8 Benefits of Setting Up an Online / Digital Banking Account

Even though digital and online banking are commonplace and popular, some people are still resistant to the idea of managing their money online. Security is a concern and so is privacy, and some people may simply not realize that there are significant benefits to digital banking.

At Addition Financial, we work with members and potential members every day to help them set up accounts and recognize the advantages of having an online banking account. We want to make sure they know that we prioritize their security and financial wellness.

What are the benefits of digital banking? Here are eight that our experts and Addition Financial staff have identified.

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#1: Pay Bills Automatically (and Possibly Save Money!)

With online and digital banking, one of the biggest perks is automating your bill payments with online bill pay, a simple procedure that can save you time and, potentially, money. Mason Miranda, a Credit Industry Specialist with Credit Card Insider, points out four important things about automating your payments:

  • “Many financial institutions allow you to set up auto-pay features for bills, which may help you lower the chances of missing payments.”

  • “Many credit card issuers offer auto-pay options and require you to link your checking account to do so.”

  • “You may be able to set up auto-pay features with outside companies, such as for your electric or water bill. If your bank doesn't offer these auto payment features, use the one offered by these outside companies.”

  • “In rare cases, auto payments may come with perks, such as slightly lower payments, lower interest rates or something similar.”

Keep in mind that you will need to do some work up front to set up your automated payments. When you do, make sure to ask about discounts or lower interest rates. Even if you don't save money on your bills, you'll have the peace of mind of knowing that everything is paid on time.

#2: Access Your Accounts Safely, 24 Hours a Day

One of the biggest benefits of online banking is that you can access your checking account on your terms. Deborah Goldberg of EffortlessInsurance.com told us:

“You can use your financial institution's mobile banking app to access the bank 24/7... see your financial data, and avoid in-person risks related to health, access or marginalization.”

In the days before online banking, accessing your money meant visiting a bank branch or ATM in person. At the best of times, it can be an inconvenience to have to leave your home to access your accounts. In the midst of a global pandemic, it becomes a health hazard as well.

Digital banking makes it possible to access your bank account at any time (without paying ATM fees) that suits you and from wherever you are in the world – typically through a mobile app.

#3: Keep Track of Your Credit Score

Another tip courtesy of Mason Miranda has to do with keeping track of your credit score and protecting your financial information from fraud through account alerts. He told us:

“Most credit card companies offer free monthly credit score updates. Use these to track your credit scores and monitor your financial well-being. Some institutions text and email alerts for potential fraud. These can be extremely helpful in avoiding any money being stolen.”

It used to be that consumers could only order one credit report per year from each of the three major credit bureaus. The fact that many financial institutions and credit card companies now offer continuous monitoring is a huge benefit.

The same is true of automated alerts, which notify account holders and card holders of suspicious activity as soon as it occurs. Time is always of the essence when fraud is involved and you can minimize your liability by locking your card or notifying your bank immediately.

#4: Transfer Money Quickly

What happens if you need to transfer funds from your savings to your checking account to cover a payment, or if you need to repay a friend for something they bought for you? Without a digital banking platform, you would need to go to the bank or to an ATM to transfer money or withdraw cash.

One of the biggest benefits of online and digital banking is that you can transfer money at any time and it takes only a few minutes. Virtually all digital bank accounts allow for instant transfers of money between accounts at the same bank. All you need to do is log in, choose the accounts you're transferring to and from, and specify an amount.

If you need to send money to a friend or family member, you can also do it digitally. Many financial institutions include Zelle on their mobile apps to make it easy for account holders to pay friends or service providers. Of course, you can also take advantage of mobile payment apps such as PayPal and Venmo, which link to your credit union or bank electronically.

Online Money Management Tools Comparison Chart

#5: Secure Your Account with Multi-Factor Authentication

Carrying cash always involves some risk. If you lose it or someone takes it, there is no way to get it back. Tyler Boyd, the Chief Strategy Officer of Squeeze, told us:

“Online banking's security features are actually one of my favorite aspects of banking apps. Many allow you to enable multi-factor authentication, so even if your password gets leaked, your account will still be secure.”

If you have never used online or digital banking before, you might worry about security and what would happen if someone stole your password. Fortunately, financial institutions understand that worry and most allow account holders to add an extra layer of security via multi-factor authentication.

The most common types of multi-factor authentication are text codes and fingerprints. With the former, you'll receive an automated text with a numerical code you'll need to enter to access your account. With the latter, you'll scan your fingerprint to log in. Either way, simply having your login ID and password will not enable a potential thief to access your accounts.

#6: Quick Access to Deposits

Another big difference between in-person banking and online banking is the ease and speed with which you can depositchecks. Instead of visiting a branch or ATM in person to deposit a check, online bank accounts and mobile apps allow you to deposit money from your mobile device by taking pictures of the front and back of the check.

In addition to saving time by eliminating the need for you to go to the bank, in many cases you'll get access to your money more quickly than you would without online banking. Financial institutions can communicate with one another electronically and in real time, meaning that checks often clear more quickly than they did in the days before online banking was a possibility.

#7: Sync Your Bank and Credit Card Accounts with Other Financial Apps

It wasn't long ago that if you wanted to withdraw money from your bank account to invest for retirement, you would have needed an investment broker and you would have had to take time from your busy day to meet with them or talk on the phone to invest your money. 

One of the biggest benefits of digital banking is that you can sync your bank account with other accounts electronically. That means you can do all of the following things.

  • Set up automatic withdrawals and transfers to move money from your checking account into online investment accounts.
  • Create automatic investment tools to buy stock, evaluate your risk, and diversify assets as needed.
  • Create a household budget and move money into spending "buckets" to help you stay on track with your savingsand investment goals.
  • Manage your budget, savings, spending and bill payments all from your mobile phone or from an online budgeting tool.

Being able to manage all of your finances from one place is a huge time-saver and makes it easy to set financial goals and meet them.

#8: Bank from Anywhere

Digital banking has become increasingly popular as a result of the COVID-19 pandemic because it allows account holders to do their banking from home. But even when things return to normal and we can travel again, there are benefits to “anytime, anywhere” access.

What if you're traveling and you need to pay bills? What if you forget to deposit a check on Friday and you're going away for the weekend? Most digital accounts come with mobile options and apps that you can use to access your accounts from home, work or halfway around the world.

The convenience factor is huge with online banking and as banks and financial institutions continue to embrace digital trends, it's likely that they'll add features and services that will make online banking even more convenient than it is now.

Online banking is undeniably convenient and easy to use. It also offers levels of security that can help to keep your money and accounts safe and advise you of fraudulent activity as soon as it occurs.

Managing your money has become easier than ever with so many online tools available on the market today. The difficult part is choosing the right platform for you! Our comparison chart allows you to quickly assess the most popular money management tools side-by-side so you can make an informed decision. Learn more here >

Are you in the market for a financial institution that puts your needs first? Click here to open an Addition Financial checking account!

The content provided here is not legal, tax, accounting, financial or investment advice. Please consult with legal, tax, accounting, financial or investment professionals based on your specific needs or questions you may have. We do not make any guarantees as to accuracy or completeness of this information, do not support any third-party companies, products, or services described here, and take no liability or legal obligations for your use of this information.