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5 online banking myths debunked

Have you fallen for one of these common myths? Put your knowledge to the test and learn the facts about online banking.

February 16, 2023

When’s the last time you made an appearance at a bank branch? With the latest digital technology, there’s almost no reason to step inside a physical bank: Nearly two-thirds of the U.S. population uses online banking services, according to a Bankrate survey. It’s also trending upward, as 80% of millennials bank online—compared to 48.5% of baby boomers who do.

But you might still like the idea of having a checking account at a bank with a branch nearby. Why? Maybe you think online banks aren’t as convenient as stopping by your neighborhood branch to get cash, the perks aren’t as good as with traditional banks, or that online banks aren’t insured. Actually, these are three of many big myths about online banking.

A woman sits at a table and takes a picture of a check with her smart phone.

“People who say online bank accounts are inconvenient may not know how they work,” says Monica Lam, founder of a frugal-living blog. “I can mobile deposit a check into my account at any time without having to drive to the bank and wait in line.”

Lam wishes she took the benefits of an online checking account more seriously sooner. “If someone had told me I could avoid using gas or spending time going to the bank to deposit my checks,” Lam says, “I would have switched a long time ago.”

By now you’re probably wondering, “What are the most common myths about online banking?” We reveal them—and give you the true facts about online banking—so you can understand why opening an online checking account might be right for you.

Myth 1: They’re inconvenient

Don’t just take Lam’s word that inconvenience is an online banking myth. Patricia Russell, a certified financial planner, agrees. “Some online accounts offer 24/7 access to many features of the bank. You can open your account, view your balance, deposit checks, apply for loans, and pay bills—all from the convenience of the mobile app or website,” Russell says.

Nearly two-thirds of the U.S. population uses online banking services.

Bankrate

One of the online banking facts you should know is that some online banks make it easy and convenient to open an account. “Online accounts are extremely easy to open,” says Miguel A. Suro, founder of a financial blog. “All you have to do is go to the website or download the app and follow the simple prompts.”

As you’re getting the facts about online banking straight, you may also worry about the ability to access cash without a physical bank branch. Russell points out that online banks may have a large network of ATMs that you can use. For instance, with Discover’s online checking account, called Cashback Debit, you can use your debit card at over 60,000 no-fee ATMs. How’s that for debunking myths about online checking?

Myth 2: Online banking perks don’t measure up to those offered by traditional banks

If you believe this, you’ve fallen for one of the most common myths about online banking.

Suro thinks one reason you may be able to score benefits from some online banks is that low overhead often means incentives can be passed down to the consumer.

One of the facts about online banking is that many online banks charge low or no fees.

“You may be able to pay no fees for routine banking, such as just having an account, ordering checks, ATM access, and most money transfers,” Suro says.

Discover Cashback Debit, for example, charges no fees. Period. That means you won’t be charged an account fee on your online checking account.1 Imagine, a host of potential fee-carrying features you no longer have to worry about!

When you’re considering the facts about online banking and checking, you should look into the benefits of a rewards checking account. Getting cash back for purchases is a benefit that’s often associated with credit cards. But with Discover Cashback Debit, you can earn 1% cash back on up to $3,000 in debit card purchases monthly.2 That means your monthly cash back earnings could yield $360 in total rewards each year. This perk could be covering a good portion of your coffee habit!

You may be interested to learn these facts about online banking: Some online checking accounts offer higher yields compared to traditional banks, Lam says, which means you can potentially make some cash while your funds are stashed.

Myth 3: You must be tech savvy to use online accounts

While you need to have a computer, tablet, or smartphone to use an online bank and access an online checking account, one of the top myths about online checking is that you need to be a techie. 

“There is no need to know a lot about technology to have an online account,” Russell says. “Some banks know the importance of easy-to-use websites and mobile apps, so they often have a design that is simple and straightforward—even for those claiming not to be tech savvy.”

Lam, who recently opened a new online bank account, also challenges this myth about online banking. “I went online and filled out a simple form and instantly had access to my account,” she says.

Suro has had an online bank account for more than 10 years and has not found the technology to be challenging, debunking this myth about online checking. “If you can manage your traditional bank’s account online via its website or app, you can manage an online-only account,” Suro says. “It’s the same basic experience.”

“If you can manage your traditional bank’s account online via its website or app, you can manage an online-only account. It’s the same basic experience.”

Miguel A. Suro, founder of a financial blog

Myth 4: You won’t be able to talk to a human if there’s a problem

Another online banking myth is that you won’t be able to access helpful customer service for your online checking account because you can’t walk into a branch to talk to someone. Not so fast.

One of the facts about online banking is that some online banks have customer service representatives that you can call, and some may even have this service available around the clock (no need to even leave the comfort of your home if you have a question). For instance, Discover’s customer service is available 24/7.

“You no longer have to make it to the bank before it closes, you can actually contact the bank in the evening and get an answer,” Russell says.

A woman stands in a living room, holding a laptop in one hand and holding a phone to her ear with the other hand.

If you’re all about communication from your favorite device, note that some online banks offer digital customer service through the bank’s website or app, calling into question this myth about online checking. “Many online banks offer [live] chat,” Russell says. You may also be able to contact an online bank’s customer service through social media.

Despite the face-to-face opportunity, Suro doesn’t think bank branches are necessarily better at providing customer service. He once needed to send a wire transfer and easily figured out how to do it online. When his relative went into a branch to do the same thing, he got held up. “The whole thing turned into an ordeal that took over 45 minutes,” Suro says.

Myth 5: Online checking isn’t insured

One final online banking myth is that deposited money isn’t insured.

In reality, one of the online banking facts to know is that online banks can be members of the FDIC, which means they insure your money up to $250,000 or the maximum allowed by law, Lam says. Before you open an account, you’ll want to make sure that the online bank is FDIC-insured. One way to do this is to call the FDIC’s toll-free number at 1-877-ASK FDIC (1-877-275-3342) and ask a deposit insurance specialist to confirm that the online bank in question is FDIC-insured. An FDIC online tool also allows you to search banks by name and informs you of their FDIC number and status, among other information. Banks often include language on their websites and in marketing materials noting if they are members of the FDIC, so be sure to look for that as well.

A graphic of a laptop with an image of a blue shield, a yellow lock, and a green check mark on the screen.

No myths about online checking—only a new reality

“Despite the benefits of online banks, many people don’t open accounts because of all these misconceptions,” Russell says.

Now that you know some of the facts about online banking and checking, you can more easily see the simplicity of online accounts and the time saved by banking online—two key reasons Suro is a huge proponent.

“That’s why banking online is one of my core strategies for effortlessly saving money and moving through life more efficiently,” he adds.

Now that you can spot the myths about online checking, it’s time to learn all about the benefits of online banking. 

1 Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.

2 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPalTM, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries

Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.

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