Online Checking Accounts A Better Alternative For Savings Accounts

According to a recently published report by WalletHub, we have now reached a new age of banking. Online checking accounts – offering up to 5% more interest than savings accounts and money market accounts are now sitting at the top of the chain. walletHub have found that interest bearing online checking accounts are paying as much as 5 times more interest on any balance up to $50,000 than both the other types of accounts. Consumers who were not satisfied with their savings or money market account interest earning and who were also not comfortable with investing in the stock market – online checking accounts have really come up as the best available alternative.

It is only natural for an investor to feel curious about the factors that have resulted in a change in bank dynamics or whether it is trend that is going to stay or a merely temporary one? Low Fed rates, money crunch, technological advances and regulations are only some of the factors that have largely contributed to the development of such a situation.
The Federal Reserve is keeping the interest rate for long term savings products to near zero for promoting borrowing and also for stimulating the economy by means of greater spending. Another recently conducted study by the National Foundation for Credit Counseling and shows that insufficient savings is the top most financial concern for majority of American households and this has contributed immensely to the rising popularity of everyday banking tools like online checking accounts.

Another factor that has immensely contributed to the growing importance of online checking accounts is technological advancements. It is more profitable for the banks to operate online via their website and call center than investing in a real life brunch. The more is the number of customers using online banking services, the more profitable it is for the banks. With ubiquitous use of the internet people now do many of their everyday activities online and financial institutions are actually closing down some of their real life shops and this is a good evidence of the growing popularity of the online checking accounts.

Due to the recession, oversighting banks has also significantly increased in recent times and checking accounts are being pushed by the banks as do-it-all-option to the customers. This can eliminate some of overhead costs associated with multiple accounts used by a single customer for more or less similar purposes. In the banking world brand label and previous performance don’t always predict the future accurately and with the changes that online credit accounts have already resulted, certainly a lot more can be expected of that.