Dear Dave: Are Online Banks As Safe As Traditional Banks?

|
Posted: Oct 31, 2019 12:31 PM
Dear Dave: Are Online Banks As Safe As Traditional Banks?

Source: AP Photo/Wilfredo Lee

Dear Dave,

What are your thoughts about online banks? Are they as safe as traditional, neighborhood banks?

Jeanna

Dear Jeanna,

Sure, if they’re guaranteed by the Federal Deposit Insurance Corporation. The FDIC is one of two agencies that provide deposit insurance to customers in America’s depository institutions. The other is the National Credit Union Administration, or NCUA, which insures and regulates credit unions.

If you’re seriously considering using an online bank, there are a few things I’d advise checking out before making the move. Look into the bank’s track record, and see how long it has been open. Also, if the bank you’re considering doesn’t have a name-brand you recognize, find out the amount of its deposits.

Online banks don’t worry me today like they did 10 years ago. And almost everyone does some form of online banking these days, anyway. If the bank in question has a good reputation, and sufficient deposits to have some strength in its FDIC guarantee, I wouldn’t worry about it.

—Dave