What are Internet-only banking accounts?

About Internet-only bank accounts

Internet-only bank accounts are online bank accounts with virtual banks, or banks that do not have physical branches, tellers, or ATMs. These banks function exactly the same as a traditional bank, except that account holders cannot deposit or withdraw funds in person, nor do they have easy access to services such as purchasing a certified bank check.

Another difference with online-only bank accounts is that the customer service experience is a bit different, as there is limited or no opportunity to meet or build a personal relationship with the bank employees. And, because Internet-only banks generally do not have ATMs, depositing or withdrawing funds can take a bit more effort or time.

Consumers choose to use virtual banks because they often offer higher interest rates that traditional brick and mortar banks, and sometimes other benefits as well, and the consumers don’t mind the trade-off in convenience of services like ATMs.

Some things for consumers to think about when considering an Internet-only bank:

• Is the bank insured by the FDIC?
• What is the security process?
• How much work is it to withdraw or deposit funds?
• How easy is it to transfer funds between accounts?
• How many accounts can be set up and linked?
• What other products or services are offered?
• How are customer service issues addressed?