What kind of benefits does an online checking account provide over a standard checking account with a traditional brick-and-mortar bank?

Should you be enticed to try an online checking account or stick with the options in your local area?

4 Benefits of an Online Checking Account

Here are a few benefits of switching to an online checking account.

Interest on Deposits

For your average brick-and-mortar bank, offering interest on the deposits held in the checking account isn’t necessary.



These banks know people prefer to have a local bank staffed with people to talk to. That coupled with the fact that everyone needs a checking account makes it easy to offer a mediocre product without much customer retribution. Part of that mediocre product means no interest on your money sitting in the checking account.

With an online checking account you actually get to earn a little bit of interest on your deposits in the account.

You won’t get the earth-shattering interest rates of a few years ago, but it isn’t uncommon to find an account paying 0.40% to 0.75% interest for your checking account business. That may not sound like much, but it never hurts to earn a little bit more money in an account that you would probably have even without the interest.

More Reasonable Fees

Local banks and big banks make a ton of money off of their customers. And they need to in order to afford all of those branch locations.

Online banks competing with these institutions draw in customers with significantly lower fees.

Here are three fees you should expect to be lower or non-existant with an online checking account:

1) ATM Fees

If you can’t go to a physical branch location to withdraw money, you are kind of at a disadvantage because you have to rely on ATMs and getting cash back at stores that allow it. Online checking accounts eliminate this problem by giving you free access to ATMs across the country.

The specific terms are bank dependent, but usually you get either a certain number of ATM fees refunded to your account or all of them are refunded.

2) Overdraft Fees

Banks make a ton of money off of their customers by hitting them with overdraft charges each time they spend more than is in their account. Most online checking accounts will have an overdraft system in place, but normally the fees are significantly lower.

Big banks typically charge $35 per overdraft so if you swipe your card 5 times in a day you end up paying $175 in fees. Some online banks only charge $9 per day of overdrafting or will extend you an incredibly low line of credit that charges you pennies on the dollar for the overdraft.

3) Minimum Balance Fees

Some banks offer “free checking”, but the “free” part only applies if you meet certain requirements like minimum balances or minimum average daily balance. If you dip below these requirements during the month you get hit with an account maintenance fee.

Not so with online accounts: you can open an account with as little as $1 or $25 in most cases, and there is no fee for the honor of being a customer of the bank.

Easy Transfers

Transferring funds between accounts is really simple with online checking accounts.

Again, having easy online access and tools is a necessity of not having physical branches for customers to visit. You can send money to your savings account or to several brick-and-mortar banks easily through the online tools.

Paper Checks are an Option

Without a physical branch you might think you wouldn’t be able to write or receive paper checks. Both are untrue with most online checking accounts.

First, you can still write checks. Some online banks provide free standard checks for you to use while others give you the option of purchasing them.

Second, without having a physical branch the online bank has to come up with a way for you to be able to deposit any paper checks you receive into your account. Different methods are used: some let you scan the check into an online tool, some let you take a photo that does the same thing, and others give you deposit envelopes where you send the signed check in to the bank for depositing. Any of the ways works, it just depends on the bank you end up with as to which method they use.

Final Thoughts About Online Checking Accounts

If you are tired of your current bank taking your deposits and giving you little benefit for them, consider switching to an online checking account.

You’ll earn more interest, pay less fees, and still get all of the benefits of a regular checking account. The only reason not to switch would be if you heavily relied on going to the physical branch location many times per week. Otherwise, grab your debit card (and paper checks if needed) and make the move.

Do you have an online checking account? What do you like about it?