5 Online Banking Myths Debunked

In fact, some online banks make it easy and convenient to open an account. “Online accounts are extremely easy to open,” says Miguel A. Suro, founder of the financial blog The Rich Miser. “All you have to do is go to the website or download the app and follow the simple prompts.”

If convenience is on your mind, you may also worry about the ability to access cash without a physical bank branch, but online banks may have a large network of ATMs that you can use, Russell says. For instance, with Discover’s online checking account, called Cashback Debit, you can use your debit card at over 60,000 no-fee ATMs. How’s that for debunking myths about online checking?

Myth 2: The perks aren’t as good as with traditional banks

If you believe this, you’ve fallen for one of the most common myths about online banking.

Suro thinks one reason you may be able to score benefits from some online banks is that low overhead often means incentives can be passed down to the consumer.

One such incentive that disproves this myth about online checking is that many online banks charge low or no fees.

“You may be able to pay no fees for routine banking,” Suro says, “such as just having an account, ordering checks, ATM access and most money transfers.”

Discover Cashback Debit, for example, charges no fees. Period. That means you won’t be charged an account fee on your online checking account.¹ Imagine, a host of potential fee-carrying features you no longer have to worry about!

Another perk on the online checking account scene—discrediting this myth about online checking—is cash back rewards, which have more traditionally been associated with credit cards. With Discover Cashback Debit, you can earn 1% cash back on up to $3,000 in debit card purchases monthly.² That means your monthly cash back earnings could yield $360 in total rewards each year. This perk could be covering a good portion of your coffee habit!

You may also find this online banking myth refuted with the fact that some online checking accounts offer higher yields compared to traditional banks, Lam says, which means you can potentially make some cash while your funds are stashed.

Myth 3: You have to be tech savvy to use online accounts

While you need to have a computer, tablet or smartphone to use an online bank and access an online checking account, one of the top myths about online banking is that you have to be a techie.

“There is no need to know a lot about technology to have an online account,” Russell says. “Some banks know the importance of easy-to-use websites and mobile apps, so they often have a design that is simple and straightforward—even for those claiming not to be tech savvy.”

Lam, who recently opened a new online bank account, also challenges this myth about online banking. “I went online and filled out a simple form and instantly had access to my account,” she says.

Suro has had an online bank account for 10 years and has not found the technology to be challenging, debunking this myth about online checking. “If you can manage your traditional bank’s account online via its website or app, you can manage an online-only account,” Suro says. “It’s the same basic experience.”

Myth 4: You won’t be able to talk to a human if there’s a problem

Another online banking myth is that you won’t be able to access good customer service for your online checking account because you can’t walk into a branch to talk to someone. Not so fast.

Some online banks have customer service representatives that you can call, and some may even have this service available around the clock (no need to even leave the comfort of your home if you have a question). For instance, Discover’s customer service is available 24/7.

“You no longer have to make it to the bank before it closes, you can actually contact the bank in the evening and get an answer,” Russell says.

If you’re all about communication from your favorite device, note that some online banks offer digital customer service through the bank’s website or app, calling into question this myth about online checking. “Many online banks offer [live] chat,” Russell says. You may also be able to contact an online bank’s customer service through social media.

Despite the face-to-face opportunity, Suro doesn’t think bank branches are necessarily better at providing customer service. He once needed to send a wire transfer and easily figured out how to do it online. When his relative went into a branch to do the same thing, he got held up. “The whole thing turned into an ordeal that took over 45 minutes,” Suro says.

Myth 5: Online checking isn’t insured

One final online banking myth is that deposited money isn’t insured.

Online banks can be members of the FDIC, which means they insure your money up to $250,000 or the maximum allowed by law, Lam says. Before you open an account, you’ll want to make sure that the online bank is FDIC-insured. One way to do this is to call the FDIC’s toll-free number at 1-877-ASK FDIC (1-877-275-3342) and ask a deposit insurance specialist to confirm that the online bank in question is FDIC-insured. The FDIC’s online tool BankFind also allows you to search banks by name and informs you of their FDIC number and status, among other information. Banks often include language on their websites and in marketing materials noting if they are members of the FDIC, so be sure to look for that as well.

No myths about online banking—only a new reality

“Despite the benefits of online banks, many people don’t open accounts because of all these misconceptions,” Russell says.

Now that some of the common online banking myths have been challenged, you can more easily see the simplicity of online accounts and the time saved by banking online—two key reasons Suro is a huge proponent.

“That’s why banking online is one of my core strategies for effortlessly saving money and moving through life more efficiently,” he adds.

¹ Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.

² ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^® and PayPal^TM, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.

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Source: discover.com