Test Your Knowledge: Facts & Fiction about Online-Only Banks

By Colleen Kane

PUBLISHED November 01
|
4 MINUTE READ

Are brick-and-mortar banks going the way of the video store? Not quite. But online banks continue to gain popularity for a variety of reasons. Misconceptions persist about the benefits of each, however. Test your knowledge with this quick quiz.

1Are online-only banks safe?
- A. Not as safe as a brick-and-mortar bank because your savings could vanish at any time.
- B. Yes, as long as it has FDIC insurance, it’s as safe as an FDIC-insured branch of the bank you grew up with.
Answer B.
To confirm whether the bank you’re considering is FDIC-insured, use this search tool: https://research.fdic.gov/bankfind/
2The average interest rate and Annual Percentage Yield (APY) offered by online banks is:
- A. Higher than brick-and-mortar banks.
- B. Lower than brick-and-mortar banks.
Answer A.
Higher rates are one of the main attractions of using online banks.
3Which of these is a way to keep your sensitive information safe when banking online?
- A. Don’t ever use Wi-Fi for banking.
- B. If you’re on a bank site, always look in your browser’s URL bar for the green “https,” which indicates a secure website.
Answer B.
While Wi-Fi is not ideal, it’s safer to use if it’s your own, password-protected Wi-Fi, not a public one. But it’s better to use your cellular data on a mobile device, or use a wired connection at home.
4What security measures do most online banks offer?
- A. Multi-factor authentication—this is when you enter a PIN and answer a prearranged question, for example.
- B. Firewalls—a layer of protection on data going into and coming out of computer networks.
- C. Secure Socket Layer encryption (SSL)—the “https” in the web address.
- D. All of the above.
Answer D.
These are all features found in most online banking.
5How do fees for online banks compare to brick and mortar banks?
- A. They’re typically lower.
- B. They’re typically the same.
- C. They’re typically higher.
Answer A.
Because online banks don’t have the overhead costs of banks with brick and mortar branches, they can offer lower fees or even no fees.
6What types of customer service can you expect from an online bank?
- A. 24/7 automated telephone service, and live bankers available during extended business hours.
- B. Live chat and secure email messaging on the bank’s website.
- C. Assistance by text message.
- D. A and B.
Answer D.
A and B are offerings of online banks, although exact offerings depend on the bank. Some even offer live bankers on the telephone around the clock.
7Can you find no-fee ATMs when you use an online bank?
- A. No, because without bank branches your bank has no ATMs.
- B. Yes, because through partnerships with ATM networks, some online banks offer fee-free ATM transactions, and some offer a monthly limited reimbursement amount for non-network ATMs.
Answer B.
8But no free lollipops—what treats can an online bank give me?
- A. You can set up your account to pay your bills online. That’s like getting free stamps.
- B. Virtual lollipops.
- C. Low overhead means higher rates and lower fees, which means more money for you. Then you can treat yourself.
- D. A and C.
Answer D.
A and C.

Colleen Kane is a freelance writer who has written for CNBC, Fortune, Money, and many other publications.

*Disclosures:

ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of .

APYs are subject to change at any time without notice. Offers applies to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time. See all CD rates and terms offered here.

The information, opinions and recommendations expressed in the article are for informational purposes only. Information has been obtained from sources generally believed to be reliable. However, because of the possibility of human or mechanical error by our sources, or any other, RVC does not provide any warranty as to the accuracy, adequacy or completeness of any information for its intended purpose or any results obtained from the use of such information. The data presented in the article was current as of the time of writing. Please consult with your individual advisors with respect to any information presented.

Test Your Knowledge: Facts & Fiction about Online-Only Banks

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