A great way you can take good care of your money and potentially make money is to choose the right kind of bank. Yesterday I shared ways to avoid bank fees, and the biggest part of that is by being at the right bank.

Today I’m going to compare online and traditional banks so that you can decide which bank is right for you. The truth is, it’s probably wisest to do a combination of both! And even if you’re not comfortable putting all your money in an online-only bank, even just having a savings account at an online bank might be a benefit to your finances.

Note: Regardless of what kind of bank you choose, you should make sure that the bank is FDIC insured. Any bank worth your while will insure accounts up to $250,000.

Comparing Online and Traditional Banks

The Pros of Traditional Banks

A traditional bank what you are driving past everyday in town. They have a building, real people behind the counter, and usually have ATM machines associated with them. There are a lot of pros to a traditional bank, including being able to visit the bank in person if you prefer face to face contact.

There’s also the matter of the ATMs. Most ATMs charge a small fee to withdraw money if you’re not a customer of the bank that is affiliated with the ATM. Having a local bank lets you avoid those fees if you need to regularly withdraw cash from an ATM.

Traditional banks can also be better than online banks because you have quicker access to your cash. Especially with a savings account, online banks may take 1-3 days to process a transfer into your checking account. If you have a local traditional bank, you can go there and immediately withdraw that money with no problems.

Another thing to consider is security. If you do all your banking in person, you have no need to worry about data breaches or security hacks. While those kinds of issues are not common, you don’t have to worry about that if you’re using a traditional bank.

It’s also usually easier to deposit money at a traditional bank. While online banks have found ways to make it easier to deposit checks, you’re mostly out of luck if you receive a large chunk of cash and don’t want to keep it in your wallet.

The Pros of Online Banks

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