Opening an online bank account: what should you take into consideration?

If you have a PC and access to the Internet, at one point or another you have probably wondered about opening a bank account online. It is a simple, convenient and cost effective way to manage your money. Aside from the ability to check your account balance and make transactions in your bathrobe, you can earn a very competitive return. 

The most challenging task is to choose the right financial institution. Will your money be safe? Can you fatten your savings? Are there any additional services? Compare the most common features of online bank accounts to find the best offer available for your requirements. 

Overview of online bank accounts 

Online bank account, as the name suggests, is an account offered online. It has all necessary features that your busy life demands. Managing your day-to-day banking needs has never been more convenient! You can choose any financial product you want: savings or checking accounts, credit cards, loans or IRAs. 

The beauty of online banking is that banks’ websites never close: they are available 24/7. Unlike traditional bricks-and-mortar banks, they are only a mouse click away. If you have gone on vacations, you can access your online account at any place with a network connection. 

Further, banks’ websites offer a set of handy sophisticated tools which include account aggregation, bill pay, stock quotes, online statements, check images, text alerts and portfolio managing programs to help you control your finances. 

You can also enjoy higher annual percentage yield (APY). The reason is simple. Doing your transactions online, you are saving money to the bank. In turn, they offer their online customers more attractive terms and interest rates. 

What should you check before opening an online account?

Searching for a suitable online account, you will definitely want to compare their terms and conditions. Most customers judge bank offers by their APY. However, there are other important features that you also need to take into consideration. 

Have a close look at all key features that a bank provides. Ask the questions, read fine print, determine the best features and services for your needs and choose an online bank account that matches you most. 

•    APY. Annual percentage yield is the strongest indicator of your potential profit. It is supposed to give consumers an easy way to compare bank accounts. APY especially matters when you are going to deposit a large amount of money. Compare rates at MoneyRates.com or Bankrate.com to find the most lucrative offers. 
•    Fees. Large monthly fees can eliminate the advantages of a high APY. Don't forget to take it into consideration while making a comparison. It seems crazy to pay for online banking services when you could enjoy them without any additional charges at other financial institutions. 
•    Access to the money. If you want to withdraw your money, transfer funds or pay a bill online, how much work do you have to do? Are there any fees for these services? Can you make transfers to external accounts? 
•    Account aggregation. Can you handle several online bank accounts (checking and savings accounts, CDs, IRAs, credit cards, loans, etc.) from one website? Can you add any new accounts from other financial institutions to your online banking? 
•    Complementary bank products and services. Can you buy CDs or insurance, increase your overdraft, apply for a credit card or mortgage, pay bills online or make transfers? The more services you can perform, the better. 
•    Automatic savings plans. Can you have a fixed amount of money regularly transferred from your linked accounts to your savings account? It will help you maximize your savings. When deposits are made into a savings account automatically and regularly you don’t have to worry about it.
•    Taking advantage of existing banking relationships. If you want to open an online account with a bank that you already deal with, you may get additional perks and services. For example, you have better chances of getting approved for a credit card or a loan.
•    Customer service. Typically, banks offer customer support via email, phone and an online help database. Check that you can receive a response to your inquiry in a prompt and efficient manner. Are there any FAQ pages, demos or searching tools to help you choose the most suitable online account? Do all answers are clear?
•    FDIC insurance. Always look for the FDIC indication before opening an online bank account. FDIC insurance covers IRAs, certificates of deposit, savings accounts, checking accounts, negotiable order of withdrawal (NOW) and money market deposit accounts. If your bank fails, you will receive your money back up to a certain amount. 
Some of the high yield savings accounts come with an extraordinary APY that seems too good to be true. In fact, these online accounts typically are not insured by the FDIC, so your funds are not protected. If your bank fails, you can lose all money that you have in your online account. 
•    Online security. With online fraud running rampant these days, the most important thing to keep in mind is security. The stories about electronic break-ins are always hot topics in news. Learn the basics of online banking and Internet security to keep your money and your online bank account safe. 

Once you have compared the key features of various online bank accounts, you can decide which one fits your needs and requirements best. For example, you may wish to make the most of your money. Therefore, you need to choose an Internet bank account with the highest APY and lowest fees. 

Opening an online bank account  

Opening an online account is very easy if you have chosen the financial institution and type of account you want to have. The application process takes just a few minutes. Go to the bank’s website and pick the product you want. 

The advantage of opening a bank account via the Internet is that you can do it at any hour, anywhere. Most banks have a demo and FAQ pages that will guide you through the process of application.

Typically, you will need to enter your name, birthday, social security number and email address. Some banks will ask you to provide a government ID or driver’s license number. It is necessary to comply with a variety of rules and regulations. If you need to make a deposit, you can use a debit card or make a transfer from another bank. 

Make sure that you understand the terms of the online bank account you have chosen. Ignorance is not a defense in case of any problems with your account. You will have to agree to abide by certain rules and accept responsibility for certain actions. 

The bank will process your application and send you an e-mail telling you about the status of your application. Once your new account is approved, the bank will mail you anything you need such as checkbooks and debit cards. As you see, opening a bank account is really easy as long as you know what to expect!