Publish Date - February 24, 2022
Author: Arthur Brown
6 Things To Look For In A Digital Bank Before Using It
Digital banks are a relatively new form of banking that is becoming increasingly popular. They are different from traditional banks in that they are entirely online and operate through a digital platform. This makes them more convenient and accessible, as they can be used from any device with an internet connection.
Digital banks are a relatively new form of banking that is becoming increasingly popular. They are different from traditional banks in that they are entirely online and operate through a digital platform. This makes them more convenient and accessible, as they can be used from any device with an internet connection. Digital banks also offer a range of features and benefits that traditional banks do not, such as lower fees, no minimum balances, and the ability to earn interest on your deposits. There are many digital banks to choose from, but not all of them are created equal. Here are six things you should look for before opening an account with a digital bank.
Understanding the concept of a digital bank
Before you open an account with a digital bank, it's important to fully understand the concept and know exactly what you're getting yourself into. Digital banks are not like traditional brick-and-mortar banks. They are entirely digital, which means they are not physical locations. Deciding what is the best digital bank for you is important, and it can take some time to research which banks offer the best services for the right price. There are several things to pay attention to, such as the interest rate and fees associated with an account.
Having a high-quality customer support system
One of the reasons customers choose digital banks over traditional ones is because they often don't need to deal with physical locations or customer service representatives. A good digital bank will provide you with ways to contact their customer support team through multiple channels, such as email, phone number, or online chat. These services should be available 24/7 to accommodate your schedule and any emergencies that may arise. It's important to know what kind of assistance you can expect from your digital bank so there aren't any surprises when you need help.
Offering competitive interest rates on deposits
Another reason customers choose digital banks is that they offer competitive interest rates on deposits. Digital accounts allow you to earn an interest rate on your deposits, which is a perk traditional banks do not offer. Some digital banks pay even more than the current national average of 0.1 percent APY and go as high as 1 percent APY for standard savings accounts and 3 percent APY for premium savings accounts. Having this added benefit can help customers save significantly over time.
In addition to deciding on a digital bank, for those interested in auto loans there are also online options. It is extremely important to check the interest rates and payment calculators. Being able to refinance any type of loan should be planned properly and you won't have anything to stress about.
Offering a wide variety of deposit options
Digital bank accounts require that funds be deposited electronically into your account due to their online nature, but there still should be several different ways you can add money into your account such as direct deposit, wire transfers, domestic and international ACH transfers, etc. The best digital banks give their customers multiple options for depositing funds into their accounts. A great example of this is Simple, which lets customers use direct deposit, ACH transfers from other banks, wire transfers, and depositing checks into their mobile app.
Offering favorable terms
The best digital banks will also offer customers favorable terms, such as low or no minimum balances, high-interest rates on savings accounts, and no fees for transferring money in and out of your account. These are all things you should look for when choosing the best digital bank to meet your financial needs. Digital banks offer a wide range of accounts to choose from, with many digital-only accounts that go above and beyond what traditional banks offer. Many of these accounts allow you to earn interest on your deposits and can help you save money.
Examples of these types of accounts include high yield checking accounts, "super" savings accounts, rewards savings accounts, premium savings accounts, and IRA/401(k) rollover or trustee services. The best digital banks will have a variety of different types of deposit options for customers to choose from. Understanding the differences between these types of accounts is important because they can all help you save money in different ways.
Lastly, you should look at how secure a digital bank is before deciding to open an account with one. The fact that they do not have physical locations makes them more vulnerable targets for cybercrime than traditional brick-and-mortar banks may be. Digital bank accounts are not covered by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA), which means that if the bank goes out of business, your deposits are not protected. The majority of digital banks are backed by large financial institutions, such as Bancorp Bank and GE Capital, but there is still a chance for customers to lose their money if anything happens to these banks. Since this is an entirely digital platform, customers also need to be aware that cyber-attacks occur all the time, and hackers can access their account information and steal personal information such as passwords, social security numbers, etc. Luckily, digital banks like Ally and Capital One offer customers the ability to monitor their accounts with alerts if any suspicious activity occurs on their accounts.