The Benefits and Drawbacks of Online Banking: What You Need to Know

Americans are increasingly turning to online banking for their financial needs, with 7 out of 10 U.S. households enrolled in digital banking. A recent survey on digital financial literacy found that 95% of those enrolled bank online occasionally or often. This shift towards online banking offers numerous benefits, including saving money on fees, earning stronger returns on savings, and increased access to cash through an international network of ATMs.

However, not all online banks provide stellar customer service, especially when faced with complex issues. Despite the overall satisfaction of customers with online-only banks, glitches or changes to websites and mobile apps can impact customer satisfaction scores.

For those interested in exploring online banking options, understanding how online banks work and the benefits they offer is crucial. Online banks operate similarly to traditional banks but without physical branch locations. They offer higher interest rates, lower fees, and more robust mobile apps and websites with features like online budgeting and account alerts.

While online banking offers many advantages, there are also drawbacks to consider. These include limited in-person services, the need for digital literacy, and challenges with cash deposits. Ultimately, the decision between online and traditional banks depends on individual preferences and financial goals.

To ensure the safety of your money with an online bank, it’s important to monitor your account regularly, avoid sharing passwords or account details, and refrain from using public Wi-Fi for financial transactions. By following these steps, you can protect your finances while taking advantage of the benefits of online banking.