If you’ve been looking at savings account rates lately, you’ve probably noticed that online banks offer some of the best rates. But, before you start saving money in an online account, think about whether it’s really better.
No Bank Branches to Visit
If you prefer to talk to a bank teller in person, then a traditional savings account is a better option for you. With an online account, you’ll only be able to talk to customer service over the phone, where you’re more likely to encounter rude customer service representatives.
Depositing Money
If you need to deposit money in a traditional savings account, you can simply drop by the bank with your deposit. Most banks have a drop box where you can put deposits after hours. Traditional banks also let you transfer money electronically.
It’s not always so easy to deposit money in an online savings account. Your options are to make an online transfer or mail your deposit. That means you’ll have to wait several ways before your deposit is available. It will be much longer if you have to mail a check because not only do you have to wait for the check to reach the bank, you have to wait for check to clear before the money is in your account. It’s not a huge deal since you probably won’t need to access the money for awhile, but that’s less time for your deposit to earn interest.
Withdrawing Money
Getting money out of an online savings account could be harder, since you can’t go to a bank branch to withdraw money. Instead, you’ll have to use a bank transfer or withdraw money from an ATM, if your bank gives you an ATM card. You’ll probably have to pay a fee to withdraw money using an ATM card, from the bank whose ATM you’re using, from your bank, or possibly from both.
If your savings account is at a local bank, you can visit the branch in person to withdraw money or use your ATM card, if you have one, at one the bank’s local branches.
Which is Better?
Sure, online accounts pay better interest, but when it comes to depositing and withdrawing money, there are some drawbacks. But, if you rarely visit a bank branch now because most of your transactions are electronic, then having an online account won’t hurt. And, there’s no reason you can’t have both an online an a traditional savings account if you need to.