly fees you can avoid at ING.
Interested in opening a bank account online? Here are some online bank suggestions.
Got any other ways that banking online saves you money?
Photo by totalAldo.
{ 6 comments… read them below or add one }
I really like how the online banks have implemented step 2. So even if you can’t pay a bill online using your bank account info, many online banks will send paper checks on your behalf for free. This helps save on the cost of stamps. Like you said, nowadays you shouldn’t need to pay someone in order to send money somewhere.
My online bank (Emigrant Direct) has definitely helped me to get my finances in order. It is very secure, transfers only take 2 days, and the interest rate is about 15 times that of my local bank.
I am a big fan of online banking. The bill pay and no fees for any atm are really nice. There are a lot of good online banks out there, so anyone has lots of choices. I would review at least 2-3 before you select one.
I still keep an account at a local bank near work. I keep a couple of hundred in it. It is nice to be able to go get a check cashed if needed or some other service. It is of course linked to my online bank.
What about sending money from the US to overseas or vice-versa?? Certainly I wouldn’t pay to send money anywhere in the US but I haven’t found a free/cheap/easy way to send money overseas.
@Katze
I use Xe.com and they don’t charge for me to send or transfer money (to select countries). You can see my article about XE – http://www.moneyhelpforchristians.com/xe-send-money-overseas/.
I’m trying to find some current info on which online bank is the best for me!