Online bank accounts

Getting an online bank account means different things to different people. For some, it’s about checking your account balances on the internet. For others, it means switching to a digital-only bank, downloading an app and never setting foot in a branch again. We take a look at what’s available, as well as the pros and cons of banking online.

Getting an online bank account means different things to different people. For some, it’s about checking your account balances on the internet. For others, it means switching to a digital-only bank, downloading an app and never setting foot in a branch again. We take a look at what’s available, as well as the pros and cons of banking online.

Rob Silvey
Finances expert
4
minute read
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Posted 6 MARCH 2020 Last Updated 5 APRIL 2022

What is internet banking?

All online banking means is that you carry out your day-to-day financial transactions on a website or app, rather than in a branch. Most traditional banks offer online banking via their websites. Once you’ve registered for your bank’s internet banking service, you can control your money online, doing everything including:

  • Checking your balance
  • Setting up new savings accounts
  • Transferring money
  • Making payments
  • Keeping track of a linked mortgage or loan.

Most banks also have apps, allowing you to do the same transactions on your smartphone. 

What are the benefits of online banking?

There are advantages to online banking:

  • It’s convenient. You can check your balance, make payments and set up Direct Debits or standing orders at any time (day or night), without needing to visit a bank. 
  • It’s easier to stay on top of your finances. You can check any linked loans, ISAs or savings accounts at a glance.  
  • It’s more environmentally friendly. Online banking usually gives you the option to receive statements via email instead of paper. This can make filing easier and could save a few trees. It also saves the bank money, which they can spend on providing a better service.

Online accounts from traditional banks

Along with ordinary current and savings accounts, many traditional banks offer online-only accounts. These are accounts with no offline access – you won’t be able to do any of the usual transactions in your branch, like making deposits and withdrawing money.

Online savings accounts

You can often find online-only versions of savings accounts, such as ISAs and fixed rate savings accounts. Online-only savings accounts typically have more restrictions than online current accounts – you probably won’t be able to make bill payments or have a card to withdraw money from an ATM.

Online banking with digital-only banks

Many of the so-called ‘challenger’ banks, such as Monzo and Starling Bank, have no high-street branches at all. Their only location is online.

Digital banks let you do everything on your phone. You’ll do everything through an app, from setting up the account (you take a picture of your ID with your phone camera) to making payments or applying for loans and overdrafts.

Not all digital banks offer the full range of banking services. For example, as of February 2022, Atom Bank only offers savings accounts, mortgages and business loans. However, many people choose to have digital bank accounts alongside, rather than instead of, their high-street account.

Benefits of digital-only bank accounts

You’ll probably find that digital-only accounts offer a number of advantages, such as:

  • Better rates – digital banks may offer attractive rates on savings, as well as card payments abroad.
  • Convenience – mobile banking through an app lets you make payments or check your balance any time, any place.
  • More control – digital-only banks offer features such as payment notifications. They’ll also let you split money into different pots or freeze and unfreeze cards. They might also link with other financial apps to give you even more oversight.
  • Good customer experience – for digital banks, a smooth customer experience is everything. They put effort into creating user-friendly apps with smart features.

How secure is online banking?

No bank account is completely safe from fraud, online or not. According to government figures, the most common type of banking fraud is ‘push payment fraud’ – where criminals trick victims into sending money to the criminal’s account.

Online banks take security extremely seriously. With internet banking, you’ll usually have to log in using security questions and a device that generates random codes based on your PIN or card. When banking on an app, you may need your phone’s face ID and often your PIN to make payments.

To keep your accounts safe, you’ll need to take steps yourself too. Here are some top tips for online banking:

  • Be alert. Check your statements as often as you can. If you notice anything unusual, contact your bank as soon as possible.
  • Opt into notifications. Your bank will message you to confirm details of your transactions, making it easier to notice anything out of the ordinary. 
  • Be wary. Never give out passwords or personal details to anyone claiming to be from your bank, either by phone or email, no matter how convincing they sound.
  • Log out. Always log out of your online banking session or close any apps on your smartphone or tablet.
  • Only use secure connections. Public Wi-Fi connections, such as those in coffee shops, don’t offer the same level of security as your Wi-Fi at home.
  • Keep virus free. Use up-to-date anti-virus software on your computer or tablet.
  • Use secure passwords. Passwords and PINs should be hard to guess and different from those you use anywhere else.

How to find an online bank account

Most of the high-street banks you’ll see when you compare current accounts offer digital banking. 

Frequently asked questions

What happens if my security is breached?

If someone hacks into your account, don’t panic. Contact your bank immediately and tell them what’s happened. Many have dedicated fraud helplines or chat features.

Your bank should refund you if you’ve been a victim of fraud, unless you’ve been considered to be ‘grossly negligent’,for example, if you shared your PIN or password with someone else.

What happens if I send money to the wrong account?

Many people avoid internet banking because they’re scared of something going wrong, such as making a large payment to the wrong account number. This happens less now that banks check names against account numbers, but it’s not unheard of for something to go wrong. If it does, contact your bank straight away.

How do I set up online banking?

If your account isn’t currently set up for online banking, you might need to call your bank or go into a branch. For security purposes, there are usually a few different steps involved. You may be issued with a passcode-generating device or have a code texted to your phone.

Where do I find my bank’s smartphone app?

You should be able to find your bank’s smartphone app either in Apple’s app store or on Google Play, if you have an android phone.

Will I still get bank statements?

With online banking, you’ll have an online record of all your transactions. This is easier to manage than paper bank statements and means you don’t have to worry about filing documents.

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