Online Credit And Banking 101

2007-03-08 10:33:40

( Financial )



The popularity of performing banking transactions online has been growing rapidly in recent years. Online banking owes this popularity to the convenience and potential savings it offers compared to conventional banks. If you want a safe and rewarding online banking experience, you need to arm yourself with information on how online banking works.

What Is Online Banking?

Online banking, as its name implies, is the execution of banking transactions through the internet. The range of services offered has expanded significantly, enabling you to perform online almost all of the bank transactions you normally do in traditional banks. Some of the more popular services are online credit applications, online payment processing, and online bank accounts.

Advantages

Since most online or virtual banks operate exclusively online, they have very low operating costs. These savings are then passed on to you, the client, through higher savings rates, generally known as Annual Percentage Yield (APY). Banking websites operate 24/7 so you don’t have to worry about limited banking hours. You also have access to your account from any desktop in the world at any time of the day. Aside from the convenience, you also save time because transactions are executed at a much quicker rate than ATMs. You have also a chance to manage your funds better because most are compatible with other money management programs.

Disadvantages

Trust is always a primary concern for most people. While offering high savings rates, online banks do not always have the reassuring character that you may be used to with traditional banks. Another hurdle is learning how to navigate through the bank’s website. If you are not computer savvy, the learning curve might take a while. Also, online banks do not have ATM machines; they only accept deposits through checks and money transfers and not via ATMs.

How to Choose The Right Online Bank

Your choice of an online bank should depend on the kind of services you need. A bank with high APY is ideal if you’re only interested in maintaining a savings account. If you’re looking for online credit and online payment processing services, a full-service online bank is more suitable. Also, consider the bank’s customer service option. Opt for a bank that offers quick and reliable customer support not just online but on other communication channels as well. Verify if the bank is insured with the FDIC. Also, ask about their security procedures, work only with a bank that fully satisfies your security concerns.

Online credit and banking is here to stay. While the advantages are substantial, not all online banks are created equal. Search the internet for reviews about the banks you’re interested in. Finally, take time to learn about the ins and outs of online banking before fully engaging in the process.


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