Online Bank Accounts

• Guides
• Published: 16 Oct 2008 in Money and Current Accounts

• More and more of our routine domestic chores are done online via the internet. As you’d expect, therefore, online banking has seen tremendous strides forward in recent years. While most high street banks also include an internet banking facility to their account holders, this article is mainly about internet bank accounts that are offered online only.

Pros

So, what’s the advantage of an online bank account, apart from being able to do your banking in your pyjamas? The logic of internet bank accounts is simple – and the same logic that applies to most internet business. By conducting your transactions online, you are saving the business money (in this case, a bank) because it has no expensive over-the-counter services to maintain, and these savings can be passed on to you the customer in the way of higher savings rates and lower interest rates and charges.

When considering whether to open an online bank account, therefore, you’ll want to know just what those savings and interest rates are. But there are other aspects of the service you’ll want to know about before you can compare it with those offered by the high street alternatives:

• How easy will it be to access and withdraw your money?
• Does the online bank offer additional products and services, such as loans, mortgages and credit cards?
• If your current high street bank also provides an internet banking service, can you use the possibility of opening a separate online bank account to negotiate a better deal or better rates from your existing bank?
• Will it be easy to put questions about your account online, and, even more importantly, get answers?
• Safety and security – can you trust the safety of operating online and the bank’s security procedures?

If you’re reassured by the replies to these kinds of questions and any other particular concerns you might have, then you might well choose to explore the convenience of an online bank account. Before taking that plunge, however, it’s as well to think again about some of the possible drawbacks.

… and cons

The most frequent reason you’ll be given for avoiding an online bank account and sticking with your high street branch is because the latter offers the convenience and reassurance of face-to-face, across-the-counter contact with its friendly staff – i.e. for reasons of good customer service. Clearly, with an online bank account you’re not going to be able to pop in to a local branch. Then again, however, there are increasingly few of the high street variants these days and in many instances, even with a high street account, you’ll be forced to attempting to do your business via a call centre and the lottery of someone at the other end of the line being helpful and knowledgeable – or not.

Although you’d expect the internet to be making things happen faster, it can in fact take longer for cheques to clear through an online account or deposits to be credited to your account.

You may also find that the online account gives you rather less flexibility when it comes to withdrawing your money and using it for purchases other than online.

In a nutshell..

• There’s no doubt that an online bank account offers some convenience and potentially better rates for regular internet users;
• It’s important to consider the potential downside to online bank accounts before taking the plunge.