As the Internet becomes an integral part of our daily lives, online banking is growing in popularity. Not only do these banks offer more convenience and free tools for consumers, they also offer services at a lower cost.
But choosing an online bank is anything but convenient. While ratings for financial stability, rates, and products are easy to find, how can you tell which banks will be there for you when you have problems, questions or concerns? Which ones make it easiest for you to bank? Today, SavingTools looks at the top online banks and rates them on overall best consumer experience.
There are certain factors covered by every online bank. These include guarantees against computer fraud and FDIC membership. The products these banks offer are similar, but small details can make big differences in your satisfaction. For instance, some online bill pay products do not make it clear if you can make payments to those who would traditionally receive a paper check from you. Small bits of information like this can make a big difference in your satisfaction with online banking.
Unfortunately, a bank that is entirely online means you have to mail in your checks to make deposits. Can you imagine the hassle if one of your deposit checks was lost in the mail on its way to your online bank? Not to mention the checks you would bounce afterwards… The only other solution is to keep another account with a brick and mortar bank and then link the account to your online account.
Banks that are traditionally brick and mortar but also offer online banking rarely offer rates or services as good as banks that are only online. These companies have higher operating costs because of the buildings and ATMs they run. The best solution for many is to have a traditional savings account with a brick and mortar company, keeping balances high enough to avoid fees, and linking that account to an online bank that offers the best rates, the lowest fees and the best customer service.
In this analysis, we looked at 12 banks that offer online services. Some have physical locations while others are entirely online. Here’s the list of contenders for Best Online Banking:
- HSBC Advance
- Capital One
Brick and Mortar
- First National
- US Bank
- Wells Fargo
- Bank of America
At first glance, one would think you could draw generalizations about online banks versus brick and mortar banks. The truth is that most of the banks did a poor job of making banking convenient online. Complicating pricing structures and an overwhelming number of options made sites like Huntington’s hard to manage. There were no less than seven different checking accounts from which to choose. Compare that with INGDirect, a bank with just one type of checking account.
Ease of Use
Looking deeper, we see that three sites shine when it comes to ease of use. These are INGDirect, Ally and Citibank. Navigation is simple and straightforward and information is easy to find. The HSBC Advance site was also easy to use, but was too simple, lacking the depth of information one would need to make an informed choice about banking. The FAQ had just a few question and answers and there was no search box to look for more information. Instant chat was not available either.
Of these three banks, INGDirect had the best interest rates for savings and checking, except for small checking accounts with under $15,000. Here Ally has the better rate. Ally’s savings rate beats all other banks reviewed, both online and off. Ally is also the winner when it comes to CD rates with much higher returns on longer-term deposits. But INGDirect wins out on IRA savings with the best interest rate, but only by a little. The reason I’m not quoting the rates here is that these are subject to change and you are better off checking it out for yourself before committing to a bank.
Ally has the best policy on fees for ATMs. They don’t charge them, and if you are charged a fee by an outside bank, the cost will be refunded to you at month’s end. INGDirect is almost as good, with free withdrawals and any All Point ATM. These ATMs can be found almost everywhere, making it a good deal. While Citibank offers some freedom from ATM fees, the bank’s policies come with restrictions and rules that can be confusing. For instance, the terms say you get five free uses of non-Citibank ATMs per month and reimbursement of the first six ATM fees per statement, up to $5 each. Then they offer rebates of up to $12 per year on fees. Wouldn’t it just be easier if they made it free?
One does not have to look far to find complaints about any of the final contenders in this competition. However, it is interesting to note that the only complaints against INGDirect were about their handling of security issues.
Apparently, the bank is so tight on security that you should avoid opening an account with them if your physical address does not match your mailing address (I’m not talking about a P.O. Box here). The bank has been known to close accounts and make people wait to get their money back, with no recourse or explanation from INGDirect. Customers without this particular problem have been overjoyed with INGDirect’s service.
And the Winner is…
If Ally can keep its incredible rate structure going, it will be the clear winner in the online banking race. However, being new on the scene just this year, the future is not clear. The rates may win them many customers, but will those customers bail when the rates start to increase? It seems likely they will run back to INGDirect to get comparable rates and better overall customer service. So, if you are just beginning online banking now, Ally is the clear choice. Just be sure to keep an eye on those rates for the next few years.
Resources / Current Rates for Selected Online Banks: