5 Signs an Online Bank Is the Wrong Choice for You
Written by
Martin Dasko
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
A recent report from PYMTS found that 81% of banking customers manage their finances through mobile devices monthly.
While mobile banking and online banks have become more popular, the report determined that financial institutions must balance the transition to digital with maintaining human interactions. The report also revealed that 25% of customers switched bank accounts in the last year, with 51% looking for better digital experiences and 39% seeking improved customer service.
While online banks can be a great option because they offer competitive interest rates and user-friendly digital tools, not everyone is a proponent of relying on technology to manage their finances.
Here are the five signs that an online bank isn’t the right choice for you and that you’re better off with a traditional one.
1. You Prefer Speaking With Someone in Person
“If visiting your local branch and speaking with bank employees face to face is a priority for you, online banking probably won’t be the right choice for you,” said Ben McLaughlin, personal finance expert and Raisin president.
If you prefer to handle your financial transactions or seek advice face-to-face, you may not appreciate an online bank since you’ll likely never see anyone in person.
A few possible reasons for preferring in-person banking could include:
- You deposit checks frequently.
- You tend to make purchases in cash.
- You earn a cash-based income in the service industry.
- Even though online-only banks will give you access to an ATM network, a location may not be near you.
There are many scenarios where you’ll want to speak with someone in person, and an online bank could make it challenging to feel comfortable about financial challenges.
2. You Don’t Feel Comfortable About Conducting Financial Transactions Online
“If you don’t feel comfortable conducting financial transactions online, a more traditional brick-and-mortar branch will better suit your needs,” said McLaughlin.
Some people prefer the convenience of mobile banking, while others simply aren’t comfortable with handling complex financial transactions online. Since personal finance is personal, there isn’t a one-size-fits-all solution.
There are a few situations where it makes sense to appreciate a more traditional approach to customer service, including:
- Loan applications.
- Paying off major bills.
- Sending money to friends and family.
- Retirement planning.
Thanks!
3. The Customer Service Options Are Limited
“If an online bank supports a very low customer service option, such as only a live chat without call access, it’s a warning sign,” noted Faris Khatib, a financial expert and CEO at Ideal Tax. “Traditional banks can and usually do assist in face-to-face ways, which is very helpful when more serious issues come up.”
A notable issue with some online banks could be that reaching someone is challenging. When you face a serious financial issue like potential fraud, or you want to apply for a mortgage, you’ll want to speak with someone instantly instead of waiting on a limited live chat option.
4. There Are Limited Services Offered
“An online bank may have limited services offered compared to conventional banks, such as loans, mortgages and investment products,” said Khatib.
If someone wants to apply for a mortgage, inquire about their credit score or open up a new investment account, they may get more options and resources with a traditional bank.
As tempting as it is to chase the highest rate for a savings account, you may have more complex financial needs. This leads us to the next point.
5. Savings Rates Aren’t Impressive
While many online banks are known for incentivizing new customers with competitive interest rates compared to traditional banks, it’s important to remember that these are usually only introductory offers.
Just because a bank is online-only doesn’t guarantee it will offer the best rates in the long run. This is why it’s essential that you conduct your own research to ensure whichever bank you choose is the right fit for you and your financial goals.
More From GOBankingRates
