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Banking institutions that have physical locations have the overhead costs of maintaining their building in addition to the costs of business operations. The amount of interest and customer benefits offered is limited due to these expenses.

When a bank operates 100% over the internet, however, they reduce their overhead expenses and can offer account holders better interest rates as a result. The availability of higher interest rates is the primary benefit of online savings accounts – but there are other advantages to using an online bank, as well as a few disadvantages.

Anytime, Anywhere, Banking When it’s Convenient to You

When you bank with an online institution, you are not limited to the “banker’s hours”. Your local banks operate during specific hours, typically 9 to 3 on weekdays and half a day on Saturday - and that means you have to work within their schedule. This becomes a problem for people who work the same hours the bank is open.

If you want to run to the bank on Sunday afternoon, you are out of luck. With an online bank, if you wanted to open a certificate of deposit or money market account at midnight on Saturday – you can. Whatever services the online bank offers can be done at any time, from any computer with internet access. Not only can you bank when it’s convenient for your schedule, but you don’t have to drive anywhere or go out of your way to do it. Just boot up the nearest computer with internet access and log in.

Improved Account Management Online

Banks that operate online have well developed, easy to navigate websites because they know that is how you will be conducting your transactions. A bank that has a physical location typically creates a website as an afterthought, and they are rarely as well designed as an online bank site. The features and account management options for your local bank’s website may be limited in comparison with an online bank, as well, since they expect you to come into the local branch office to open accounts or make changes to them.

Potential for Internet Problems

While it is rare, having an online bank means you could go to log into your account and discover that the website is down. The technology is good but not perfect and there are times when the bank’s website just might not be available.

Delays in Processing

Online banking requires patience. When you make a deposit, whether it’s via a mailed check or a bank transfer, you can expect to wait awhile before the funds become available. A bank transfer (from one bank to your online bank or vice versa) can take 3-5 business days. So while your deposit may earn higher interest once it “gets there”, you’ll have to be patient because it’s going to take longer than stopping to deposit a check on your way home from work.

Deciding if Online Savings Accounts Are For You

Like any other decision you make, you need to compare the pros and cons of using online banks for your savings account. Online banks have both advantages and disadvantages. It’s difficult to overlook the many benefits, including having higher interest rates, improved account management and twenty four hour banking ability – as they are wonderful advantages of having an online bank. You have to decide whether these advantages outweigh the disadvantages of online banking based on how you personally will use your savings account.


The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.