Brick and Mortar Banks Vs. Internet Banking

In the U.S. today, there are hundreds of banking options available to consumers. National, regional and local banks populate street corners with branches in most cities. More recently, online banks that do not have physical branches but with whom you can bank online 24/7 have come onto the scene. Like many consumers, I have accounts with both types of banks. Which is the best one for your needs?

Brick and Mortar Banks: Pros and Cons

• You can deal face-to-face with a banking specialist to handle complex transactions. This personal interaction can also give you more comfort when handling large amounts of cash.
• Relationships with neighborhood bank branches often benefit the account holder. A local teller or bank manager who knows you may be able to provide you discretionary services such as reversing bank fees, offering a preferred investment or mortgage rate or offering portfolio management advice.
• Some physical banks have 24-hour telephone and internet banking available, as with many internet-only banks.
• It can be cumbersome to set up automatic savings or other transfers with a brick and mortar bank, and it often involves the intervention of a bank teller or telephone representative.
• Going green is often difficult with a physical bank, as there tends to be significant paperwork for transactions, including receipts and statements.

Online Banks: Pros and Cons

• Online bank accounts are easier to set up in most cases, and they can be opened over the telephone or online.
• Internet-only banks often have more robust website banking features than do physical banks, such as account segmentation, goal planners and account-to-account transfers. You can also download year-end 1099's and other tax forms rather than having to wait for them to arrive in the mail.
• You can set up automatic transfers from your physical bank to an online bank to fund the account.
• Online banks frequently offer higher interest rates on investments and lower mortgage rates across the board, as their costs are less than a traditional bank that has to maintain branches.
• Transactions such as wire transfers cannot be done at an online bank, since they often require you to physically attend the transaction.
• Because all transactions occur electronically, online banks are more environment-friendly and use far less paper than traditional banks.

Physical banks and online banks are right for different people. If you have straightforward banking needs, cannot be at a bank during its open hours, or prefer to handle transactions in real time over the internet, an online bank will meet your needs. If you like one-on-one personal attention or often have unusual, international or otherwise complex banking transactions, your neighborhood bank branch is your best bet. If you want the best of both worlds, then go with a bank that has both brick-and-mortar branches and Internet banking services, as these offer convenience and service all rolled into one.