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Banking Basics

Explore the Features and Advantages of Online Banking

Thinking of switching to an online-only bank? Here are the modern features you should look for in a new online bank account. 

Katana Dumont • August 25, 2021

If you are dissatisfied with your bank and are looking to make a switch, you’re in luck. New banks, credit unions, and financial institutions are popping up every day, and the competition for your business is revving up. So how do you know where to entrust your money when there are so many options out there? First and foremost, you need to weigh the benefits of one account versus another and the features they offer. 

The steady rise of online banking apps and accounts has made it easier, safer, and more convenient to bank than ever before. Not to mention that online-only banks come with a slew of features and services that a traditional bank might not have. So with that being said, you should consider switching to an online bank account. 

Check out the top modern features you should look out for when it comes to online banking.

In This Article

  1. Features to Look For in an Online Bank Account
  2. Advantages of Online Banking
  3. FAQs
  4. Final Thoughts

Features to Look For in an Online Bank Account

Not all bank accounts are created equal. While most online-only banks will offer many of the same services and features as a traditional bank — sometimes even a few more — every online bank is slightly different. Look for features that will save you time and money, and ones that will provide you with the peace of mind that your money is safe and secure. 

 

Safety Features

The first question you should ask yourself is, are online banks safe? The short answer is yes. Online banks come with a heap of safety features to protect you and your money. When considering an online-only bank, look for the security measures it has in place.

Many online banks use tools like multi-factor authentication, encryption, firewalls, and the requirement of using secure browsers to keep your data under lock and key and safe from hackers. 

Things to Look For:

  • Multi-factor authentication
  • Secure Sockets Layer (SSL) encryption 
  • AI
  • Biometrics
  • Firewalls
  • Secure browser restrictions 
  • Fraud monitoring 

Mobile Banking App

Your online bank account should come with an intuitive mobile banking app that allows you to easily access your account on your phone. The app should be able to handle everything from tracking your spending and savings to paying friends on the go. 

Look for an app that works on all smartphone devices and allows you to transfer money, check your account balances, deposit a check, and even grow your savings automatically without ever worrying about hidden banking fees.

Things to Look For:

  • App notifications and transaction alerts
  • Mobile check deposit 
  • Fee-free mobile payments and money transfer 
  • Spending and saving trackers
  • Mobile payment app support
  • Online bill pay 

 

Early Direct Deposit 

The option to sign up for direct deposit is always a good idea. Not only does it minimize paperwork and hassle, it also gives you the possibility of getting your paycheck faster. Many online banks offer direct deposit, but only a handful allow their customers to receive their paychecks early.

Look for an account that has early direct deposit. For example, when you open an account through Chime, you no longer have to wait for your money. With Chime’s Get Paid Early feature, you’ll get paid as soon as your paycheck is available – which is often up to 2 days earlier¹ than traditional banks.

Things to Look For:

  • Ability to access your funds up to 2 days early
  • Direct deposit set up via mobile app
  • Access to a pre-filled direct deposit form

ATM Withdrawals 

Despite the move to make everything paperless and online, sometimes you might still need to physically access cash. Luckily, switching to an online-only bank doesn’t mean you lose out on ATM and debit card services. Several online banks and financial institutions maintain relationships with ATMs or ATM networks and offer a method of easily locating ATMs via their banking app. 

Unlike traditional banks, which often charge customers a fee for using an out-of-network ATM, most online banks don’t charge any ATM fees at all, or they offer reimbursement for any fees incurred.

Things to Look For:

  • No ATM fees
  • Debit card
  • ATM locator app

Built-in Automatic Savings Account

When switching to an online banking service, look for one with an automatic savings account. This will allow you to automatically schedule funds to be transferred from your checking account to your savings account. And you’ll be able to automatically transfer a portion of your paycheck directly into your savings account.

For example, saving money with Chime is a no-brainer. Every time you swipe your Chime Visa Debit Card, Chime rounds transactions to the nearest dollar and transfers the round-up from your Spending Account straight into your Savings Account². The more you use your Chime card, the more you build your savings. 

Things to Look For:

  • Automatic round-up feature
  • Automatic paycheck transfer
  • Debit card

Credit Building Features 

Building credit can take time, but if you look for an online account with built-in credit building features, you can expedite the credit building process. Look for features that turn your everyday purchases into credit-building opportunities.  

Very few online banks and financial institutions offer credit building support. Luckily, Chime offers a Credit Builder Visa Secured Credit Card³ that helps you build your credit and increase your credit score by an average of 30 points⁴. 

Things to Look For:

  • All-purchase accepted card
  • Cash-advance features
  • Account transfer 
  • Automatic balance payment
  • Activity report automatically sent to credit bureaus 

Fee-Free Overdraft 

Brick and mortar banks have enormous operational expenses that online banks simply don’t have. This means that with an online bank or online financial institution, fees are kept to a minimum because of the low overhead costs associated with an online business. So one perk of an online bank account is saving on fees that most traditional banks would normally charge their customers, such as overdraft fees

Consider switching to an online account with fee-free overdraft protection. Some online accounts, like Chime, offer their own version of overdraft protection that safeguards their customers from any payments or withdrawals that would result in a negative balance. Chime’s SpotMe feature lets users overdraft up to $200 on debit card purchases with no fees⁵.

Things to Look For:

  • Fee-free overdraft protection up to a certain limit
  • Deposits are automatically applied to your negative balance 
  • Notification alerts
  • Ability to easily increase your limit 

Pro Tip:

To be sure your bank is legitimate, look for a bank that is FDIC-insured. The Federal Deposit Insurance Corporation helps make sure your accounts are protected against bank failure, protecting you for up to $250,000 per account.

Advantages of Online Banking

Along with the features and services, online-only banks offer a number of advantages over traditional brick and mortar banks, including lower fees and higher interest rates, 24/7 customer support, and easier access to your money.

Check out the summary below of everything online banks have to offer:

  • 24/7 account and service access
  • Speed, efficiency, and convenience
  • Online bill payment
  • Higher interest rate offers
  • Lower fees
  • High-yield accounts
  • Automatic savings
  • Mobile deposits
  • Immediate access to your bank statements
  • Money transfers between accounts
  • Alerts can be set up to monitor fraud
  • Alerts can be setup to inform you of transactions and balance activity 
  • Enhanced security
  • Early tax refunds
  • Check deposits

FAQs

Are online banks safe?

Yes, online banks are safe. With standard security measures, online banks are just as safe as traditional banks. Look for safety features such as encryption, multi-factor authentication, and fraud monitoring. Before you open any bank account, make sure the bank or financial institution is insured by the FDIC. There are also measures you can take to ensure secure online banking, including avoiding public Wi-Fi networks, using a strong password, and keeping anti-virus software up to date.

How does online banking work?

An online-only bank is not much different from a traditional bank except for the fact that it doesn’t have a physical, brick-and-mortar location. All your banking needs are managed exclusively via the web or mobile app, and with a simple internet connection or data from your phone, you have access to all your banking needs at any time of the day.

How do I open an online-only bank account?

Opening an online bank account is pretty simple and can be done instantly, using a computer or smartphone. Each account might vary, but, in general you’ll want to do the following:

  1. First you’ll want to apply for an online bank account and download their mobile app. Simply go to the site or app of the online bank account, fill out the application, and then provide your personal information and verification. 
  2. Once you apply you’ll want to set up direct deposit to fund your account.

Final Thoughts

When making the switch to a new bank account, look for the features and services that will ultimately make your life easier and better support your financial wellness. Never settle. There are accounts out there that can meet all your financial needs, all you have to do is look for them. Are you ready to open an account and make the switch to a better online banking experience?

Banking services provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Chime Visa® Credit Builder Card is issued by Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see back of your Card for its issuing bank.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank and Stride Bank N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

1 Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.

2 Round Ups automatically round up debit card purchases to the nearest dollar and transfers the round up from your Chime Spending Account to into your savings account. Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Spending Account into your savings account.

3 To be eligible to apply for Credit Builder, you need to have received a qualifying direct deposit of $200 or more to your Spending Account within the last 365 days of your application. The qualifying direct deposit must have been made by your employer, payroll provider, or benefits payer by Automated Clearing House (ACH) deposit. Bank ACH transfers, Pay Friends transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, and cash loads or deposits are not qualifying direct deposits.

4 On-time payment history can have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

5 Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Spending Account each month. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member's Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime's discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won't cover non-debit card transactions, including ACH transfers, Pay Friends transfers, or Chime Checkbook transactions. See Terms and Conditions.

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