If you lost a debit card or needed to deposit the birthday check from Grandma, would you prefer to walk into a branch or contact a so-called virtual bank, which operates solely online?
Most people would prefer the former option, according to a recent study from Forrester Research. Except for members of Generation X and Generation Y, that is.
"Anyone who has already set up their bank accounts is used to going to the branch," said Jim Bruene, editor of Online Banking Report, a monthly industry publication. "But for younger people, their first inclination is to shop for a bank online."
Web banking, however, isn't an all-or-nothing proposition. Today, there are three broad categories from which to choose:-- Bricks-and-mortar banks, which have traditional branches plus online bill-paying and Web services.
-- Web-only banks offer the traditional suite of checking accounts and loans, but operate only online.
-- And direct banks, the newest class, which provide select, but often high-yielding, products, such as online savings accounts.
When shopping for a bank, it's smart to think through the options, even considering a combination of Web and traditional banks. Because no matter how much of your life is virtual, some aspects of banking--checks and cash--are very much physical.
"The main reason people pick and stay with their bank is the location of the branches, the ATM network and the whole convenience aspect," said Catherine Graeber, a principal analyst at Forrester.
Here are some things to remember when selecting a bank:
-- How will you get cash?
Most people withdraw cash from ATMs, not from a teller at the branch. But you'll want to check that your bank, whether virtual or not, has machines in your area.
First Internet Bank of Indiana, for instance, will refund up to $6 of ATM surcharges a month. VirtualBank, on the other hand, does not reimburse any fees.
You have to pay attention even with bricks-and-mortar banks. Some 80 percent of accounts charge for withdrawing cash at an out-of-network ATM, with an average fee of $1.29, according to Bankrate.com. That's on top of the $1.50 or more you pay to the bank that operates the ATM.
Also, keep in mind that electronic transfers between banks--say you have an online savings account at ING Direct but do your checking with a local bank--can take up to five business days.
If you tend to need cash more quickly, look for a bank that offers both types of accounts: Intrabank transfers can be completed during the same business day.
-- How will you make deposits?
Just as important as withdrawing money is putting cash in your accounts. Direct deposit for a paycheck is easy. But if you are paid mostly in cash or you often receive checks, how will you make the deposit?
"From the transaction standpoint, Internet banks have taken a lot of strides," said Greg McBride, a senior financial analyst at Bankrate.com. "They realize that not having a branch network is an obstacle they need to overcome."
Generally, you can wire transfers or mail in checks, sometimes using prepaid envelopes, to Web-only banks.
At NetBank Inc., for example, customers can send for free a deposit overnight through select United Parcel Servicedrop-offs.
It's worth exploring each bank's policy. Not all will offer these amenities and some won't accept cash deposits, even through an ATM.
-- What are the yields? The fees?
Without branches, Internet banks say they can afford to charge lower fees and pass on higher yields.As far as checking accounts, however, there hasn't been a mad rush online.
"There's no financial incentive to go anywhere," said Online Banking Report's Bruene. "You can find no-fee checking accounts at just about any bank."
What may make more sense is to keep your checking account where it is and open a savings account online, where you'll find 5 percent yields compared with what's often less than 1 percent at your local branch.
-- Do you have additional needs?
Finally, consider any other special needs you may have. A safe deposit box for the family jewels? A need to be able to talk eye-to-eye with a bank rep when something goes wrong?
Then you may find that you're more traditional, though no less tech savvy, than you thought.
E-mail Carolyn Bigda at email@example.com.