Online banking - Pros & Cons

[goshenBogle]

We have been using Vanguard Prime MM for our cash reserve keeping about $25K in the account. But the current SEC Yield is only 0.11%. So now we are thinking of using an online bank savings account (not checking) for cash reserves. We would still keep a minimum in the Prime ($3K) since that account is handy for transfering into / out of Vanguard.

What are the procs & cons of online banking?
Am I correct that an online bank such as Ally does not offer paper statements?
Do online banks typically have good customer service?

[aristotelian]

I see only pro, at least in the current environment. Higher yield and FDIC insurance. Online savings for cash is a no brainer. Only con would be intangible stuff like having your accounts all in one place.

[Svensk Anga]

I am using American Express Bank. Last I looked they were paying 1.0%. They still provide paper statements monthly.

It has worked so smoothly that I have had no need for customer service.

[02nz]

There are no real cons aside from the things you can only get from a branch, e.g., notarial services. But if you have a brick & mortar bank or other provider for that, then there's no real downside to high-yield online savings account, especially since funds cane easily be moved to your checking account by ACH for cash needs. I believe Ally will send paper statements if you choose them, probably most others are the same. Ally has good customer service in my experience but I've rarely had to contact them. It seems like the only time I contact traditional banks are to request waivers of fees, and online banks have far fewer of those.

[nix4me]

Only con I’ve run into is what to do with large sum of cash.

Otherwise we have banked completely online with USAA for 16 years.

[fortfun]

I switched to Ally about 5 years ago. Never going back to brick and mortar. Only problem is no way to deposit cash. That's the ONLY downside I can think of (for our family). I maintain an account at Charles Schwab for their no fee international ATM.

[kaneohe]

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What are the procs & cons of online banking?
Am I correct that an online bank such as Ally does not offer paper statements?
Do online banks typically have good customer service?

Ally and Synchrony offer paper statement. My experience has been good w/ both for customer service.

[Tejfyy]

I've been online banking since the mid 2000s with various institutions and the convenience outweighs the few times customer service wasn't what I expected, which is also to say that the notion of customer service has changed over that time too, meaning the customer is expected to do more.

[Doctor Rhythm]

I’ve opened a half dozen online bank accounts in the last 2 years (for sign up bonuses, CDs, etc). I have a brick and mortar bank as well, but walk in maybe once a year, so it might as well be on-line. No huge cons but some minor frustrations:

1. They all make it easy to add money to the account, but sometimes put up barriers to transferring out large sums. This often includes a daily or monthly maximum limit on ACh transfers that “push” money out to another account. There is generally no problem with a “pull” into an account from another bank, which is what I usually do.

2. Mobile apps vary in ease of use and clarity of information. Some are just awful and crash-prone. Their websites are usually better.

[carolinaman]

If you still maintain an account with a brick and mortar bank there are no downsides. I started using Ally this year and have link with my local bank to move money back and forth as needed. So far I have not pulled money from Ally. I also moved MM funds from Vanguard to Ally for CDs

[JonnyDVM]

How do you get out relatively large sums of cash if you only bank online? That’s the main reason I use a brick and mortar. Plus a lot of banks have modest caps on how much you can mobile deposit monthly. The brick and mortar will always take my check.

[Katietsu]

How do you get out relatively large sums of cash if you only bank online? That’s the main reason I use a brick and mortar. Plus a lot of banks have modest caps on how much you can mobile deposit monthly. The brick and mortar will always take my check.

In my experience, online only banks have reasonable caps on mobile deposits. Now, with Covid, these are even higher. I think I saw a notice that one bank’s limit is $250k. Alternatively, you may mail your check to the bank.

I do have a brick and mortar bank that I am still using for daily expenses. But I think I use the physical bank less than once a year. Cash? I do not know that I have ever needed more cash than I could get from an ATM in one or two days, especially since DH can take out an independent limit.

[Oilcans]

Have had Ally, Marcus Goldman, and Sallie Mae. Have had great service with all three.