The Benefits of Opening an Online Savings Account

There’s no getting around it. Just like every other industry, banking as we know it is moving online. According to consumer data company Statista, by 2022 nearly half of all baby boomers, roughly 70% of Gen Xers and 78% of millennials will be using digital banking.

There’s a good reason for this transition. Online banking has a number of advantages over traditional banks with brick-and-mortar branch offices. This is particularly true for online savings accounts, in which higher interest rates can make your money grow faster. But that’s not all – from convenience to lower fees, here are just a few of the benefits of opening an online savings account.

Higher Rates and Lower Costs

E-commerce businesses benefit from a significant advantage over traditional brick-and-mortar companies: lower overhead. Online banks have lower operational costs since they don’t need to pay to keep the lights on at branch locations.

This isn’t just good news for the banks, it’s beneficial to customers as well. The savings that banks get from operating online are passed down, with banks often offering higher interest rates. These savings could show themselves in other ways as well, including reduced fees or no minimum balances or deposit requirement.

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Automation

If you find yourself having trouble saving money each month, online savings accounts may be for you. Most online banks offer tools that allow you to establish automatic deposits from your checking account into your savings account. Or you can set up a direct deposit from your employer and have a portion of each paycheck sent to your savings account. Now, money is being put away without you ever having to think about it.

But the automation of online banks may be most helpful come dreaded tax time. Many tax preparation tools allow users to automatically download their financial information, significantly lightening the load of the cumbersome task of preparing your taxes.

Reduce Clutter

We could all do with less clutter in our lives, which is precisely one of the forgotten benefits of having an online bank account. But it’s not just a matter of having fewer stacks of paperwork around your home. It’s also about organization. When your account information is online, it’s easy to find, sort and organize everything on file. Plus, you never have to worry about losing an important document in the back of your filing cabinet.

If you enjoy, or feel safer, having physical documents, you can always print out anything you need a hard copy of.

Convenience

There’s a reason nearly every aspect of the real world has transitioned over to the digital realm – it’s far more convenient. This is true even when it comes to banking.

In most cases, you can open an online savings account in mere minutes, either entirely online or with a short phone call. Once established, your account’s information is always at your fingertips. Most online banks also have apps, meaning wherever you are, your bank is just a few clicks away.

Standard Bank Features

While having an online bank account may seem like new terrain for those accustomed to traditional banks, they may not even notice much difference once they open an account. Many online banks offer the same standard bank features of brick-and-mortar institutions.

Some people prefer traditional banks for their customer service. If a problem arises, they’d like to be able to talk to another person. But online banks have customer service agents who are easily reachable by phone or email, often times 24-hours-a-day.

Finally, most online banks are as safe and secure as traditional ones, with features like encryption and fraud monitoring. Additionally, the Federal Deposit Insurance Corporation backs these banks just like any other. This means that any money you deposit into an online account is insured.