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Traditional vs. Online Banking: What's Your Best Option

September 20, 2018 · 3 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Traditional vs. Online Banking: What's Your Best Option

How frequently do you visit your bank? How often do you use your bank’s notary service? Do you make bank deposits in cash? If your answer to these questions is rarely or never, then you might want to look into online banking. After all, you are paying extra fees for these traditional banking conveniences that most of us don’t ever use.

In the conversation of traditional vs. online banks, you might realize you don’t need to rely on a traditional bank because you rarely go to the brick-and-mortar storefront to have papers notarized or deposit cash. And why pay for traditional banking services you don’t need?

These extra fees can easily add up to nearly $1,000 in 10 years, according to U.S. News and World Report . Most traditional banks will charge at least $12 a month for maintenance, plus ATM and overdraft fees. A recent Pew Charitable Trust Study finds that banks are increasing their consumer fees to generate revenue on checking accounts. In fact, most U.S. banks that offer consumer checking accounts charge at least $35 each time you overdraft.

However, if you choose your bank wisely, you can avoid these unnecessary fees, and find a bank that offers accounts with higher interest rates. Here’s a closer look at traditional vs. online banks:

Difference between Online and Traditional Banking

Security

Consumers often wonder if online banking is as secure as a brick-and-mortar bank. Whether online or traditional, banks abide by the same federal regulations. If you’re still not convinced, you can use the FDIC BankFind to make sure your online bank is FDIC-insured. However, it will fall on you to use a strong password and to avoid conducting online banking transactions on public WiFi or a public computer.

Bank Fees and Interest Rates

Online banks typically offer higher interest rates on saving accounts and lower fees on checking accounts, because you aren’t paying for brick-and-mortar offices, tellers, or other overhead costs. If you don’t use traditional banking services, you can save money and earn more interest with online banking.

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24/7 Banking

While traditional banks are typically only open 9 a.m. to 5 p.m. Monday through Friday, you can bank online at any time. If you have a question, most online banks have staff available to answer questions outside of regular office hours.

In fact, many online banks have better customer service than traditional banks, including fraud protection, apps, and 24-hour support. Rather than rushing to your bank during your lunch hour and standing in line, you can make mobile deposits and pay bills when it’s convenient for you.

An App vs. an Office

Most traditional banks require you to come to their branch office to deposit money or use an ATM. And if you use an ATM that isn’t in their network, they will charge you a fee. You can avoid ATM fees with online banking by making deposits and money transfers through a mobile banking app.

ATMs

If you need to use an ATM to withdraw cash, most online banks have a large network of ATMs you can use for free. With traditional banks, you only get free use of ATMs the bank owns, which means your options can be limited.

Opening an Online Bank Account

With online banking, you don’t have to wait until Monday morning to open a new account. You can just log on from your couch on a Sunday afternoon to open a new account, apply for a loan, or even refinance a loan.

Technology is allowing financial companies to change the entire banking experience and offer less traditional money management services. One of these new ways is SoFi Money®, a cash management account.

With SoFi Money you can save, spend, and earn all in one product. Plus, there are no account fees (subject to change).

SoFi Money also gives you access to unique benefits, including a member discount on loans, career coaching, unemployment protection to temporarily pause loan payments, financial advisors, and community events such as happy hours, dinners, and networking events.

Ready to bid farewell to your current account and use an online cash management account that is available 24/7? Open a SoFi Money cash management account today.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.

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