Online Banking
Last month we reported that banks were going to start charging a monthly fee for making purchases with a debit card. However, as the announcement hit the mainstream media many banks announced they would no longer do this. Then on November 1st Bank of America, the largest bank by deposits, stated that due to their customers concerns and outrage they would not charge the fee either. As we covered last month this fee was going to be charged due to the Durbin Amendment which limits the amount of money a bank can charge a merchant for debit card fees.
Banks are estimated to lose billions of dollars revenue annually. They were trying to recoup some of the funds by charging the monthly fee to the card holders. There is no cap on fees that banks can collect from credit card purchases so the banks were hoping that consumers would use credit cards instead of debit cards once the fee was implemented. It would have been a no lose situation for the bank since they would have collected a fee either way. If the cardholder used a credit card the merchant would pay a fee, whereas if the purchaser used a debit card the monthly fee would be collected from the accountholder. The banks cannot afford to take that loss, therefore the question lingers how are the banks going to make up for this loss now? Only time will be able to answer this question. There is much speculation recently that it will be made up with other fees, however nothing has been stated as of yet.
With this new development numerous account holders are reevaluating their banking needs. It is important to determine what type of bank and account is right for your needs. Online banking has become increasingly popular lately. Online or Internet banking is precisely what it says. You do all your banking needs through a secured website. There are advantages and disadvantages that we will review to see this option would meet your financial needs.
Advantages
- Eliminates waiting. If you are an online banker you will no longer need to see a teller for any of your needs. Withdrawing cash would be done with an ATM card and deposits are either mailed in or done with your phone.
- Little to no fees. Since you are not accessing any personal there are usually no fees associated with these banks.
- Unlimited Access. Considering you are not relying on a person you can access your accounts at all times through the Internet.
- No paper statements. Everything can be accessed online therefore you have immediate access to any of your financial needs at your fingertips.
- Bill pay is available. Bill pay is a service that is offered through online banking usually at no cost. This service will send out a check to your lenders on the day you request every month. Furthermore through online banking you are able to access the history of the payments that were sent.
- Fast and convenient. Most online banking facilities process checks and deposits very quickly and effectively.
- They are FDIC insured.
Disadvantages
- Cash deposits can be tricky or impossible. If you are constantly depositing cash online banking may not be a viable option.
- Must have access to Internet to bank.
- Security concerns since you are doing all financial transactions on the computer.
- Should have basic knowledge of using a computer.
- If you have a problem it may be hard to find someone to speak with and there could be fees for contacting the customer service department.
