Online Banks Pay More Money For Your Money
CHARLOTTE, NC — We are learning the new way people are earning more on their money. More young professionals are moving their money to online banks that pay higher interest rates on saving accounts compared to traditional brick and mortar banks.
“All of my colleagues have talked about at school,” said Nicole Holman. “Like I said, that’s almost a buzzwords with it being “online banking”. So, that’s is a big thing.”
We spoke to every day bankers who say they’ve considered it.
Banks like Marcus by Goldman Sacks, Discover, Synchrony offer online savings accounts. They do not offer an ATM network.
You can’t stop at the branch and drop off a check.
“I like going to my bank. You know the tellers. It’s easier,” said Tasha Woods.
However, online banks pay you more interest for your money. We’re talking 1.6 percent or higher.
Brick and mortar banks offer interest rates at .04 percent and lower.
“Because these banks do not have a visitor brick and mortar location, it’s cheaper for them to operate, and they can pass a lot of that savings on to the consumer via higher savings interest rates,” said Ross Marynell with Vertex Capital Advisors.
WCCB Charlotte asked financial advisors what’s the risk?
“The FDIC insurance is going to be the same for all the traditional banks and the online banks,” said Marynell. “So, there’s no risk using an online bank.”
Turns out, your data is not more at risk with an online bank.
“The challenge is, even with the traditional bank, your data, there’s a threat of your data still being available,” said Marynell.
You may want to keep your traditional checking account for making deposits easier.
“It may be a situation where you have a traditional checking account but also a separate online savings account that you can use to get higher interest rates,” said Marynell. Bottom line, he says, every interest percentage point matters.
Online bank savings accounts offer more interest than some traditional bank CDs.
Plus, because it is a savings account, you have more freedom to access your money. Typically, with a CD, you can’t touch it for a period of time.