Banking Options: Choosing Between Online and In-Person Banks

Paying bills in pajamas at three in the morning and taking less than a minute to check account balances at work are examples of the advantages of Internet banking. And with more and more families across the country viewing the Internet as a household necessity, Internet banking is becoming more popular, leaving the customer to choose whether to bank in-person or online and whether to use a local branch's Internet banking or take their business to a virtual bank.
Whether banking with a local branch, national chain like Citibank, or a completely virtual bank like ING, many of the services offered on the internet are similar, according to popular banking website bankrate.com. Most banks offer free electronic bank statements, electronic bill payment with bill reminders, funds transfer between accounts at the same institution or accounts at another bank, which may require a fee, loan and credit card applications, and up to date viewing of account and check history.

These services offer convenience, which comes at the cost of an increased chance of customer error, that is once the send button is clicked, the money comes out or goes into that account. With personal banking, the watchful eye of the teller might catch some simple mistakes. Dependency is another issue. Any number of things, power outages, server failures, can cause the internet to be down, so depending on an online service is never a good idea.

An advantage to internet banking, both with national chains and virtual banks are the high interest rates they offer for savings accounts, though the largest disadvantage is the infrequencies of ATMs, which are not littered all over every town, like that town's local bank machines.

Security is also an issue when deciding whether to bank online or at a physical office. According to the Federal Deposit Insurance Corporation, online security measures differ from bank to bank, but some examples of methods used to secure personal information are encryption, in which sensitive information is scrambled, and passwords or personal identification numbers, numbers or letters that allow access to an online account. The FDIC recommends changing a password periodically, refraining from sending personal account information over e-mail, and using virus protection and other controls to add an extra measure of security when using the internet for banking.

Security is also a top variable in deciding whether to bank with a large chain, virtual bank, or local branch. According to the FDIC, research is key in making sure you make the most secure decision. Customers should read the bank bios carefully before choosing an institution. Banks that are real and reputable will be FDIC insured, whether they are virtual, chains, or a physical, local office. Also, the corporation urges internet bankers to be careful not to accidentally stumble onto a website that looks like an official bank website, but is actually from a web address similar to the bank's site. These sites attempt to lure customers into giving personal information, which can lead to identity theft and other crimes.

Thus, banking is similar no matter what type of institution you choose, and caution and research should be applied regardless of your choice.