Online Banking Guide for Beginners
With your mobile phone, you can engage in financial transactions and financial services of any financial institution or credit union. You are no longer need to visit the cold halls of traditional banks as all you need is a computer or mobile device.
Financial institutions have evolved over the years with the growing pace of technology, and it has given birth to internet banking. Even traditional banks and credit unions are rivaling online-only banks by creating a mobile app that offers services unique to that traditional bank.
The United States has one of the highest statistics of people banking online with the many online banks, and the numbers continue to grow. With 64.6% of people in the US owning bank account online, online banks and traditional banks providing banking services through their mobile app have come to stay.
However, we can’t help but feel that these statistics of online bank users are relatively low as there are over 30% without an online account. We strongly feel that there should be more online bank users, and we provide tips on online banking to help beginners.
Table of Contents
Online Banking Guide: What is Online Banking?
One of the many prejudices against online banking is that some people don’t know how online banking works and would rather not bank online. Online banking is more or less like your regular banking without the added stress of looking for a physical branch of your financial institution.
You can get all the banking services you need with your phone or computer, and all your financial information is secure with your username and password. With online banking, you can transfer money, pay bills, deposit cash, save money, withdraw money, access transaction history, etc.
Interestingly, internet banking with online banks is cheaper than regular banks as you only pay lower fees to run your account. Online banks also don’t have a higher interest rate than most banks with physical branches, so you pay less to get more.
Online banking gives you the financial freedom you desperately need, and you can easily run multiple bank accounts. So, let go of your fears against online banking and move along with internet banking; your traditional bank has done so; why shouldn’t you?
How does Online Banking work?
It works in simple ways, and all you need to do is open an online account on your phone or computer. With a phone, you can access online services with a bank or credit union, and sometimes, you might not even need an opening deposit.
To discuss how banking online works, we will take a two-pronged approach. We will discuss how digital banking works for online-only banks and traditional banks.
➔ For Banks or Credit Unions that are only online
The process for a bank or credit union online is simpler as you only need to go to the app store to get the mobile app of an online bank. When you get the app, all you have to do is sign up and supply personal information or account details such as your name, address, social security number, etc.
The bank will also ask to provide a user name and password that the bank or credit union will keep safe. Your username and password will allow you to access online banking services with a bank or credit union.
Like regular banks, you will also have access to a credit card or a debit card. Also, you will be able to use your cards with ATMs on or not on your online bank’s network.
Although these online banks don’t have a physical branch, this doesn’t mean you wouldn’t be able to get assistance when you need one. These online banks have created different means of making their customers have a comfortable banking experience.
➔ Traditional Banks or Credit Unions that Provide Online Services.
↳ Get your Account Numbers
If you are using a regular bank or credit union and want to enjoy their online services, you need to get your account numbers. Your bank account numbers will be on your paper statements, and they are necessary for you to have access to online banking services.
↳ Get your Bank or Credit Union’s Mobile App or Website
You can get your bank’s website or credit union’s website by searching their name on the internet. Alternatively, you can get the bank or credit union’s website by checking the back of your credit and debit cards.
When you get to the credit union or bank’s website, visit it to use your account online or to be directed to your bank’s mobile app.
↳ Sign up on your Bank or Credit union’s Digital Banking
When you visit your bank or credit union’s digital banking website or platform, you will confirm your details. Afterward, the bank will instruct you to provide a username and your password and provide extra security protocols.
In selecting your password, choose strong passwords and do not use any obvious detail about you as a password.
Your bank or credit union’s all app or website is now ready for you to use, and you can now bank online. You can pay bills, receive money, transfer money, receive money, check account balances, etc.
Online Banking Pros and Cons
▶ Lower Fees
In addition, most online banks don’t have a minimum deposit or require that you pay an initial deposit. Even if they ask for an initial deposit, the amount required is very much meager.
In addition, banking online allows you to gain more APY than regular banks. For instance, you can gain as much as 0.50% APY or more with an online bank.
This is unlikely with regular financial institutions and their cheap APYs.
✖ No physical Branch.
Why you should try Online Banking?
No matter how many physical branches a regular bank has, it cannot be as accessible as an online bank. With an online bank, you don’t need to leave your house. All you need is just your cell phone, and you are good to go.
➔ Zero Fees
Unlike other regular banks with a costly fee to maintain your bank accounts, digital banks are cheaper as they have low or zero fees. Most online banks don’t collect monthly fees, overdraft fees, ATM fees, etc.
➔ They offer Checking and Savings
As we have repeatedly mentioned, online banking is similar to regular banking. You get the same or better services with online banking even. They offer Checkings and Savings Account that you can apply online.
➔ Better interest Rates
Regular banks usually have higher interest rates for loans, and this is one of their most prominent features. However, with online banking, you can gain access to lower interest rates for loans.
➔ More ATMs
With your account number, online banking gives you a wider range of choices when using ATMs, as having a robust ATM network is crucial to online banking
What are the financial institutions that offer online banking?
- Capital One. This online bank is one of the leading online banking platforms available currently as it has zero fees and a high-interest rate. You don’t need a minimum opening deposit for its checking account, as all you have to do is register and transact.
- Axos Bank. This online banking platform is one of the best and the oldest. It provides full banking services.
- Ally Bank. This is one of the most innovative online banking platforms, and it has a competitive interest rate.
- Chime. It is an exclusive option launched in 2013 to ensure an effective alternative to serving people better than other bank accounts
- Discover. Discover Bank is one of the fest online financial institutions that offer complete digitalized features of traditional banks.
- CIT Bank. It is an online banking solution that offers incredible benefits that traditional banks aren’t able to.
For more Banks that offer online services Click Here.
What is the difference between Bank or Credit Union?
One of the differences between banks and credit unions (CU) is that banks are for-profit while credit unions are not. A credit union is primarily a non-profit institution, and it does not publicly trade as a bank does.
Ownership is another difference between the two as members own a CU, and it is made up of like-minded individuals. A private person or persons own a bank, and the board members need not be like-minded.
A bank is subject to federal taxes, but a CU is not. In addition, CUs get subsidies from the businesses they are affiliated with.
You can do business if you don’t have an adverse banking history, but can’t do business with a CU as it is exclusive. You have to be part of a community a CU serves to do business with them.
Mobile banking is an easy approach to banking, and we are quite surprised that the statistics of current online banking enthusiasts are not higher. There is a relative calm to online banking that makes 64% of online banking enthusiast seems paltry.
However, we understand that lack of information plays a crucial role in fueling the prejudices of people towards online banking. This is one of the ills which we want to cure with this post as the post contains some crucial information about online banking.
As you have come to see, online transactions aren’t complicated at all, and all your need is the internet, a phone, or a computer. Registering to start using is uncomplicated and could be completed within minutes if the bank is completely digital.
We are fast approaching a future where everything business transactions would operate in a completely digital space. It’s best to be a part of this come from business transactions as soon as you can.
Online Banking FAQs
Are online bank accounts safe?
Online banking and its online bank accounts are completely safe, but it depends on you as much as your bank. You have to choose strong and not easily guessed passwords to keep your bank account secure on your part.
What is the best way to do online banking?
It depends on your preference. You can download a mobile banking app or use their website.
How do you access your money from an online bank?
It is easy to access your money in online banking. You will be issued a debit card for your account, which you can use to withdraw.
Also, you can send and receive money into your online banking account. You only need to log in.
What are 5 good things about online banking?
- You only have to pay low or zero account maintenance fees
- It is easily accessible
- A large nationwide ATM network
- Easily reached customer service
- Better interest rates.
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Author: John V
John is an avid researcher and is deeply passionate about health and finance. When he's not working, he writes research and review articles by doing a thorough analysis on the products based on personal experience, user reviews and feedbacks from forums, quora, reddit, trustpilot amongst others.