November is Financial Literacy Month and with 55 per cent of Canadians using online banking*, BBB says it pays to know the pros and cons when it comes to digital vs. traditional banking. With more than 3,000 inquiries and 13 complaints about banks in 2015, BBB is helping consumers make safe banking decisions.
Mary O’Sullivan-Andersen, president and CEO of BBB Serving Southern Alberta and East Kootenay, says no matter what stage of life you’re in, having a solid grip on your financial needs and goals is crucial.
“Going digital when it comes to your finances can be convenient but it can also be confusing if you’re unsure of the benefits and potential risks,” says Mary O’Sullivan-Andersen. “Before selecting a banking method, be sure to have a good understanding of your own banking habits, and what you need from your financial institution.”
When comparing banking methods, BBB says to make sure things add up by taking everything into account, such as:
- Security: This is one issue that scares many people away from taking their banking online, but it shouldn’t. Even traditional banks have all your financial information stored in a big data center that could be vulnerable to hackers.
- Fees: Online banks are friendlier to smaller depositors because they typically require lower monthly balances in your account(s). Some traditional banks require a certain amount to be kept in your savings account to avoid charging you a monthly maintenance fee. For online banks, that number can be lower, and they might offer “unlimited” chequing accounts so that you don’t get charged a fee for exceeding the number of transactions per month.
- Deposits: Web-based banks offer a few different options to deposit physical checks. You can always mail them in, but most online banks also offer “eDeposits” in which you can take a picture of the front and back of each check and upload it to your account for deposit, which saves you a trip to the bank. But, you must ensure you’re on the official bank’s website and on a secure WiFi network connection.
- Interest rates: Online banks typically have better interest rates than traditional banks because they don’t need to take any funds to operate brick-and-mortar buildings.
- Customer service: If you like to deal with the people managing your money via email or over the phone, go digital. If you’d rather have someone to talk things through with face-to-face, stick with a regular bank. Nearly all banks also have call centers and online message centers as well. Online banks are rarely, if ever, “closed.” But if you’d rather use a traditional bank to complete your transactions or get questions answered in person, you’ll need to visit your bank during normal business hours.
- Personal preference: Having a personal relationship with a banker can be a big benefit for people, especially those who like getting new products or services pitched to them or getting in-person financial advice. But keep in mind that banks have been closing physical branches left and right to cut costs, even installing ATMs that allow tellers to answer questions via web cam.