Bank question [Online or Brick and Mortar?]

[S_YAGNESH]

Hey,

I have a checking and savings account with a national bank but I am terribly dis-satisfied with their fee for non proprietary ATM withdrawals. I am thinking about moving to a non brick and mortar online bank (like Ally) that also gives me higher rates for checking and savings account.

1. What are your thoughts about online banks? Can I trust them with my money? Has anyone used their online deposit scheme? Is it hassle free?
2. Most of them claim that they are FDIC insured which rests some of my fears but what is the possibility of them going out of business? In that case how long does it take to get my money back from FDIC?
3. I have found my current brick and mortar bank useful in some cases like getting free secure box and having someone available to notarize documents for free. Considering these should I maintain a small amount of my cash with a brick and mortar bank and move the majority to an online bank? Is this how others do?

Please share your thoughts.

Thanks
Yagnesh

[dm200]

Check out a credit union (with nearby/convenient branch) that has an extwnsive ATM network, or no cost atm access.

[Toons]

I personally use Capital One(formerly ING Direct) and have for many years for online checking and savings accounts.
Many on this board use Ally as the rates are somewhat better than Capital One. You will read positive reviews for both .


1. What are your thoughts about online banks? Can I trust them with my money? Has anyone used their online deposit scheme? Is it hassle free?

You can trust them with your money FDIC insured. Online deposits simple,I link a checking account,use check capture app(take picture of check) or use direct deposit feature to add to accounts

2. Most of them claim that they are FDIC insured which rests some of my fears but what is the possibility of them going out of business? In that case how long does it take to get my money back from FDIC?

PAYMENT OF INSURED DEPOSITS.-- (1) IN GENERAL.--In case of the liquidation of, or other closing or winding up of the affairs of, any insured depository institution, payment of the insured deposits in such institution shall be made by the Corporation AS SOON AS POSSIBLE, subject to the provisions of subsection (g), either by cash or by making available to each depositor a transferred deposit in a new insured depository institution in the same community or in another insured depository institution in an amount equal to the insured deposit of such depositor.

3. I have found my current brick and mortar bank useful in some cases like getting free secure box and having someone available to notarize documents for free. Considering these should I maintain a small amount of my cash with a brick and mortar bank and move the majority to an online bank? Is this how
others do?

I keep a NO FEE checking account with a local bank (500.00 minimum) to transfer money and other banking services if needed ,Notary etc

[Majormajor78]

Never used an online bank but I don't consider them any more risky than any other local community bank. Take a look and 'safe & sound" through Bankrate. It will give you another opinion on the financial well being of any bank you are considering moving assets to.

http://www.bankrate.com/rates/safe-soun ... =&c=&s=&z=

[jimmyrules712]

I "ditched" brick and mortor banks several years ago. Initially I went to Charles Schwab bank, then ING, and for the last 2 years I have been at Ally.

Most of my deposits are paychecks that are direct deposited into the account, that works no different than at all other banks. When I need to deposit a check I can either use my computer scanner to scan it and then deposit it via the website or I can use the Ally Android app to take a picture with my phone. This entire process can be annoying at times (the desktop scanner option seems more fickle than the phone option) but it still takes less time than driving to a local bank and depositing the old fashioned way. I always see the deposits in my account in about 2 business days. You can also request a stack of prepaid envelopes to use for mailing in checks for deposit. I used to do it that way with Schwab and it worked fine but it took a couple days longer.

There is no way to deposit cash. On the rare occasion that I get cash I just use it for spending money.

When I need to withdraw cash I just use the first ATM machine I can find. If that machine charges me a $3.50 fee then at the end of the month Ally reimburses my account with that $3.50 (plus any other atm fees I was charged).

Ally has a nice feature where you can electronically send money to other people. You just have to provide either an email address or their account & routing number. If you go the email route then Ally sends them an email with a link to the ally website where they enter in their account and routing number to receive the funds.

The biggest drawback to using an online bank like Ally is for when I need to withdraw a large amount of cash or obtain a cashiers check. Every time I've been in this situation I didn't know the exact amount I needed until the last minute and thus had issues. If you know how much you need in advance then you can call Ally and they'll mail you a cashiers check. What I ended up doing one time was calling ally and getting them to temporarily increase the limit on my debit card then I went to walmart and bought several large money orders. Another time I transferred money to my local bank account and then at the last minute went there to get a cashiers check.

I do retain a checking account at a local credit union with a $100 balance in case I ever need to use them for some kind of service that Ally doesn't provde. In the 2 years since I opened it I have only needed it once for the situation described above (although I am contemplating opening a safety deposit box).

I've been very happy with my experience and I like that I am location agnostic. No matter where I am or where I am living I can do all the things with my bank that I can anywhere else. When I'm on vacation I could argue that I have better access to my money then you do when you're on vacation (if you use a local bank).

[ddunca1944]

I am totally happy with our credit union, but I would have no concerns about the safety of an online bank.

[tjstogner]

I use Ally for my savings, and the local credit union for checking. Hassle free. If I need the money from Ally, I just transfer it into my checking account, which takes a couple of days. It makes it easier for me to keep my hands out of the cookie jar.

[obgraham]

Here's the thing: most of us were raised to believe in loyalty. So we kept dealing with "our" bank, either a local one or a local branch of a major one. But as things developed the banks themselves lost their feeling of "loyalty" to their customers.
So I see no reason to continue to patronize an institution that didn't feel the same about me. Exit BOA, enter ING (for now!). I get a lot better and consistent service with my online bank than I ever got from the prior one. Just like when Vanguard replaced "brokerages" in my lexicon.
I just haven't made that check-depositing system work yet. It never accepts my scan.

[Saleen]

I use USAA, though as discussed in a recent thread on this forum, its rates on checking and savings are extremely low as of late.

1) It is easier to deposit a check on my iPhone than to drive to a local bank or ATM.

2) I use whatever ATM is closest when I need cash, as USAA reimburses any ATM Fees.

3) If I need a large amount of cash (larger than the daily ATM withdrawl rate), I can walk into any bank and ask for a cash advance on my USAA Debit Card (not credit Card, as that would start charging interest immediately).

I do keep an old account with a local credit union, but only because that is my oldest line of credit (to keep my score up) and because it is easiest to transfer money to and from my father, who is also a member there. Otherwise I would likely close the account and go solely with an online bank. I guess it did come in handy a few weeks ago when I received a check that was above the daily deposit limit for the mobile app. Something about me just didn't want to send such a large check in the mail to USAA, though, of course, I had received the check in the mail.

I have no plans on going back, though I may be switching out of USAA soon in a search for higher that .01% rates.

[shawcroft]

We have used predecessor banks of Bank of America since 1972 and still have a small checking account with them.
I've had a checking account with Navy Federal since 1975 (when I was on active duty with the Navy) and have been using it more over the past 5 years. Savings rates are fairly good and the customer service is great. They are part of a few ATM networks so you can withdraw cash conveniently around the country.
I also use the NFCU bill paying service which works quite well for me......
My wife likes the "bricks and mortar" presence of B of A but I think I could do without it.I keep that account to maintain a state of "domestic tranquility"..
We also use USAA for banking services and I've found them to be excellent on service as well.
One little glitch is that NFCU and USAA seem to limit transfers OUT of their checking accounts to $2000-$3000 per day..
(doesn't apply to paying bills) although they will accept transfers IN of any amount. ....so I use Vanguard as the "hub" for our financial stuff for the most part.
Has anyone else encountered this transfer out limit and NFCU and USAA and, if so, have you been able to work around it?
Shawcroft

[spartanlaw]

Make the switch to Ally. By far the best bank I have ever used.

[Sidney]

USAA seem to limit transfers OUT of their checking accounts to $2000-$3000 per day..

I have never seen this -- I haven't had any problems with larger pull transactions.

[jegallup]

USAA seem to limit transfers OUT of their checking accounts to $2000-$3000 per day..

I have never seen this -- I haven't had any problems with larger pull transactions.

I've moved amounts quite a bit larger than that to Vanguard out of a USAA checking account with no difficulty. They had a $5K daily limit on on-line deposits, but when I called and asked they bumped the limit to $10K.

USAA is not like other banks; it's a result of their history and provenance. They're not perfect, but I wouldn't bank anywhere else.

[shawcroft]

Sidney and jegallup:
Thanks for your comments. I tried moving about about $3500 from USAA checking to VG last week and encountered this amount limitation. ( I made the transfer in two amounts over two days) Must be something I am doing wrong. It did strike me as strange. I will look into it.
Shawcroft

[crowd79]

Ally Bank. Sign up for their MMA at .90% interest and receive a debit card. It acts as a savings and semi-checking account with the card. They also refund all ATM fees charged by other banks, home and even abroad (Mexico, Thailand, Malaysia, HKG...some places I've been and they refunded everything except the 1% currency conversion fee) and they don't charge a fee themselves on top of that.

Zero, zip, zilch problems. You will be happy with 'em.

[interplanetjanet]

USAA is not like other banks; it's a result of their history and provenance. They're not perfect, but I wouldn't bank anywhere else.

I feel the same. I don't have a sense of dread engaging their customer service that I often get with other institutions, when you're reaching a call center with limited abilities to really help you. Thanks to their history, I really do think that they do remote banking better than the vast majority of institutions.

They're not perfect, but I'm not quite sure what would induce me to switch to someone else as my main banking hub. I think that would only happen if they went seriously downhill.

[jjbiv]

Sidney and jegallup:
Thanks for your comments. I tried moving about about $3500 from USAA checking to VG last week and encountered this amount limitation. ( I made the transfer in two amounts over two days) Must be something I am doing wrong. It did strike me as strange. I will look into it.
Shawcroft

Did you pull (i.e initiate the transaction) from Vanguard to USAA or push from USAA to Vanguard? Try initiating the transaction from the other side.

[tetractys]

Sometimes a visit to the bank/CU is necessary, and it helps to have some trust established. I prefer CU's for various reasons, of which most are online. Also it seems to me the purely online establishments already, in their short span, have shown a tendency to bait and switch.

Regarding Vanguard: Purely online; but in a different class altogether--an exception that proves the rule.

Regarding USAA: For the times I've checked their products, I've never found them noteworthy in comparison to other institutions; maybe in the upper 1/4 at best. -- Tet

[AAA]

As others have stated, as long as the bank is FDIC insured you don't have to worry about losing anything, only some possible delay or inconvenience in retrieving your funds if the worst happens. I've had several CD's through Vanguard's brokerage with banks that failed. The funds showed up in my sweep money market account very quickly.

A lot of people here are touting Ally Bank, and I use it myself - they have very good customer service and rates. But this was formerly GMAC Bank, which went under.

[nisiprius]

My opinion: FDIC-insured online banks are fine; I use ING Direct. I do not think it is prudent to have an online account as your only bank account, because there are too many things you need occasionally from banks that you might not yet have encountered.

Like others, I have consistently and uniformly, over um one, two, three, four decades, found small local banks and credit unions to be just plain better than big banks. The only thing to watch out for is to make sure that they do offer the full range of "brick-and-mortar" bank services.

a) Medallion signature guarantees

b) Certified checks and/or teller's checks. The need can crop up very quickly. If you don't have a physical bank with money in the account and your signature on file, and you need a teller's check immediately, what do you do?

c) Notarization. There are many other options besides the bank, but do you know what yours is? Last time I needed one, it was because the TSA said I had "a similar name to that of someone on the no-fly list" and every darn time we flew, the wife and kids would get their boarding passes and MINE would have "SEE AGENT" stamped on it and it would take me an extra ten minutes at the counter while they made calls and took my ID backstage and did mysterious things. So I knuckled under and joined the TSA's "this-isn't-a-clearance-but-give-us-all-your-ID-anyway" program, and I needed a notarization, and being retired could no longer get it at work.

d) Foreign exchange. Needed a wire transfer to put down a deposit for a reservation at a fancy family campground in Bergen-op-Zoom. Not sure why a credit card didn't work, but a wire transfer was what they wanted.

e) Safe deposit box.

f) Empty the change jar, without a ripoff 8% charge at the supermarket.

g) Someone to beg to sponsor the Little League team.

Paper checks are already starting to feel like slide rules and carbon paper, but it is amazing how indispensable they still are. Everyone keeps trying the PayPal and smartphone-to-smartphone-zap stuff but there's a long, long tail on the need for paper checks. For example, the firm I consult for does not do direct deposit and pays via paper check (!). And the online banks don't have deposits licked yet. ING's image deposit seems to work but is limited to $3,000. Deposits via ATM machine are very spotty--at one time ING claimed to have it but only for their "Electric Orange" account--and when I tried it, it didn't work. The ATM machine belonged to the NETWORK they said worked, but it turned out that the closest MACHINE in the network that could actually accept a deposit was twenty miles away.