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Internet Banks
The expansion of the Internet has led to
two related developments in banking:
- Internet Banking, or Online Banking. Some traditional "bricks and mortar"
banks that mainly do business through physical
bank branches may give customers the ability
to view activity and to enter transactions
online. Most of the larger banks offer this
option.
- Internet Banks, or Online Banks. Additionally, a number of banks do business
solely through the Internet. Without any
physical branches to staff and maintain,
they have much lower operating expenses than
traditional banks. Accordingly, you should
expect lower fees, higher interest rates
on deposits, and lower rates on loans than
at traditional banks.
Before doing business with an
Internet-only
bank:
- Carefully review the "about us"
(or equivalent) section of the bank's website.
Look for information about coverage by FDIC
insurance. Then, visit the FDIC's own website,
www.fdic.gov, to verify that the bank is indeed insured.
Look under "Deposit Insurance"
then "Is My Bank Insured?" Also
review the rules governing FDIC insurance
here.
- Review the bank's privacy policy. Do they
promise to keep your information
confidential?
Will they blitz you with unwanted
sales pitches,
or sell your name and e-mail
address to third
parties? Will they respect
your decision
to opt out?
- Be wary of fraudulent "spoof" websites
that mimic those of legitimate
traditional
or Internet-only banks. Don't
be fooled into
divulging personal information
to scam artists.
- Review the bank's security procedures. When
accessing account information and entering
transactions, you must be on a secure site
with encrypted transmission.
Once you have determined that
the bank you're
considering is a legitimate,
FDIC-insured
institution with reasonable privacy
policies
and security procedures, there
are still
some practical questions to answer:
- How does it accept deposits? Setting up direct
deposits of your pay should be no problem.
But what about depositing checks or cash?
Can you do this through ATMs near you? Are
there any fees to do so? What happens if
you find that your deposit was not properly
credited?
- How do you get your cash out? (Many Internet
banks will electronically transfer your withdraw
to your local bank overnight.) Can you get
cash through ATMs near you? Are there any
fees?
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