Everyone is in pursuit of the highest interest rate savings account. Traditionally, opening a savings account requires a trip to your local bank. Modern times call for modern measures and now online savings accounts allow you to open and manage your savings account completely on the Internet. Before you run off to open your online savings account, first learn the pros and cons of each type of account:
Savings Accounts Features
In reality, the features of both traditional offline savings accounts and their online counterparts are the same. Both types of accounts allow you to stash your money away to save for a rainy day or another specific purchase. While your money sits in either type of savings account, it earns interest. Offline and online savings accounts tend to have limitations on the number of withdrawals you can make each month – typically set at a maximum of six. The primary differences between the two accounts lie in the advantages and disadvantages that each account brings to the table.
Pros of Offline Savings Accounts
The primary benefit of an offline or traditional savings account is the access you have to the money in your account and the bank itself. With a local branch, you can walk into the bank during normal business hours to make deposits or withdrawals, or to have a face-to-face conversation with a banker. If you prefer face-to-face interaction when dealing with financial transactions or tend to like a more tangible bank service, then offline banks are the way to go.
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Pros of Online Savings AccountsThe primary advantages of online savings accounts tend to come down to fees, interest rate and flexibility of access. Online banks generally do not have brick-and-mortar locations, which equates to less overhead. These banks often pass on the cost savings to its account holders by paying a higher interest rate on savings accounts and charging lower fees when it comes to conducting other transactions, including ATM fees, fees charged for dipping below minimum deposit levels and more. You can also open and manage your online account without ever leaving your computer or mobile device.
Another pro of an online savings account is 24/7 access. Online banks typically offer round-the-clock customer service by phone or email. You also have the ability to access your account, check the balance and even make money transfers on the bank website. Making deposits with online banks can be easier with mobile deposits or mail-in deposit options, eliminating the trip to the bank. You can even link your online account with an offline account so you can make transfers and access cash when you have an immediate need.
Cons of Offline Savings Accounts
The disadvantages of offline banks are fees and lower interest rates. Because brick-and-mortar banks have overhead and expenses they have to cover, it often means a lower interest rate for you and higher fees to cover these costs.
Cons of Online Savings Accounts
Disadvantages for the online bank deal mostly with access. You do not have the option to walk into a branch to deposit or withdraw money, or speak face-to-face with a banker about your needs. Since there are no physical locations, this also eliminates the ability to make deposits and withdrawals through the bank ATM.
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Choosing which account is best for you comes down to your expectations for your savings account. If you seek a higher interest rate and are not concerned with in-person access, then an online savings account from a trusted site like SmartyPig may meet your needs. If the interest you earn is less of a concern than immediate access and face-to-face interaction, then traditional offline savings accounts are still for you.
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Savings Accounts: Online vs. Offline was originally featured on Quizzle Wire
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