Online checking accounts let you manage your money from the comfort of your independent living apartment, but are they really as safe and convenient as brick-and-mortar banks? Below, we'll explain everything older adults need to know about online checking accounts.

What Are Online Checking Accounts, and How Do They Work?

Online checking accounts work similarly to regular checking accounts, allowing you to deposit money, pay bills and purchase goods and services. However, online banks don't operate physical branches. Instead, you can open and manage your account online using your smartphone, tablet or computer instead of visiting a local branch.

Generally, online checking accounts fulfill all the functions you'd expect from a checking account opened at a physical bank. Many online banks even allow you to cash checks online and deposit cash at partnered ATMs.

What Are the Pros and Cons of Online Checking Accounts?

There are several advantages to opening an online checking account. Online banks typically charge lower fees and provide higher annual percentage yields (APYs) than their traditional counterparts. Operating online has lower overheads, allowing banks to pass on savings to their customers.

Most online banks don't have their own ATMs, but many partner with ATM providers to allow their customers to withdraw money and deposit cash. They may also reimburse you for any fees accrued from using ATMs, making withdrawing cash cheaper (although you should check with individual banks to determine how they manage ATM fees).

Many online institutions have sophisticated apps that may offer attractive features to tech-savvy seniors. For example, online banking apps often provide help with budgeting and let you set up automated transfers. These functions can make it easier to save for specific goals and avoid overspending.

Whether the lack of brick-and-mortar branches is a benefit or drawback depends on your needs. Managing your money online is often quicker and more practical if you have mobility difficulties or simply want to avoid unnecessary travel. However, some seniors prefer to discuss their finances and manage their accounts face-to-face with a teller, which isn't possible with online banking.

Reputable online banks employ measures such as encryption to keep customer accounts secure. However, your banking information could fall into the wrong hands if you don't keep your login details safe.

Therefore, it's worth educating yourself about financial scams to protect yourself against fraudsters. Installing antivirus and anti-malware software on any device you use for online banking is also essential to keep your accounts safe.

Are Online Checking Accounts a Good Option for Seniors?

Whether you should consider an online checking account as an older adult depends on your needs and preferences. If you're comfortable using tech and know how to protect your devices against online threats, an online checking account could be a convenient option. It can also be helpful if health or mobility issues make it difficult to attend your local branch or you're unhappy with the APY and fees on your existing account.

On the other hand, many seniors feel uncomfortable managing their accounts online and worry about security. In this situation, you may be better off opening a checking account with a brick-and-mortar bank.

Not all online checking accounts are created equal, and it's a good idea to shop around for the best rates, features and security arrangements. Consider the following questions when comparing online checking accounts:

• Is the APY competitive?
• What fees does the online bank charge for certain transactions?
• Is the bank FDIC-insured to protect your funds if it fails?
• Does the bank offer 24-7 customer assistance?
• What features does the banking app offer?

Finally, check the financial strength of any online bank you're considering. While many agencies charge users to view the ratings of American banks and credit unions, some firms offer free information on the health of financial institutions. For example, BauerFinancial provides free ratings for thousands of banks, including many online options.

If you're unsure whether to switch to online banking, consider retaining your regular checking account and opening an additional online account. This option allows you to try the features of an online checking account before committing to conducting all your banking activities online.

Are There Alternatives to Online Checking Accounts?

If you want the convenience of an online checking account but like the option of visiting a branch in person, opening a checking account with a regular bank that offers decent online banking services is a good alternative.

An increasing number of major banks have online banking apps with many of the features that make online checking accounts so attractive, such as budgeting assistance and online transfers. However, bear in mind that most regular banks offer lower APYs on checking accounts because of the cost of operating physical branches.

‍