The Pros and Cons of Online Banking in Retirement

More Americans are accessing their bank accounts online instead of visiting brick-and-mortar locations. So, it makes sense that consumers are increasingly looking into online-only banks. It’s possible to conduct most banking needs entirely online, and some online banks offer better perks than traditional ones. Here are the pros and cons of using online banking in retirement, plus answers to a few of the most common questions.

Pros of online banking. The biggest perk of online banking is convenience. You’ll have 24/7 access to your bank accounts no matter where you are, and you won’t have to take the time to drive to a physical branch.

Online banks also tend to have lower fees and higher interest rates than traditional bank accounts. Some online banks pay out nearly 2 percent interest for savings accounts and over 1 percent for checking accounts, compared to far less than 1 percent for many traditional savings and checking accounts. Since online banks aren’t paying for the overhead of branch locations, they’re able to pass these savings on to the consumer. Many online banks have free ATM access throughout the U.S. and sometimes even all over the world. Some online banks don’t charge monthly fees either.

[Read: How Retirees Can Take Advantage of Higher Interest Rates.]

Cons of online banking. The biggest downside to online banking is you won’t have anyone to talk to in person. No matter how helpful employees are over the phone or live chat, it just isn’t the same as talking with a banker face to face.

Complex transactions could be difficult to conduct entirely online. At a traditional bank, the bankers are able to consult with each other and you know exactly who you’re dealing with at that bank. Problem solving over the phone or on an internet chat might cause problems, and you won’t always talk with the same person.

Are online banks safe? Online banks are just as safe as traditional institutions and are held to the same standards. Make sure the online bank you choose has the FDIC seal, and keep your deposits within FDIC limits to ensure the safety of your money.

Online banks use secured technology and encryption to ensure no one steals your personal or financial information. However, you should be proactive to protect your account, whether your bank is online only or traditional. Don’t respond to emails, texts or phone calls that ask for your bank or personal information. Some scammers might pretend there’s a problem with your account and request access. If you suspect anything is amiss, contact your bank directly.

[Read: How to Keep Your Social Security Number Safe.]

Could someone tap into your bank account through your laptop? Online bank sites use technology to protect your account. This means hackers aren’t able to see the valuable information you type into the computer, such as a password or account number. However, there are still risks when using a public internet connection. It’s best to avoid banking transactions when connected to public internet.

What do you need to switch to an online bank? To set up an online bank account you need a computer, laptop, tablet or smartphone and a secure internet connection. Most online banks offer mobile check deposits if you take photos of the check or scan it. For this, you’ll need either a smartphone or a scanner. However, you don’t have to deposit checks virtually. You could also visit an ATM to cash you checks.

How long will it take to sign up? Signing up with an online bank is simple and will probably only take a few minutes. You fill out a short form with your personal information. It’s best to keep the account number of your current bank account on hand, since you’ll need to connect the accounts to transfer over initial funds.

[Read: How to Cope With Stock Market Declines in Retirement.]

Will an online only bank offer everything a traditional bank does? Yes. Online banks offer the same services as brick-and-mortar locations. Some online banks have the resources to offer more services than a traditional bank, such as budgeting tools, financial planning services, investment analysis, loan calculators and credit monitoring.

Choosing to switch from a traditional to an online bank is a big decision, but it could revolutionize the way you handle your personal finances. Some people maintain both types of accounts to take advantage of different services. You can sign up for an online bank, but keep your other account open while you become familiar with virtual banking.

Jacquelyn Pica is a staff writer at The Penny Hoarder.

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