- Online banking platforms are not banks, but they offer some of the same services.
- Online banking platforms are safe if accounts are federally insured through a bank.
- You might like online banking if you want to get a higher interest rate.
- See the Insider’s guide to the best online banks.
If you’re new to online banking, you might see an institution refer to itself as an “online bank” or an “online banking platform.” Sounds like the same thing, right? Well, they are not.
and online banking platforms have some notable differences. By learning about their differences, you may have a better idea of which institution to choose.
What is the difference between an online bank 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,
, or CDs. Investment and loan options are also available.
Here are some examples of online banks:
During this time, online banking platforms are not banks. This detail is important to note because an online banking platform is not directly insured by a government agency, such as the Federal Deposit Insurance Corporation or the National Credit Union Administration.
Online banking platforms are still 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 typically have fewer banking options than online banks. You will usually only have one or two accounts to choose from, such as a savings account or a hybrid checking/savings account.
All of the following are examples of online banking platforms:
If you plan to only open a savings account or checking account, online banking platforms can still be a great way to bank. However, if you are looking for a full banking experience, online banks are more suitable.
What are the similarities between online banking and online banking platforms?
Online banking services are mainly done by computer or telephone. 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 thanks to the detailed FAQ sections or help 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 at GreenDot locations, but you will pay a fee.
Advantages and disadvantages of online banking
Should you try online banking?
Online banking – through a platform or a bank – works best if you are comfortable with technology. If you depend on in-person banking to manage your bank account, you may find it difficult to adapt to online banking.
You will also prefer online banking if you are looking for a high interest rate on savings. Online banks tend to offer higher rates than traditional financial institutions. You’ll find several online-only institutions featured in our guide to the best CD rates and our guide to the best high-yield savings accounts.