The Best Banks You'll Never See - Internet banking - Brief Article

Kiplinger's Personal Finance Magazine, August, 1999 by Joan Goldwasser

Internet banking can deliver supercheap checking and robust CD yields.

Hardly ever set foot in your bank? Maybe you're ready to take a bold step into the frontier of Internet-only banking. Your reward for leaving the neighborhood branch behind can be supercheap checking and robust yields on CDs.

Of the six banks that do business exclusively over the Internet, CompuBank of Houston (www .compubank.com) offers the best checking-account deal: free checking with no minimum balance and a minimum opening deposit of just $100. CompuBank charges no ATM fees and reimburses you for other banks' ATM surcharges--up to four per month at $1.50 each. Electronic bill-paying is free, too, along with your first order of checks. And the bank rates first in ease of use in Gomez Advisors' spring 1999 Internet Banker Scorecard (see www.gomez.com).

Because online-only banks have no ATMs of their own, those that reimburse you for the cost of using other banks' machines are the best bet for most consumers. Telebank (www.telebankonline.com) also reimburses you for four $1.50 surcharges a month if you apply for your account through Yahoo!

Virtual banks can also pass along the benefit of lower overhead expenses in the form of higher interest rates. NetBank's offerings (netbank.com), for instance, often appear on our monthly list of top-yielding CDs (see page 56). Recently, the bank paid 5.75% on a 30-month CD and 5.35% on a six-month CD.

Most of the banks also pay far more than the average 1.2% on checking-account balances. Until next January, Security First Network Bank (www.sfnb.com) is paying 6% on balances. And USA Access Bank of Louisville (www.usaccessbank.com), which caters to small-business owners, pays 4% on business checking accounts with a $1,000 minimum.

What's at risk when you bank online? Not a lot. All the banks named here are FDIC-insured. Online transactions are encrypted, and under federal law the banks bear the burden of any computer fraud. You can usually access your account 24 hours a day, and telephone customer-service hours tend to be substantially longer than traditional banking hours. You typically receive your statement online rather than on paper--but you can always print it out.

As with ordinary banks, service can be uneven. The biggest drawback: If you do have a serious problem, you can't march into a branch to get it resolved.

ONLINE CHECKING ACCOUNTS

                         MIN. BALANCE                REBATES ON
BANK                     TO AVOID FEE   ATMS FREE?   ATM CHARGES?

www.compubank.com                none    unlimited      4 per mo.
www.telebankonline.com         $2,500    unlimited      4 per mo.
                                                        ([dagger])
www.sfnb.com                 1,000(*)   10 per mo.           none
netbank.com                      none    unlimited           none
www.usaccessbank.com              500    unlimited           none
www.firstib.com                  none   10 per mo.    with $5,000
                                                       bal.

BANK                     INTEREST
                         ON BALANCE

www.compubank.com             2%
www.telebankonline.com        3.1
www.sfnb.com             6 ([double
                           dagger])
netbank.com                   3.05
www.usaccessbank.com          3.9
www.firstib.com               3.05

(*) or none with direct deposit

([dagger]) when you sign up via Yahoo!

([double dagger]) until January 2000

RELATED ARTICLE: FAMILY FINANCES

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--J.G.3