Chime® is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

Pros and Cons of Online Banking to Know About

Timothy Moore • May 12, 2023

What are the pros and cons of online banking? We'll explore all the perks – and some of the drawbacks – of internet banking below.

What is online banking?
Online banking , also called internet banking, is a system that allows you to access traditional banking features entirely online or through a mobile app. You can open checking and savings accounts, pay bills, deposit checks, move money, and more – all online, without ever setting foot in a physical bank branch.

Internet banking, also known as online banking, has become a popular way to manage your money. With an online bank account, you can do all your banking from the comfort of your couch.

Online banking offers more than just convenience. Some of the top perks of internet banking include higher interest rates and lower fees.

But brick-and-mortar (that is, in-person) banks still make sense for some consumers. Choosing between in-person and internet banking is a key decision on your journey to leveling up your personal finance.

So what are the pros and cons of online banking, and is it the right move for you? Let’s dive in.

Easy online banking

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  • 50,000+ fee-free ATMs~
  • Chime Visa® Debit Card
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What is online banking?

Online banks operate without branches and allow you to manage your bank account information over the internet using a computer or mobile phone. Internet banks typically have a convenient and easy-to-use mobile banking app – so you’ll never miss the days of getting in-person help at a branch.

Internet banks allow you to handle a range of financial transactions from home or on the go – functions that you may have previously had to do at a bank. Some of these online banking features include:

But online banks don’t corner the market on these features anymore. Many traditional banks and credit unions with branches now let customers access their account statements (or e-statements) via the internet. Some have even started to add other core mobile banking features to their services to keep pace with internet banks.

That means internet banks must now differentiate themselves with newer app features, higher APYs on checking and savings accounts, and lower (or no) fees.

Deposit checks from anywhere1 and get paid up to two days early with direct deposit2 – just use the Chime online banking app.

5 pros of online banking

Higher rates

Since internet banks don’t have to spend money on maintaining physical locations, they can offer higher interest rates for savings and checking accounts than traditional banks.

For instance, high-yield savings accounts from internet banks might have a 2.00% APY. For comparison, the national average is just 0.39%3, and some of the top banks in the U.S. offer just 0.01% APY on savings.4,5

Many internet banks also offer certificates of deposit (CDs) with high interest rates, including no-penalty CDs for early withdrawal.

Lower fees

Internet banks also have the upper hand when it comes to fees. Because they have fewer overhead costs than traditional banks, internet banks often charge lower fees – or no fees at all.

That means you’ll be less likely to pay monthly service fees, foreign transaction fees, overdraft fees, and ATM fees, to name a few.

Accounts at large brick-and-mortar banks often carry monthly service fees of around $10, though they may be able to waive them if you meet certain requirements, such as having a $1,500 minimum balance.

Better for the environment

By receiving all your banking correspondence by email or text, internet banking reduces the amount of paper you use. You can easily access all your bank statements online or in your app.

But you don’t have to wait for those monthly statements. Another perk of having an internet bank account is the ability to receive push notifications to your phone.

For instance, you can get immediate notifications every time your debit card is swiped – that’s huge for stopping fraudsters in their tracks.

Bonus: Online banking means you don’t have to drive to a bank. Less driving is a big win for the environment (and for your wallet, with gas prices going up).

Accessibility

Traditional banking hours aren’t always convenient, but with online banking, you can access your bank accounts and bank services wherever there’s internet – on your computer or mobile device – any time.

You can also reach customer service by phone – in many cases, 24 hours a day, seven days a week.

Already a Chime customer? Here’s how to contact Chime customer service on your own time.

Quick and convenient transactions

When it comes to conveniently depositing or transferring money, internet banks have traditional banks beat. You can easily transfer money from another checking account or savings account to your online bank and deposit checks using an app, eliminating the need to find an ATM.

Some internet banks offer even more convenience. For instance, you may be able to get your paycheck up to two days early, and some banking mobile apps offer peer-to-peer transfers – meaning you can send easily send money to friends and family for dinner or pay them back for concert tickets.

3 cons of online banking

No physical branches

A traditional bank provides the opportunity to have face-to-face interaction with the staff at your local branch. That can be helpful if you need additional financial services, such as a loan, or when you have to make changes to your banking arrangements.

In addition, many traditional banks provide special promotions for mortgages, auto loans, and credit cards to their existing customers.

With an internet bank, you’ll likely have limited access to in-person help and fewer opportunities to build those personal relationships.

Cash deposits can be a challenge

Internet banks make depositing a check from your phone easy, but cash can be a little trickier.

For example, you might have to find a deposit-accepting ATM. Or you may need to put money into a traditional bank account and transfer funds to your online account. You could also use cash to buy and deposit a money order electronically using your online bank’s mobile app.

Some accounts make it more convenient to deposit cash than others. For example, Chime partners with Walgreens for cash deposits. Just head to one of the 8,500+ Walgreens nationwide, and you can deposit cash into your Chime account for free.6

You can’t get foreign currency

International transactions may not be possible with internet banking, meaning you wouldn’t be able to exchange U.S. dollars for another country’s currency.

However, some online banks compensate for this by offering free ATM usage abroad and reimbursement of exchange fees. For example, Chime doesn’t charge foreign transaction fees.

Open an online bank account

Traditional and online-only banks both have their advantages. If you want higher rates and lower fees and don’t need frequent in-person banking services, an internet bank may be ideal for you.

You can open an online account without giving up an existing account at your local financial institution. Having accounts at both a traditional and online bank could give you the best of both worlds.

Think you’re ready to get an online account? Here’s how to open a free online account through Chime.

FAQs

What are the pros of online banking?

The pros of online banking include:

  • Higher rates and lower (or no) fees
  • Easy-to-use mobile app and online platform
  • Many helpful features, like mobile check deposit and early paycheck access
  • Quick and convenient transactions
  • Constant access to your account
  • Less paper (and gas to drive to branches), which is better for the environment

What are the disadvantages of online banking?

Some disadvantages of online banking include:

  • No physical branches when you need help
  • Challenging cash deposits
  • No access to foreign currency

What is the difference between online banking and internet banking?

Online banking and internet banking are the same thing. The two terms are interchangeable, though “online banking” has become the more common phrase as online banks have grown in popularity.

How to get internet banking?

Interested in opening an internet bank account? Do your due diligence by researching multiple internet bank options while considering your needs. Some things to compare when searching for a bank account include:

  • APYs
  • Fees
  • Mobile banking features
  • In-network ATMs

After finding the best internet bank for you, apply online or download the mobile app to apply from your phone. Upon approval, the bank will typically mail you a debit card.

Is online banking safe?

Online banking is safe, especially when you follow our tips for safe online banking, like choosing a strong password, using multi-factor authentication, and setting up account alerts.

If you prioritize finding an internet bank with top security features, you may find the experience better than a traditional bank. Your money should still be FDIC-insured, and with instant alerts about account activity, you can immediately know if your account’s been compromised – and act fast.

Easy online banking

  • Checking Account with no monthly fees
  • 50,000+ fee-free ATMs~
  • Chime Visa® Debit Card
Get Started

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

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.

Third-party trademarks referenced for informational purposes only; no endorsements implied.

‡ SpotMe® for Credit Builder is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.

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, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

1 Mobile Check Deposit eligibility is determined by Chime in its sole discretion and may be granted based on various factors including, but not limited to, a member's direct deposit enrollment status.

2 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.

3 Information from the FDIC's "National Rates and Rate Caps" as of May 3, 2023: https://www.fdic.gov/resources/bankers/national-rates/index.html

4 Based on Chase Savings account interest rate as of May 3, 2023: https://www.chase.com/personal/savings/savings-account/interest-rates

5 Based on U.S. Bank Standard Savings account interest rate as of May 3, 2023: https://www.usbank.com/bank-accounts/savings-accounts/standard-savings-account.html

6 The retailer that receives your cash will be responsible to transfer the funds for deposit into your Chime Checking Account. Cash deposit fees may apply if using a retailer other than Walgreens.

~ Out-of-network ATM withdrawal and over the counter advance fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

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