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Ups and Downs of Online Banking

piggy banks increasing in size
Last year, I swapped my PNC student checking and savings accounts for Discover Bank’s checking and savings. What enticed me was Discover’s 1% Cashback Checking (which is a typical feature of credit cards and not debit cards) and their 2% APY interest on savings compared to PNC’s 0.01%. Think of it like this, with $5,000 at Discover you would earn $100 interest, but at PNC it would be just 50¢. The extra $99.50 is the main reason I switched, but I have learned some drawbacks since then.

Online banks like Discover are able to offer high APY on savings and checking accounts due to the fact that they do not have costs of maintaining branch locations. Thus, the savings are passed onto the consumer with high interest and minimal fees. I find the benefits of online banks suitable since I am not a very avid user of cash. Why would you want to hold cash on you when you could be making money off your money in an FDIC insured bank? Yet, there are moments when I am forced to make cash transactions. Most online banks will have a network of shared ATM’s that can be found at common locations such as Walgreens or other banks. My online bank does not have ATM fees but some might so be sure to look at the fine print. Thus, withdrawing cash is never an issue for me, but making the occasional cash deposit is troublesome. I recently learned that Discover Bank does not take cash deposits. With $300 cash on me this was a problem, yet there are ways around this. If you have a check you can deposit it simply by taking a picture. Cash on the other hand, I was told by a representative to deposit it by money order. I simply asked a friend to Venmo me $300 on the app for $300 cash, so neither of us were hit with any fees in the exchange.

Besides the inability to make cash deposits, I have no complaints. The websites of online banks tend to be more user-intuitive since that is technically their “bank” to the consumer. The interest rates offered are much higher, some as high as 6%. As society tends to move further away from cash to virtual currency, I recommend giving online banking a try. Plus, you’re not limited to just one bank account. You can have an online bank and a traditional one to reap the benefits of both.