Internet only banks were not even a possibility over 30 years ago before the commercialization of the internet. As the years have passed more and more internet banks have been established in competition with the regular bricks and mortar banks with their familiar high street prime locations. These cost big money and the banks pass these costs on to you and me, their customers, in the form of high fees, low interest rates, and high interest rates on credit card balances.
The main advantage virtual banks have over retail banks is their low overhead. They don't have to maintain costly branches or hire tellers and branch managers to process your daily banking needs. As a result, they can pass some of those savings on to their customers in the form of higher interest rates and minimal or no bank fees.
The older generation, who did not grow up with computers, probably prefer to do their banking at the local branch like they are used to doing. However, younger generations who are tech savvy, prefer to save time and money by doing their banking online with one of these direct banks.
Regular banks have tried to keep up by offering online and mobile banking features that are similar to those offered by the internet only banks. You can now bank 24/7 from anywhere and at anytime from your PC, laptop, tablet or phone which ever bank you choose!
The process of deciding on an Internet bank can be quite daunting, especially if you do not know what you are looking for.
The most important feature to look for when choosing an online bank as with any bank is that they are insured with the Federal Deposit Insurance Corp (FDIC). The maximum amount insured by the FDIC is $250,000 per depositor.
Internet Only Banks or Direct Banks
- Ally Bank
- ING Direct Canada now known as Tangerine
- Connexus Credit Union
- Bank of Internet USA
- Flagstar Bank
- Capital One 360
- FNBO Direct
However there are certain factors that, if taken properly into consideration, can help you to intelligently determine what the best option would be for you and your particular needs.