Online Banking

Should I get an online bank account?

by Jane Bryant Quinn

If you want a basic savings account, there are two ways to go: a traditional bank, where your money will earn a pittance; or an Internet bank, which will pay you more. That’s a no-brainer. Go online!

You open the account online and transact your business there. You can also access the account by mail or phone and speak to a service rep if you have a problem. The rules are simple: no fees, no minimum deposits, no complicated accounts, no bank lines, no time wasted driving back and forth to see a teller. And your savings will earn a lot more money.

You can link your Internet savings account to the checking account you already have at a traditional bank. That lets you move money back and forth with the click of a mouse. Consider having your paycheck deposited into your Internet savings account automatically. To pay bills, move some of that money into your checking account as needed. There might be a two- or three-day delay before the traditional bank credits your checking account with the cash, but so what? You’re earning interest on cash that would otherwise lie fallow. If you’d rather send your paycheck to your traditional checking account, set up an automatic savings arrangement. Have a fixed sum of money transferred to your Internet account every time your paycheck comes in.

Checking accounts are the next step for Internet banks. They’re in their infancy but are sure to grow. As with savings accounts, there are no monthly service fees, no minimum deposits, and high interest rates compare with those paid by traditional banks. You get overdraft protection if you authorize a check for more than you have in the bank; your only cost is the interest you pay on the amount you borrow to cover the bill. There’s no delay when transferring money from Internet savings into Internet checking, so you can pay your bills immediately. The technology is a little different from that of online bill-paying at traditional banks. You don’t get a checkbook. Everything is paid electronically or with debit cards. Still, it’s easy and will earn you extra money on your funds.

Excerpted from Making the Most of Your Money Now by Jane Bryant Quinn

Copyright 1991, 1997, 2009, by Berrybrook Publishing, Inc. Reprinted by permission of Simon & Schuster, Inc

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