My love affair with online banks dates back as far as 2003, when I opened my first account with Netbank, a now-defunct banking upstart that some of you might nevertheless remember.
Between 2005 and 2008 in an on-and-off fashion, I experimented with banking at E-Trade, which for the first time allowed me to connect my banking and investing directly. Online banks were the hottest thing since sliced bread during that period, with rates topping 3-5% in many cases and easily outpacing brick-and-mortar banks. (Those were the days!).
As recently as 2010 through the first few months of this year, I regularly banked with Ally, a re-branded GMAC. Even now, their rates were significant enough to see some dividends come in every month.
But that simply wasn’t enough…
What I Loved About Banking Online
Hands-down, banking online offers the best rates you can find anywhere today. On larger balances, this can make a significant different on your liquid savings, though you won’t get anything close to a relatively “safe” investment in a brokerage account.
Another great feature of many online accounts is the ability to use any ATM in the country (and maybe even the world) without being charged a fee, and often being refunded any fees charged by the ATM owner. For frequent ATM users and those who live far from their bank of choice, this alone could save tens of dollars every month.
Finally, the service I got was absolutely fantastic, though I don’t know how long they can keep up the high level of service they provide. With Ally, I was able to reach someone within 1-2 minutes whenever I called, day or night.
But Ultimately, It’s Not for Me…
My online bank is essentially my home for all of my liquid savings—long-term goals, emergency funds, and shorter-term stuff. While I had check and ATM access to the money at any time, I really missed having a direct and instant connection to my checking account that allowed me to make large or unexpected cash purchases with my debit card.
Moving money around back and forth was also made difficult by the 2-3 day delay in every transaction I made. Think of instructing a ship to turn, and only seeing the effect after 3 miles. It was frustrating for someone who does it as much as I do.
I’m also not a big ATM cash user, and I knew that I could never convert completely to online banking (I use features like safe deposit boxes and ATM deposit), so the idea of simplicity in my account structure weighed in my decision. I liked the concept of keeping everything tied together in a simple way.
Back to the Basics
I’m back to where I started a while ago: a single personal checking account, one savings account, and a business checking account. Everything is connected and the money moves between accounts seamlessly and instantly.
I only keep two checkbooks, two debit cards, and one banking login. I shredded the rest of the complexity from my life, and I have to say I’m rather enjoying it.
Fiscal Fizzle 
And, when yields return, you can join fresh with new sign-up bonuses! Congratulations on simplifying your existence.
Good point; I didn’t even consider that.
Sounds like a good choice for you. Personally, I don’t mind the 2-3 days it takes for stuff to clear. I try to plan ahead of that and I also generally keep enough of a cushion in my primary bank to cover any expenses that might come up, so that I can ‘cover myself’ and essentially pay myself back with the transfer.
As I get old(er), I want simplicity too. Changing things unless I see an immediate benefit may not be worth it. I have simplified many of my investment accounts.
That is a horrible wait. Online banking only makes sense when they’re able to bridge the time/wait gap effectively.
I don’t mind the online banking, but I just have a checking account with my local credit union. Just like the major online banks, they allow me to make up to 10 transactions at ANY ATM every month. Since I don’t use the ATM that often, this is a great way for me to grab money just about anywhere.
I didn’t realize local unions were also on this kind of program. I’ll have to check it out.
I keep a good chunk online at USAA, but don’t use it for transactions, just CDs.