Key Considerations for Online Checking Accounts
In your quest for finding an online checking account suitable for you, you should keep in mind these key considerations:
1. Balance Requirement
This is the minimum dollar amount necessary to open and/or maintain the account. Clarify this contingency with the institution to avoid penalties.
2. BBB Rating
The Better Business Bureau rates institutions on a variety of factors including customer satisfaction, business operations, and compliance with legal regulations.
3. Interest Rate
Be sure the institution you open your online checking account with offers a competitive interest rate. Since this number fluctuates alongside economic conditions, it’s difficult to specify what a “good” or “bad” rate is. As this is the case, evaluate them based on your individual situation.
4. Fees
Monthly, insufficient funds and overdraft fees are just a handful of the ones to look out for when deciding which online checking account to open.
ATM fees can be particularly painful. In my research, I found that the best checking accounts available online will actually reimburse at least some of your ATM fees. The reason for this is that online-only banks don’t normally offer their own machines. With the average ATM fee sitting at $2.90, this can mean significant savings.
5. Extra Features
Explore the extra features offered, as these can make an online checking account even more convenient. The most useful features I put on my list include:
- Mobile banking: If you live life on the go like many people do these days, this feature can be a lifesaver. You can check your balance, move money around between accounts, and even make deposits by simply photographing a check.
- Mobile alerts: These typically arrive via text message and can notify you of a number of events depending on your settings. Get low balance warnings, transaction alerts, and even security alerts which tell you if your PIN or other vital information has been changed. This can help you by letting you know you need to contact your bank immediately.
- Bill pay: According to the Pew Charitable Trusts (a civic research and policy firm), 24% of Americans have used their smartphone to pay a bill. This trend is only increasing, so it’s important to make sure you’re getting the most up-to-date features when you open a checking account online.
- 24/7 customer service: If you’ve ever gotten stuck trying to pay for something only to have your card declined, you know why round-the-clock service matters. Technology isn’t perfect, and sometimes you need an issue resolved right now, not at the open of business. The best checking accounts online include expanded service hours.
6. FDIC Insurance
The Federal Deposit Insurance Corporation insures deposits in banks up to $250,000. This is a valuable component to look for when evaluating different online checking accounts because it’s a trusted agency of the federal government and will protect your funds in the event that the banking institution fails.
How to Open a Checking Account
Once you’ve found a checking account that meets your needs, the next step is to open the account. Fortunately, online accounts offer little difference than their brick-and-mortar counterparts. The process is generally simple.
First, you’ll need to determine whether it will be a single or joint checking account. Choose joint if you’re opening an account with a spouse, or dependent. For joint accounts, you’ll need to include all the information I mention below for the other member in your account.
Second, you’ll have to fill out personal information such as name, date of birth, address, and contact information including email and phone number. For some online banks, you’ll use your mobile number to confirm opening the account and enter a generated security code.
From there, the bank may ask you for your employment status and annual income. Your Social Security number is also required.
These responses will be used to generate a digital W-9 form you should print out for your records. Once you consent to the terms and conditions of the checking account, you can add money.