Internet Banks

Why should you get an Internet bank account? The whole concept of a bank that exists primarily on the Internet is that many of the costs and overhead incurred by traditional banks are unnecessary and if they were eliminated, the bank could pay higher interest rates on savings accounts. They could also offer high yield checking accounts, something which is almost impossible to find at a traditional bank.

The largest Internet bank is ING Direct, a subsidiary of the huge Netherlands based financial conglomerate ING. ING Direct has been experiencing impressive growth since their spin off from ING in 2000. They now boast more than 15 million customers world wide, including 6.5 million in the US. They're not alone. Other leaders in the space are HSBC Direct, WTDirect Emigrant Direct, and E*Trade Bank.

These banks offer advantages that traditional banks just cannot match, such as interest rates on savings accounts that are 3 - 8 times what traditional banks are paying. That's actually the primary reason people are drawn to Internet-only banks, and why you should consider one. Other advantages are unique financial services and products, such as ING Direct's 5 year mortgages, and checking accounts that actually pay a healthy interest rate. While many traditional banks advertise free checking accounts, the Internet banks take that one better, actually paying their depositors to keep money in their checking accounts.

Other reasons to get an Internet bank account are the ability to easily pay bills and see all aspects of your account from any computer with Internet access. When these features were first offered they truly set the Internet banks apart from traditional banks, who offered little or no ability to do these things. Since that time, many traditional banks have added online banking and closed the gap in this area. Now the main advantage of an Internet bank account is the very high interest rates you can earn on your money, and really, do you need another reason to look at opening an Internet bank account? Remember, Internet banks will pay you interest on both savings and checking accounts, an advantage that leaves most traditional banks in the dust.