What is right for you?

  • Online banking platforms are not banks, but they do offer some of the same services.
  • Online banking platforms are safe if the accounts are federally insured through a bank.
  • You might like online banking if you want to get a higher interest rate.
  • Check out the insider’s guide to the best online banks.

If you are new to online banking, you may see an institution refer to itself as an “online banking” or an “online banking platform”. Sounds like the same, right? Well, they are not.

Online banking

and online banking platforms have some notable differences. By learning about their differences, you might get a better idea of ​​which institution to choose.

What is the difference between an online banking and an online banking platform?

a online bank offers products and services similar to those of traditional financial institutions, but via the Internet instead of a branch.

Online banks allow you to open savings accounts,


verify accounts

,


money market accounts

, or CDs. Investment and loan options are also available.

Here are some examples of online banking:

During this time, online banking platforms are not banks. This detail is important to note because an online banking platform is not directly provided by a government agency, such as the Federal Deposit Insurance Corporation or the National Credit Union Administration.

Online banking platforms are always safe to use if their accounts are federally insured by another bank. Online banking platforms will include a disclaimer if they are federally insured by another financial institution.

Online banking platforms will also generally have fewer banking options than online banking. You will usually only have a choice of one or two accounts, such as a savings account or a hybrid checking / savings account.

Here are some examples of online banking platforms:

If you plan to open only a savings or checking account, online banking platforms can still be a great way to do banking. However, if you are looking for a full banking experience, online banking is more suitable.

What are the similarities between online banking and online banking platforms?

Online banking is mainly done by computer or by phone. Thanks to online banks and banking platforms, you can open an account online, deposit money by going to ATMs, or get help with some of your questions through detailed FAQ sections or call centers. calls.

Most online banks don’t have branches, so in many cases you can’t withdraw or deposit money directly. Some allow you to do this in GreenDot locations, but you’ll pay a fee.

Advantages and disadvantages of online banking

Should you try online banking?

Online banking, whether through a platform or a bank, works best if you are comfortable with the technology. If you depend on in-person banking to manage your bank account, you might have a hard time adjusting to online banking.

You will also prefer online banking if you are looking for a high interest rate on savings. Online banking tends to offer higher rates than traditional financial institutions. You’ll find several online institutions only featured in our guide to the best CD rates and our guide to the best high yield savings accounts.

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