With an APY of 1% to 2% or, even in some cases, 3% on savings accounts, the conclusion is clear. Online banks are encouraging more people to save. To emphasize this point, you should examine traditional banks’ average APY on savings accounts. Their average is an APY of 0.08%, which is quite the distance from what online banks offer. Plus, these online bank saving accounts have no maintenance fees.
The exciting part is that when it comes to accessibility, online banks have an advantage as you can easily transact using your phone. Also, online banks partner with some ATM operators to allow customers to withdraw cash from ATMs. However, despite the advantages online bank offers, people still do business with traditional banks. Usually, these people prefer physical interaction with bank officials.
Regarding the security of your cash, both online and traditional banks offer financial security. The Federal Deposit Insurance Corporation (FDIC) insures online banks. So, if you want to choose an online bank, ensure that they have FDIC insurance, no matter how juicy their savings interest rates are.