online banks loansThe Online Bank is a present reality and wave of the future. When shopping for an online bank loan do plenty of homework. Compare costs and fees and scrutinize the level of customer service available.

Online banking lets you connect through the Internet and perform the usual banking and financial activities such as view accounts, transfer funds, pay bills and take out loans. Online banks are commonly compatible with money managing programs such as Quicken and Microsoft Money.

Many banks make it easier to manage your checking account by allowing you set up e-mail alerts that notify you when checks clear or when your balance slips below a certain level and provide a detailed listing of your canceled checks.

If you’d like to eliminate paper checks from your life, you’ll find that a growing number of companies allow you to make automatic payments through your online banking account.

The bank’s Web site will walk you through the steps of registering the bills you want to pay and the accounts you want to use to pay them. You’ll only have to enter the information once. You can always make changes and add or subtract bills.

Not all banks operating on the Internet are insured by the FDIC. Many banks that are not FDIC-insured are chartered overseas. If you choose to use a bank chartered overseas, it’s important to know that the FDIC may not insure your deposits.

Most online bank Web sites have an “About Us” page that describes the institution. Look for information regarding the official name, their charter, address of the bank’s headquarters and information about its insurance coverage from the FDIC. Check with your bank or the FDIC if you’re not certain.

There are security risks inherent in online banking, and safety and privacy concerns should be clearly understood. Identity theft and fraud are constant threats.

Basic computer security should always be on your mind. Safe surfing is never letting your guard down.

  • Never go online “naked” — without a good commercial firewall and anti virus software.
  • Wireless connections without strong digital encryption is the same as sharing the contents of your hard drive with anyone on the street.
  • Never do your online banking on a public computer — like the one at the library or a public cafe.
  • Never use your Social Security number or other sensitive data as user IDs or passwords.
  • Protecting yourself from hackers by thinking like a hacker can be a powerful defense.

Auto companies are moving into the banking business.

BMW Bank of North America has been offering its customers online banking since 1999 and includes certificates of deposit, checking, savings, money market accounts and debit and credit cards. Online bill payment is also available.

GMAC Bank, a new federal savings bank aimed at General Motors customers and employees, was launched in August. GMAC Bank offers money market accounts, certificates of deposit and checking accounts. The bank also plans to originate and purchase residential mortgage loans as well as home equity loans and lines of credit.

Volkswagen Bank USA is awaiting federal approval and should be up and running by the end of the year. As with BMW, the aim of Volkswagen Bank USA is to deepen relationships with auto customers by offering a wide range of banking products both on the lending and deposit sides.”

How do rates from BMW Bank and GMAC Bank stack up? They’re pretty competitive. As with many Internet banks, they are able to offer more generous yields on CDs, in part, because they have less overhead.

For example, BMW Bank is offering a three-month CD with an annual percentage yield (APY) of 3.45 percent. Its 60-month CD comes with an APY of 5.2 percent. The minimum balance to obtain that APY on the accounts is just $1,000.

And GMAC Bank is promoting a 12-month CD with an APY of 4.25 percent and a 24-month CD with an APY of 4.4 percent on balances of $5,000 or more.

Looking for a loan can be a tedious and time consuming process. Applying for a loan and getting it approved can be frustrating and, many people decide against it because of the paperwork and headache.

You may find that getting an online loan is a much easier process since and the whole loan transaction can be carried out sitting at home or in your office. You usually just have to submit a one page online application.

Online banks are accessible 24-7, even on weekends and holidays. Now, you can apply at your convenience. Almost too easy, you don’t even have to go through the hassles of faxing documentation.

Back to the top of Online Bank.