Banks online and platforms for online banking have a few distinct distinctions. When you know the differences between them, you can choose.
If you’re just beginning to learn about the world of online banking, then you could observe an institution refer on its own by the name of an “online banking bank” as well as “online banks platform.” They sound like the same things, right? They aren’t.
What is the difference between an online bank and an online banking platform?
However, the internet-based bank provides similar items and services offered by brick and mortar financial institutions via the internet, instead of a branch.
Online banks let you create savings accounts, checking accounts, money market accounts, and CDs. In addition, options for loans and investment are offered.
As of right now, neither there are few options for buying or selling cryptocurrency. But that may change soon.
The following are examples of internet-based banks:
- Ally Bank
- Barclays
- Axos Bank
- Capital One 360
- Discover Bank
- Synchrony Bank
In addition, online banking platforms aren’t banks. This fact is essential — be aware of the designation since the online banking platform isn’t directly covered by a government agency, such as that of the Federal Deposit Insurance Corporation or National Credit Union Administration.
A quick tip. In the event that FDIC or NCUA has protected a banking institution, up to $250,000 on an individual bank account is safe even if the bank has to close down.
Online banking platforms are secure to use even if the accounts are insured federally by a different financial institution. Online banking platforms can contain a disclaimer if a different financial institution federally guarantees them.
Online banking platforms also generally have fewer banking options than banks that are online. There’s usually only the option of having two or three accounts, for example, a savings or hybrid checking and savings accounts.
These are examples of banking websites that are online:
- Ando
- Aspiration
- Betterment
- Chime
- One
- OnJuno
- Wealthfront
If you plan to open just a checking or savings account, online banking services could still be an excellent option to bank on. However, if you’re looking to have a complete banking experience, online banks are better.
What are the differences between online banks and banking platforms?
Banking online is done mainly via the phone or computer. With online banks and banking services, it is possible to create accounts online and make deposits of cash using ATMs, or receive assistance with your queries by reading the FAQs in detail or telephone centers.
The majority of banks online don’t offer branches, which means that it’s impossible to withdraw or transfer money directly in many cases. Certain banks allow you to do this at GreenDot locations, but they’ll charge you something.
Good and Bad of Cyber-Banking
Advantages of an online platform for banking
- The interest rates are high. Infobahn banks tend to have higher rates of interest than brick and mortar banks. Some institutions are exclusively online in our top high yield savings account guide.
- An intuitive interface. Because internet-based banks are always available, they often have a variety of sophisticated and user-friendly features. In addition, some of these online services, such as Chime, offer features that help show the progress made in achieving financial goals.
- Make sure you highlight specific social causes that you want to support. For example, Ando and Aspiration may be good options if you’re interested in contributing to the environment by banking.
- Lower costs. Banks that are on the World Wide Web typically don’t charge monthly service fees, and some have eliminated fees for overdrafts.
Negatives of an internet-based banking platform
- There are fewer choices for accounts. The majority of World Wide Web banking platforms offer only two or three account choices. The standard options provided are checking accounts, savings accounts, and hybrid accounts.
- You can’t quickly deposit or withdraw cash. Instead, you’ll have to withdraw money from an ATM. Certain cyber banks let you make deposits at GreenDot locations for a small fee.
Advantages of an online bank
- Rates of interest are high. Similar to banking platforms, cyber banks have very high rates. Go to consumer reports for more specifics.
- There are fewer charges. The majority of cyber banks don’t charge monthly service charges, and some have also eliminated overdraft fees.
- A user-friendly interface. Banking transactions are predominantly online, and internet banking is easier to use than what you can get from brick-and-mortar banks. Certain ones, such as Ally, offer options that help to show how you are progressing towards your financial goals.
- Options for your account. You’ll have more options for your account than the internet-based banking service. It is also possible to get loans or research investment options.
The disadvantages of using an internet banking service
- You can’t deposit or simply withdraw cash. You’ll have to withdraw cash using an ATM. Certain ATMs allow cash deposits at GreenDot locations for a fee.
Are you ready to try cyber-banking?
Whether via a platform or a bank, online banking is the best option if you’re comfortable using technology. If you rely on banking in-person to control your bank accounts, you might not fit into online banking. But, hey, give it a try — it’s so convenient.
You should also consider cyberspace banking if seeking higher rates of interest on your savings. Online banking typically offers better rates than brick-and-mortar financial institutions.
