Key takeaways
Online banking is a digital service that lets you manage your bank accounts securely through a website or mobile app instead of visiting a branch.
Typical online banking services include 24/7 account management, automatic bill payments, mobile check deposits, instant funds transfers, and cardless ATM withdrawals.
The main benefits of online banking include convenience, easy account monitoring, secure transactions, potentially lower fees, and higher interest rates.
Traditional banks still hold an edge for cash deposits and in-person help, so weigh both options before you choose.
Online banking lets you manage your money from a website or mobile app instead of a branch. You can check balances, pay bills, transfer funds, and deposit checks whenever you need to.
Online banking services range from high-yield savings to mobile check deposit and fee-free ATM withdrawals. Learning how these features work can help you decide if online banking is right for you.
What is online banking?
Online banking is a digital service that lets you manage your bank accounts through a website or mobile app. You access it by logging in with your username and password, so you can bank without going to a branch.
With online banking, you can check balances, transfer money, pay bills, and deposit checks. Many online banks also add savings tools, budgeting features, and account alerts.
Online banking works much like traditional banking, with a few key differences. An online-only bank does not have a physical, brick-and-mortar location. It still offers many of the same services, including electronic fund transfers, access to ATMs, direct deposit, and debit card purchases.
How does online banking work?
Online banking gives you access to your accounts through a web browser or mobile app around the clock. Once your account is open, you can manage your money anytime, from anywhere.
You can:
Check balances and transactions in real time to track spending or spot unusual activity.
Transfer funds between accounts or send money to others instantly.
Pay bills and set up recurring payments to avoid late fees.
Deposit checks securely using your mobile device's camera.
These tasks happen digitally, so you can handle your banking from your computer or phone.
Online banking services and features
Online banking through a credit union or bank offers a full range of services to simplify money management. Many online bank accounts include these services and features:
Real-time account monitoring: Check your balance 24/7, even outside regular business hours.
Digital payment system integration: Use Apple Pay®, Google Pay®, or a similar system for seamless online and in-store transactions.
Easy automatic payments: Pay recurring bills automatically to reduce the risk of missed payments.
Mobile check deposit: Deposit checks directly into your account using your smartphone's camera.1
Automated savings features: Stash a percentage of your pay in your savings account automatically to reach your goals faster.
Saving and budgeting tools: Manage expenses by automatically categorizing your transactions and tracking your savings goals.
Credit card and loan management: Check balances and pay bills to avoid late fees and extra interest charges.
Secure online statements: View your account history instantly without waiting for statements in the mail.
Cardless ATM withdrawals: Use your mobile app to withdraw cash, even without your debit card.2
24/7 online chat and customer service: Get answers from a customer service agent through chat or phone.
Pros and cons of online banking
Like any financial service, online banking has pros and cons. Here's a closer look.
Pros | Cons |
Convenience | Dependence on an internet connection |
24/7 account monitoring | Harder to deposit cash |
Faster and safer transactions | Potential security and privacy concerns |
Lower fees | No physical branches |
Higher interest rates | Fewer product offerings |
Pros of online banking
Online banks often prioritize user-friendly digital platforms. Many offer features designed to save you time and reduce costs.
Convenience. Manage your finances from home or on the go, including transferring funds and paying bills, with just a few clicks.
24/7 account monitoring. Check your balances, payments, and deposits at any time of the day or night.
Faster and safer transactions. Complete transactions quickly using a secure connection that helps prevent identity theft.
Lower fees. Bank without the fees and enjoy reduced ATM costs, minimal maintenance charges, and fewer account service fees.
Higher interest rates. Earn a higher return on your savings than with a traditional brick-and-mortar bank.
Cons of online banking
Online banking offers many advantages, but it also has a few potential downsides. Here are the main ones to keep in mind.
You need an internet connection. Technical issues or website maintenance could temporarily limit access to your accounts.
Harder to deposit cash. You'll need to find in-network ATMs that accept cash deposits. This can be less convenient without a large fee-free ATM network.
Potential security concerns. Opening an online bank account is generally safe, but there's still a small risk of phishing attacks or data breaches.
No physical branches. This can be inconvenient if you need face-to-face help for more complex issues.
Fewer product offerings. You might need to go elsewhere to open a certificate of deposit, a money market account, or an investment account.
Is online banking safe?
Online banking uses several layers of security to protect your money and personal information. Online banks rely on encryption and multi-factor authentication to keep unauthorized users out. Many also run fraud monitoring that flags unusual activity on your account.
Some financial technology companies work with partner banks that hold your deposits. Your money stays with regulated partner banks while you handle everyday banking through an app.
Online banking vs. traditional banking
Online banking and traditional banking cover the same core tasks in different ways. The right fit depends on how you like to access your money and get help.
Feature | Online banking | Traditional banking |
How you access money | Through an app or website | At branches, plus an app or website |
Fees and rates | Often lower fees and higher interest rates | May charge more account and service fees |
Cash deposits | Through in-network ATMs | At a branch with a teller |
In-person help | Chat or phone support | Face-to-face at a branch |
Online institutions often keep costs lower because they have less overhead, which can help you avoid ATM fees. Traditional banks still hold an edge when you need to deposit cash or want in-person help.
Mobile banking is the app-based part of online banking. You use it to bank from your phone, while online banking also covers banking from a web browser.
Should you open an online bank account?
Here are some questions to ask yourself to decide whether online banking is a good fit for you.
What services are you looking for? Different institutions offer different types of bank accounts and features, so identify what matters most and confirm those services are offered.
How secure is your information? Investigate their security measures and track record with data breaches. A solid security reputation signals stronger protection for your information.
What customer support do they offer? Assess the quality of customer service. Consider the availability and the channels used for support, like phone and chat.
How can you deposit cash? Check whether there are in-network ATMs near you that support cash deposits.
How important is in-person service to you? Consider whether you're comfortable banking fully online or prefer speaking with a banker in person.
How to open an online bank account
Opening an online bank account is quick and convenient. Once you've chosen an online bank, follow these steps:
Go to the bank's website or download its mobile app.
Select the type of account you want to open, such as checking, savings, or both.
Complete the online application and upload any required identification documents.
Fund your new account by transferring money or setting up direct deposit.
Set up online access and automatic bill payments so you can start using your account right away.
Access your bank account online
Online banking can simplify how you manage your money day to day. Weigh the pros and cons to decide if it fits your needs.
Chime® is a financial technology company that offers online banking through its partner banks. You can open an online bank account through Chime from your phone.