Online checking accounts are convenient and low-cost, but some may prefer to walk into a branch and speak with someone face to face.

Pros and Cons of Online Checking Accounts

posted in: Banking Tips, Checking | 0

The internet has changed the way we operate as a culture on many levels, specifically the way we communicate and interact with others.  Community is now a global term, and while we may be able to transfer information more easily, we often lose some level of personal attention and the other social benefits of face-to-face interactions.

This impacts us on both an individual and group level, especially when it comes to business.  While the technology boom and shift to online life has impacted all industries, few have seen as large of an impact as the banking industry.  Online checking accounts (as well as online savings accounts and other services) have changed the way that we handle our money.  There are two types of online checking accounts:

  • Online-only banks
  • An online branch of a traditional brick-and-mortar

Like with most things, there are both pros and cons to taking advantage of this convenience.


  1. Fees: Fewer fees generally go along with opening and maintaining the account. They may even reimburse you for ATM fees.  This has become very appealing as free checking starts to fade.  Online banks also require lower monthly balances in an account in order to prevent a penalty.
  2. Ease of Use: With new online tools being developed each day, using online banking is easier than ever.  Many people do not enjoy the actual process of going to the bank, waiting in line, talking to a confusing teller, etc.  Online banking lets you view your account information wherever and whenever you want, transfer money between your accounts, pay bills, make deposits, and manage your budget if need be. Furthermore, you can get text or email notifications for transactions or alerts when your balance slips below a certain amount.
  3. Interest Rates: While not specifically referring only to checking accounts, online banks usually have better interest rates than brick-and-mortar banks. This is because they do not have to take additional funds for building operation costs like traditional banks do, which can prove very costly. Studies have shown that online banks have a much better interest rate than the national average. This is true for savings account rates and CD rates as well.


  1. Fewer Options: Online banks offer fewer account options that are much simpler and more limited. This is because the banks are intended to be easier to use, which is part of their appeal. That said, online branches of brick-and-mortar banks sometimes offer things like high-yield checking accounts which have an average payout much larger than online-only banks.  These differences can be confusing, so if you choose to go online only, make sure to carefully consider the type of online bank.
  2. Customer Service: While many online banks have representatives with whom you can speak, banking can be confusing.  Some people like to walk in to a traditional bank and speak to someone face to face, especially about something as sensitive as money.  Many people prefer to have a personal relationship with the individual making their financial decisions and giving them advice.  While this is a personal preference, it is far worth it to some.
  3. Security: While many online banks pride themselves on their security measures, it can vary from bank to bank and it is often not clear until it is too late.  Accounts are always subject to data theft, hackers, and Malware.  Ironically, many of the security issues are due to errors by the customer, not the bank, so if you choose online banking, make sure your password is unique and your personal information is secure.

What Should I Choose?

Online banking has come a long way, but it is far from perfect.  Younger generations are probably more comfortable with most online activity, while older individuals often prefer to walk into a bank like they always have.  At this point, the ideal move may be to split banking between both brick-and-mortar and online services.  This way you can enjoy the conveniences and savings of internet banks while also taking advantage of the customer service and personal relationships of a traditional branch.