We all try to do our best to maximize the return we get on our money. It has driven an entire subsection of the banking industry to cut costs and offer online savings accounts. The rates the banks offer vary as much as the interfaces they offer for you to manage you accounts. I constantly see reviews, articles, and even rate lists that tout the highest rates as though that is the only thing that matters. I have learned the hard way there is a lot more to an online banking account than just interest rate.
One of the things you have probably never thought about when opening an account online. I know I didn’t think about it. I am used to holds on transfers and checks bu when I make a direct deposit transaction I expect it to be direct and immediately available, that isn’t always the case. I have been using iGoBanking’s Online Checking Account for a while now but I am finally wising up and getting the hell out. A portion of my paycheck is direct deposited on Mondays, they hold it for three days so I don’t have access to it until Thursday/Friday. This is unacceptable for a checking account. In my savings it doesn’t matter but checking I “need” that cash. Check before you open an account and make sure they don’t hold your direct deposits.
Most online accounts limit the amount you can transfer at one time, and the amount you can transfer in any given day or month. These limits don’t mean a lot to people like me who don’t have a ton of cash but when you are looking at $50k+ in an account you have to be prepared for the reality that you may not be able to get all that money in just a couple of days. Check with your bank and make sure you know what their limitations are on transfers.
When you are looking for an online checking account ATM locations and fees are far more important than the interest rate. When you are making 2% or less on a minimal average balance the ATM fees you pay will murder any chance you had at earning interest. Most banks are only members of a specific ATM network which you can use surcharge free, anywhere else you have to pay. You should check and make sure the ATM’s are convenient to where you live, work or play. Otherwise you are better off sacrificing interest rates for an easier to access ATM. These ATM fees are another thing that has killed me with my current online checking account.
While not directly related to your interest earnings the user interface makes a big difference in how you interact with your online account. A well designed interface makes you feel like you are dealing with a professional bank who care about your experience. Not only does it increase your confidence in the bank it also allows you to more easily manage your money. The bad part about interfaces is you don’t really know until you open the account. To get a little more insight you can look to reviews for more details.
Finally customer service is important when you need some help you want to know you can get it easily. One of the areas online banks cut costs is on their customer service availability. They either aren’t available, or they aren’t easily accessed. It makes it difficult to get the answers you need and can make a big difference in your experience with a bank.
What other things should you look for in your next bank account?