I have never dealt with internet-only banks. I was looking to open a CD and a savings account. Can someone please speak to any internet-only banking caveats that I should be on the look out for? Or give a recommendation to a customer friendly internet-only bank especially when I try to collect the money from a CD that matures. Thank you for your input.
Answers
Have CDs at any place moved upon maturity into a savings or checking account, and you should be able to then transfer those funds via ACH. I also use ALLY as my hub for ACH in or out of other firms.
I always assume that ANY online resource is capable of being hacked, but as long as you have FDIC or NCUA insurance, you should be OK. DO NOT link to any other financial accounts with LARGE cash balances. At my main bank, I have two checking accounts. One is for online use with others firms like ACH, so I keep smaller sums there and make sure it is not linked for overdraft with any other account. So worse case, no one can get into my main working capital. If I am doing larger ACH amounts, I temporarily move the funds into or out of this special purpose account.
I must have 4 or 5 accounts at internet banks from when they were running specials. There is always someone who is a bit higher than Ally, but they remain towards the top on their rates being offered on savings. I keep checking there too for times I need funds/checking moved TODAY. Their ACH limits are good, but can take 2-3 days between start to finish, but they are FREE.
DO not be afraid of internet banks, so long as they have been around a while. I would avoid any start ups even if running a special. Just make sure they have FDIC or NCUA insurance, which you can also verify with those agencies if you have any doubts.
Lastly, watch all of your accounts fairly closely (internet or brick and mortar ) for anything that is odd or out of place. ( TRUST, but Verify ).
1) There's no real way to deposit cash
2) If you need a cashiers check, Ally will mail it to you but it takes several days
3) If you need a signature guarantee or notary, you can't get it through Ally
4) There are a few other esoteric services (eg foreign currency exchange) that Ally doesn't have
For these reasons, I've always maintained a second no-fee account at a local bank just in case I've needed their services.
The only caveat really is the 6 withdrawals per month from a savings account. But you can have 2 or more savings accounts at ally.
Many credit unions are ok too. But for a newbie, I think the Ally website is the easiest to deal with.
I have been using online banks & credit unions for a very long time. No real downside other than some requesting a copy of my drivers license and one even wanted something notarized. (Most do not)
Ally has great ACH but you need to prime external accounts before you get 1 day transfers. (That means a $200+ transfer from the external account to Ally) Once you do that, you get fast transfers.
For me, I need things to be simple. A user-friendly account page that make transactions easy. (Hard to know before acct is open). And I do not like severe restrictions on ACH transfers, in or out. A 5 or 7 day hold on new deposits is understandable, but I want to be able to withdraw large amounts if need be. Good efficient phone customer service is a priority too. But hopefully I can do everything right from the acct page.
I won't mention specific names, as you will read both good & bad comments about all of them. It's a personal choice. I've bought some slightly lower yielding CDs just because the bank or CU had an excellent website and customer service.
Protection from electronic banking fraud is covered by the Electronic Funds Transfer Act (also known as Regulation E). Regulation E applies to electronic funds transfers (ETFs) in bank accounts. Basically Regulation E says that if someone fraudulently takes money from your bank account by an ETF you will get all your money back if you notify your financial institution within 60 days after the fraudulent transaction appears on your bank statement. The rules regarding a lost debit card, which are a type of ETF, are somewhat stricter.
The issue of bank fraud does come up, and you mention ALLY which is one of the leading online bankers insured by the FDIC. I guess you have to do your research and find more opportunities, and there may be fines and other requirements you may want to check into.
What the heck is that supposed to mean?
Have you ever heard of the NCUA?