Disadvantages of Online Banks
While many people prefer the convenience of online banking, there are some disadvantages:
No doubt about it, some folks prefer to conduct their banking face to face. It can be a social outlet for some, and folks may find it reassuring to deal with familiar individuals week after week. It might also be easier for some to ask questions or explain problems in person rather than over the phone. Stopping at the depository branch might be a part of a person’s weekly shopping routine. If you need a smile or a free lollipop when you make a deposit, a banking company branch might be your first choice.
Some folks who grew up before the Internet age (and some younger people as well) might find computers and mobile apps confusing or threatening. If a computer keyboard causes you to break out in a sweat, you will be comforted by the fact that you can do all your banking at a branch without the need to acquire any computer skills.
This is more a problem of perception rather than reality. Most of the best online banks typically belong to a widely accessible ATM network in which transactions are either free or reimbursed by the financial institution. You might feel more secure using the ATM at a bank branch than one at a convenience store or gas station.
Limited Product Offerings
Many online banks prefer to keep it simple and offer only the most widely-used banking products. Products that you might not find at some online banks include mortgages, car loans, insurance, annuities and trust services. But online banking differs in the offerings, so it’s best to shop around if you know you’ll need certain products not supplied by all online banks. For example, Ally Bank offers credit cards, auto financing and home loans online.
No Safety Deposit Boxes or Currency Exchange Services
There is no substitute for a physical bank branch if you need a safe deposit box or want to exchange currencies, although non-bank currency exchanges are available in most medium to large cities. But if you travel a lot, you will find exchanging currencies at your local depository branch convenient.
Branched financial organizations that have served the community for a long time are naturally well-trusted by their customers. You don’t think much about the legitimacy of a Citibank or Bank of America branch. Using one of the best online banks requires some due diligence. You’ll want to know if it’s FDIC-insured and has a clean record with regulators.
Online banks vary widely in the quality of customer phone support. Many offer ‘round-the-clock customer service, either through direct phone support or via emails or chats. If you prefer to hash things out in person, a banking company with branches will suit you better.