Are Online-Only Banks a Safe Bet?

Jacqui Kenyon
Posted

online only bankingWhen was the last time you visited your local bank branch?

For many people today, the answer to that question is, “I don’t remember.” In an age where you can do everything from pay your bills to deposit checks from your computer or smartphone, many Americans have ditched in-person banking completely.

As a result, several internet-only banks are gaining popularity—Ally Bank, GoBank, EverBank and CapitalOne 360 among them. But those with long relationships with their brick-and-mortar bank may question the safety and reliability of money stashed with these branchless entities.

But, as Manassas Va.-based financial planner Deana Arnett told CNN Money, their fears are unfounded. “Brick-and-mortar banks give an appearance of safety, but they are no safer,” she said.

Additionally, the low overhead costs for online-only banks allow them to offer perks—like the ability to withdraw from any ATM without a fee and higher interest rates on savings accounts—that traditional banks often just can’t match.

RELATED: How to Maximize Interest on Your Savings

If you’re considering an online bank and worried about how to protect your money, keep these three things in mind:

Verify that your funds are insured by the FDIC.

This means that funds are protected up to $250,000 per account holder.

Beware of malicious websites masquerading as your bank’s site.

Scammers often create sites that copy the appearance of banks’ legitimate web sites. Always make sure you’ve typed the correct web address in your browser, and be wary of links sent in emails from your bank.

Make sure your information is encrypted.

A lock or key symbol in the web address window of your browser indicates a secure connection.