The Best of Both Worlds

The Best of Both Worlds

For many the thought of banking without having a physical location (also known as a branch or a brick and mortar location) to go to is unthinkable. They cannot imagine not seeing a person to hand their deposits to or not going into an office to ask questions and/or to discuss their account with a Banker. They have so many questions. Who do I talk to if I have a question? Is my money safe? What if there is a problem? How quickly can I get to my money? How can I deposit checks if there is not a branch that I can go to? There are pros and cons to online banks. I am not here to recommend one style of banking over the other. I just want to discuss the differences.

Here we go again. When I started in banking the thought of online banks was not even a thought. Telephone banking was the closest thing to doing banking without going to the actual bank. It was very limited. You could call the bank to get your balance and to make transfers from one account to the other. Years later you were able to do those same transactions at an ATM along with making deposits. As direct deposit and the Internet became more prevalent you began to be able to bank online. The only thing you had to come to a branch or an ATM to do was to make cash and check deposits and/or to withdraw money. Finally, online banks began to show up and they changed everything.

You no longer have to live in the same state where the online bank is located. You can make check deposits via your cell phone. You can also use an ATM network associated with the online bank, so you do not have to pay fees if you use an ATM in that network. Some online banks will even refund your ATM fees if you use an ATM outside of the network. You can also make transfers to and from other banks, get your statements online, and call customer service with any problems or issues you may be having. One of the biggest selling points for many is the fact that online banks are able to pay higher rates of interest than traditional banks because they do not have the same amount of overhead. They do not have to build and to maintain branches or hire and pay employees to be in several hundred or several thousand branches over 40 hours every week of the year. They can pass those savings on to their customers.

That brings me to the reason why I am writing this post. I have relationships with a traditional bank and an online bank. Recently, my wife needed a Notary Public, so we visited our local branch. During our visit the Relationship Banker informed us that we had been chosen to take advantage of an opportunity to gain more interest on our savings account. All we had to do was to deposit $20,000 within the next 90 days. My wife looked at me and asked if that was a good deal. I told her that we were already getting almost 1.00% more than that special rate at our online bank. So, why do we bank at the traditional bank? There is the convenience of being able to go into a nearby branch during banking hours to talk to a live person. That is important for someone my age because I grew up with that experience and offered that service before I was an Ex-Banker. Also, I cannot get a document notarized or get a cashier’s check from my online bank. Finally, the traditional bank offers remote deposits but sometimes I just feel like going into the branch to hand my check to a Teller. It just feels safer. Sure, that keeps the rates lower, so I have my other saving account online where I get a higher rate of interest. I don’t have to choose one or the other and neither do you. I can have the best of both worlds. Do what is best for you and make it work for you.  Just make sure it makes good financial sense. All the best!

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