Banking at home is the practice of conducting banking transactions from home rather than at branch locations. Home banking generally refers to mobile banking, web banking, banking over the telephone, or banking by mail.

The first experiments with online banking started in the early 1980s. However, it did not become popular until the rise of the Internet in the mid-1990s. Many Internet banks maintain few, if any, physical branches.

We are going to discus the power of banking from home, its advantages and disadvantages and other things you need to know.

• How does Home Banking Work?
• What are some Types of Home Banking?
• What are the Pros and Cons of Banking from Home?
• What are the most Important Banking Services?
• Does the Federal Reserve have too much Power?
• How long do Bank to Bank Transfers take?
• How Long does a Check Deposit take?
• What is the Easiest way to Transfer Money from one Bank to Another?
• Which Bank is Best for Home Banking?

How does Home Banking Work?

The increasing popularity of home banking has fundamentally changed the character of the banking industry. Many people can arrange their affairs so that they seldom need to visit a physical branch. Online-only banks have profited from this shift in the industry. The absence of brick and mortar locations allows many online banks to offer favorable interest rates, lower service charges, and other incentives for those willing to bank online.

Read Also: Advantages and Disadvantages of e-banking

Many of the limits on home banking revolve around initiating large transactions. Requiring a personal appearance reduces and even prevents some forms of fraud. Although there is an increasing trend toward offering more services online, many banks normally require that some transactions occur in person.

For instance, applying for a personal or business loan often calls for an appearance at a branch office. Applying for a mortgage is another financial transaction where the applicant historically had to visit the bank at some point.

What are some Types of Home Banking?

Mobile Banking

Banking via mobile phone apps has become increasingly popular. Most mobile apps are easier to use than websites, and they have some security benefits. In particular, banking apps can provide protection from phishing attacks. Mobile apps also often allow users to access features that are not available via websites. For example, it is frequently possible to scan paper checks with an app, while this feature is less common on websites.

Web Banking

Web banking via the Internet is still fairly common. Nearly all banks have websites that allow access to checking accounts and savings accounts. Web banking is generally available for both individuals and small businesses. Some users may be more comfortable with web banking than new apps for mobile phones. The vast majority of web browsers are also open source and thoroughly tested, which makes them more secure than most mobile apps.

Banking Over the Telephone

Banking over the telephone is one of the oldest forms of home banking, and it still has some uses. Some of the earliest home banking services were automated systems for obtaining account balances over the phone.

While the Internet has mostly taken over that function, banking by phone remains a useful fallback. Phone calls are a way for banks to verify if customers actually made suspicious looking transactions. Phone calls also help customers to resolve issues when errors occur.

Banking by Mail

Banking by mail continues to enjoy some popularity. Depositing paper checks via mail is simple and intuitive for people who usually do their banking in person. Furthermore, banking by mail does not introduce the cybersecurity risks associated with online banking. Banking by mail is a good alternative for customers with a temporary need for home banking.

What are the Pros and Cons of Banking from Home?

Pros

Some advantages of online banking go hand-in-hand with simply being online; others are competitive advantages provided by online banks taking advantage of their cost structure. The most prominent benefits provided by online banking include:

1. 24/7 Account and Service Access

Online banks are accessible 24/7, as long as you have an internet connection. Some online banks, such as Ally Bank, take this perk one step further, giving you 24/7 phone access to a real-life customer service agent. This can be extremely helpful if you don’t have access to the internet, or if you feel you need the assistance of a human brain, rather than a computer algorithm.

2. Speed and Efficiency

If you need to transfer money, apply for a new loan, or perform nearly any banking transaction, you’ll typically have to wait in line at a bricks-and-mortar banking location. With an online bank, there’s never any waiting. As long as you can log in, you can access your accounts, request a new credit card, or perform nearly any banking transaction you desire without driving down to a bank or waiting in line.

3. Online Bill Payment

One of the great advantages of online banking is online bill pay. Rather than having to write checks or fill out forms to pay bills, once you set up your accounts at your online bank, all it takes is a simple click — or even less, as you can usually automate your bill payments. With online bill pay, it’s easy to manage your accounts from one central source and to track payments into and out of your account.

4. Low Overhead Can Mean Low Fees

Online banks don’t have to pay for things like electricity, janitorial services, landscaping, or rent, so they can pass those savings along to customers. Typically, this means that online banks can charge fewer fees than traditional banks.

For example, most online banks offer a free online checking account with no deposit, along with other no-fee bank accounts, such as IRAs. There are a number of online banks with free checking and no minimum balance; if you’re worried about applying for an account with bad credit, you might be able to open a bank account online for free, no credit check required, although there might be ongoing fees.

5. Low Overhead Can Yield High Rates

In addition to offering low fees, online banks often have the best interest rates, whether you are looking for a certificate of deposit, a high yield checking account or deposit accounts with high interest, such as a money market account. Although rates fluctuate, if you look at a current list of best CD rates or best free online checking account rates, you’ll usually find that the banks paying the best interest rates are online banks.

Cons

No one type of bank can be the best at everything. In spite of their many advantages, there are some drawbacks to using online banks as well. Here are some of the downsides of working with an online bank:

1. Technology Issues

In many ways, an online bank is only as good as your — or their — internet connection. If there’s a power outage, or if servers go down, you might not have any access to your account whatsoever. While some banks offer a phone number for customer service, it might be overwhelmed if online access is down. With a real bank, you can always find someone to talk to in the branch.

2. Security Issues

While many online banks are reputable and well-established, sometimes it can be hard to feel comfortable with a bank that doesn’t have a physical presence, particularly when large sums of money are involved. If a website suddenly folds up, what will happen to your money? There’s also the risk of identity theft — or actual theft — if someone gains unauthorized access to your account via a hacked or stolen password or log-in credentials.

3. Inefficient at Complex Transactions

Online banks might be able to transfer money between accounts or pay bills, but you might be more comfortable with an international, bricks-and-mortar bank if you have complex transactions.

Worldwide, business-oriented banks like Chase have global transaction capabilities, such as the ability to send payments to more than 35 different currencies worldwide, that online banks might not be able to muster. Without a real-world presence, most online banks can’t even offer the services of a notary public, which require an in-person visit and necessary for most important financial transactions like buying a home.

4. No Relationship With Personal Banker

Over time, you can develop a relationship with a personal banker if you visit a traditional bricks-and-mortar location. If you’re dealing with an online bank, on the other hand, you’re typically handed off to an anonymous customer service agent who is unlikely to know you from the next customer.

If you’re really in a bind, financially speaking, having a relationship with someone who can help and who knows you well can be a major advantage over a strictly online banking relationship.

5. Inconvenient to Make Deposits

It might seem counterintuitive that a bank, whose purpose is to attract assets, makes it hard for customers to make deposits, but that can be true in the case of some online banks. With an online bank, you can’t simply drop off cash or a check at a local branch.

In fact, some online banks, like Ally Bank, won’t accept cash deposits at all. Using Ally Bank as an example, to make a deposit you’ll have to mail a check, transfer money from another bank or another account, or use the bank’s e-check deposit service.

What are the most Important Banking Services?

A bank’s job is to provide customers with financial services that help people better manage their lives. As technology advances and competition increases, banks are offering different types of services to stay current and attract customers.

Whether you are opening your first bank account or have managed a checking account for years, it helps to know the different types of banking services available. This ensures you get the most out of your current financial institution. Deciding which services are most important can lead you to the bank that best fits your needs.

Individual Banking—Banks typically offer a variety of services to assist individuals in managing their finances, including:

• Checking accounts
• Savings accounts
• Debit & credit cards
• Insurance*
• Wealth management

Business Banking—Most banks offer financial services for business owners who need to differentiate between professional and personal finances. Different types of business banking services include:

• Business loans
• Checking accounts
• Savings accounts
• Debit and credit cards
• Merchant services (credit card processing, reconciliation and reporting, check collection)
• Treasury services (payroll services, deposit services, etc.)

Digital Banking—The ability to manage your finances online from your computer, tablet, or smartphone is becoming more and more important to consumers. Banks will typically offer digital banking services that include:

• Online, mobile, and tablet banking
• Mobile check deposit
• Text alerts
• eStatements
• Online bill pay

Loans—Loans are a common banking service offered, and they come in all shapes and sizes. Some common types of loans that banks provide include:

• Personal loans
• Auto and boat loans
• Home equity lines of credit
• Home loans
• Business loans

Does the Federal Reserve have too much Power?

The Federal Reserve has too much power, too little accountability, too little transparency and always acts too late to be effective in the role it’s supposed to play. In truth, the role the Fed actually plays is providing cover for banks to make as much money as they can.

Let’s go back a few years to see how the Fed aided and abetted the fleecing of America, and much of the world for that matter, and sank our economy into the hole its in. Interest rates were kept artificially low for far too long. There was no reason for the Fed to interfere with the free market for capital, as they continue to do even now.

Low rates facilitated easy financing schemes for speculators looking to carry high-risk positions, banks funding rapidly expanding loan books and homebuyers greedily buying into the easy terms and availability of mortgages.

Meanwhile, artificially low rates crimped fixed income investors, especially retirees and pension plans, causing a reach for yield out further on the east end of the risk spectrum.

Who benefited most by the Fed’s easy money policies? Banks, of course, were the major beneficiaries.

Who was saved by massive injections of taxpayer cash when the Fed’s “free-market” policies went into a free fall? The banks, of course, got trillions of dollars from the Fed.

Thanks to Bloomberg L.P. chasing the Fed all the way to the Supreme Court to get data under the Freedom of Information Act, we know that the top six banks in the U.S., Bank of America, Citicorp, JPMorgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley, got some $460 billion from the Fed, mostly unbeknownst to our Treasury Department and Congress. Meanwhile, the same group got $160 billion in TARP money from Treasury.

Without the aiding and abetting of the Fed, how else could the too-big-to-fail banks increase their assets held by 39% between September 2006 and September 2011?

How else could they have ended up with virtually the same level of compensation in 2010 as they saw in their peak year of 2007?

How else could they increase their lobbying efforts, in terms of money spent, by 33% from 2006 to 2010?

And, the answer is: The Federal Reserve.

That’s too much power for the Fed to have. Since when does an open democracy allow a quasi-private institution to scheme with and for the benefit of a powerful class of citizens? Oh, that wouldn’t be a democracy, would it?

There’s far too little accountability and virtually no transparency when it comes to the Fed. We can thank our august lawmakers, many of whom reside on the payrolls of banks, one way or another, for a lot of the cover the Fed and banks enjoy.

Ever heard of Exemption 8? That’s a little gift lawmakers gave the Fed, banks and financial institutions. It’s a carve-out from the Freedom of Information Act that’s supposed to protect us from the hidden dangers of knowing what’s really going on.

Exemption 8 is for financial institutions, it “protects matters that are contained in or related to examination, operating, or condition reports prepared by, on behalf of or for the use of an agency responsible for the regulation or supervision of financial institutions.” And specifically with regard to the Federal Reserve banks covers “nonpublic supervisory information related to the examination, inspection, and operations of the Reserve Banks.”

If the Fed lets things in the banking system get to the point of panic, in other words, they act too late to prevent the problems they’re supposed to be prevented, they’re not doing their job. That is if that’s what you believe their job is. But, it’s not. Welcome to the real world, stupid.

The Fed’s job is to clear the runways for banks to take off into the heavens of profitability. That’s what the Fed was created to do.

There’s only one way for America to win back its democracy and repair absurdly commandeered free markets. Break up all the big banks and never let any institution become a systemic risk and reduce the Fed to nothing more than a facilitator of stable prices, not self-governing, but transparently governed by articulated price stability targets.

Oh, and as far as that dual-mandate nonsense, it’s about time we shoved back onto Congress its shrugged-off duty to maintain full employment in this country.

How long do Bank to Bank Transfers take?

It’s never been quicker or easier to send money across the world thanks to a variety of electronic transfer options. Popular transfer methods include wire transfers, Automated Clearing House (ACH) payments, and direct deposits. If you’re sending a payment and time is of the essence, it’s important to know which method is best suited to you.

How long do wire transfers take?

Speed is one of the biggest benefits of sending money with wire transfers. Banks can complete domestic wire transfers within 24 hours, and recipients will not have to wait for the funds to clear before withdrawing them. But bank employees still need to review and authorize the transfer of funds, which may cause delays.

Mistakes made by the bank about the recipient’s details or errors can hold up a wire transfer. Banks may also only process wire transfers on business days, which can cause delays as a result of bank holidays and weekends.

You should find out when your bank’s cut-off time is for wire transfers to ensure your transfer arrives on time. The cut-off time is usually 5 pm, but it can vary between banks. Banks will process requests made after this time the following business day.

The term ‘wire transfer’ can also sometimes refer to non-bank transfer services. These services can be faster than bank-to-bank transactions, but may not offer the same level of security.

How long does an international wire transfer take?

International wire transfers can take much longer than domestic transfers. The funds may arrive within two business days. But they may also take up to five days, depending on your bank or credit union.

Some banks allow you to send international wire transfers online in just a few minutes. Other banks may require you to make the transfer request in a branch. As with domestic wire transfers, you should ensure you submit your request before the bank’s cut-off time to minimize delays.

If you need the funds to arrive in the recipient’s bank account as soon as possible, you may be able to expedite the process. Some banks offer this service if the recipient account is within the same financial institution, and the sender has previously sent a transfer. There is usually an additional fee for this service.

How long does an ACH transfer take?

There are differences in the way banks process ACH and wire transfers. Network operators process ACH payments in batches three times a day rather than on an individual basis. The ACH network is responsible for processing around 25 billion electronic payments for every U.S. financial institution each year. This means ACH transfers can take several business days to clear.

Timelines for ACH credits and debits are set out by the National Automated Clearing House Association (NACHA). Accountholders initiate ACH credits themselves, and the ACH should process these within one to two business days. Organizations automatically “pull” funds from the customer’s account for ACH debits, making them ideal for recurring bill payments. The ACH should process these transactions the next business day.

Delivery times may vary as some banks and credit unions place holds on these funds. Some financial institutions offer expedition for ACH transfers, but there may be an additional charge.

How Long does a Check Deposit take?

The ACH processes deposits into current accounts as well as ACH credit and debit transactions. Banks place holds on deposits to ensure the funds clear into the recipient’s account before the withdrawal. These hold times vary by financial institution, but it should take between two to five business days for a check deposit to clear.

The bank is more likely to place a hold on a check if it is from out of state or for a large amount, as the teller will need to contact the issuing bank to confirm the funds are available. You should be able to withdraw checks the next business day if they are paid from the same financial institution as yours, from within the same state, or for small amounts. Cashier’s checks, direct deposits, and checks from the U.S. Treasury will also clear quickly.

Banks outline their deposit policies, including holding times, and should notify you if there is a hold on your account. Even if the funds are showing in your checking account balance, they may not be available to withdraw. Make sure you understand the difference between your checking account’s actual balance and available balance to know which funds are free for use.

What is the Easiest way to Transfer Money from one Bank to Another?

If your funds are spread across accounts at different institutions, it helps to have an easy way to make transfers between them. Online transfers are a convenient way to transfer money from one bank to another.

Online transfers are generally free at online banks and some traditional banks, but others charge for this service. You will want to check with your institution before setting up your first transfer so you won’t be hit with unexpected fees.

Before you can start, you’ll need to set up a relationship between the two accounts you have at different banks — the one that will send money and the one to receive it.

• Link the paired accounts. Log in to the first bank’s website or mobile app and select the option for making transfers. There may be a choice for internal transfers; you want the external option. The former is for transactions within the same bank — moving money from checking to savings, for example. An external transfer moves funds to a different bank.
• Provide external account information. Have the bank routing number and personal account number handy for the account that will receive the funds. You can usually get this information from a bank statement or printed paper check.
• Confirm the new account. After you enter the required information, the first bank will typically want to verify that you have access to the second bank’s account. You might be asked to enter your username and password, which the first bank would then verify. Another way the first bank could verify the account is to make a small deposit or two (think a few pennies each) and ask you to confirm the amounts. This process could take a couple of days to complete.
• Set up transfers. Once the account is confirmed, you can set up transfers from the sending bank’s website. Choose the sending and receiving accounts, and enter the amount to be transferred and the date for the transaction to occur. From there, you can usually see which date the funds are expected to be available in the receiving account. You’ll also want to choose whether you want to make a one-time transaction or a recurring transfer (once a week, for example). After you’ve made your choices, select the option to submit them.

Which Bank is Best for Home Banking?

With an online bank, you give up branches. But you get other perks. You can earn a higher rate on your savings account or checking account because online banks have less overhead than banks with branches.

The best online banks also charge low fees, if any, and support intuitive mobile apps. If you’re comfortable ditching branches, you may want to switch your checking and savings account to a new online bank provider to get these kinds of benefits.

1. Radius Bank

The brand isn’t a household name, but Radius Bank earned the No. 1 spot among online banks for the combination of its mobile banking app, generous ATM fee rebates, its payout on checking and savings accounts and its accessibility — the minimums to open a checking or savings account are fairly low.

You can earn higher yields at other banks, but the Boston-based bank is competitive, especially for those with higher balances. If you have $2,500 to put into savings, Radius will pay 1.25 percent APY. Sock away more ($25,000 and up), and the Radius High-Yield Savings pays 1.65 percent APY. A $100 minimum deposit is required to open an account.

While most banks don’t pay perks on their checking accounts, Radius stands out for paying 1 percent cash back on certain debit purchases. Even better, if you have at least $2,500 in your checking account, the bank will pay you 1 percent APY, and more if your balance is $100,000 and up. If you often take out cash, you will benefit from the bank’s generous ATM policy: There are an unlimited amount of ATM fee rebates if you go out of the bank’s network.

The well-reviewed mobile app lets customers take care of the banking basics and more, like letting customers link other financial accounts to manage their money.

2. Bank5 Connect

Bank5 Connect launched in July 2013 as an online-only division of BankFive in Fall River, Massachusetts. Here, you can earn high yields without paying steep fees.

The online bank’s savings account pays an attractive rate (currently offering savers 1.85 percent APY). You only need $10 to open an account. To earn interest, however, you will need to deposit at least $100 into the account.

Bank5 Connect’s checking account stands out for its perks: It pays 0.76 percent APY for customers who keep $100 in their account. You can also earn rewards for making purchases on your debit card at certain stores and restaurants. Bank5 Connect will refund ATM fees that are racked up outside of the bank’s ATM network and don’t exceed $15 per statement.

The bank doesn’t charge you maintenance fees either so long as you ditch paper statements and receive them online. The mobile app earns high marks in the app stores. While the app doesn’t offer cutting-edge features, you can use it to save time on financial chores, like depositing checks.

3. Ally Bank

This bank often makes the best banks list and for good reason. It has everything you need: a high-yield savings account, interest-bearing checking account, and a mobile app that stands out from the competition combined with stellar customer service.

You can get a higher yield at other banks. However, you will earn competitive APYs any day of the week at Ally. With its savings account, you will currently earn 1.60 percent APY. You won’t pay monthly maintenance fees or minimum balance requirements either — it doesn’t charge those fees.

The direct bank’s checking account interest rate structure is tiered, so yields will change depending on your minimum daily balance. At the low end, you will earn 0.10 percent APY. While not much, it’s still something. Plus, there are no fees tied to the checking account.

More recently, the bank has been testing digital features that help ease you into regularly saving small amounts of money from your checking account —  a useful tool with many of us struggling to save.

Among the bank’s mobile app standouts include: debit card controls and a voice assistant to navigate the app.

4. CIBC Bank USA

CIBC Bank USA pops in our rankings for paying a highly competitive yield on its savings account. But you’ll need to deposit at least $1,000 to open the account.

The bank’s myChoice Plus checking account stands out for paying interest and only requiring $50 to open the account. While its interest rate is meager, it’s something whereas many other checking accounts don’t offer any perks. However, there’s an important caveat — you can only open a checking account at a branch. (Update 9/25/20: CIBC now offers online checking account applications in select states/counties.)

The Canadian Imperial Bank of Commerce is based in Toronto, while its U.S. headquarters are in Chicago. Banking centers are in Illinois, Michigan, Missouri and Wisconsin.

The mobile bank app reviews aren’t glowing, but the bank’s app lets you take care of the basics, like paying your bills and depositing checks with your phone’s camera.

5. Salem Five Direct

Salem Five Direct impresses with a high-yield savings account that has no monthly fees. Right now, you can earn 1.91 percent APY on its savings account. You will, however, need at least $100 to open the account.

Its checking account can also help you earn a little extra money. It pays 0.25 percent APY on your balance. You can also earn cash back on your debit card purchases and won’t pay a monthly fee for the account. The bank never charges you for ATM transactions and will reimburse up to a certain amount of fees others banks charge.

While there’s nothing innovative about the bank’s mobile app, it scores well in the app stores and will let you tackle the important chores, like deposit checks and pay bills.

Salem Five Direct is an online division of Salem Five Bank in Salem, Massachusetts.

6. HSBC Direct

The online bank’s biggest draw is offering a top-tier interest rate. At HSBC Direct Savings, the direct bank pays savers an impressive 2.05 percent APY, making it one of the highest APYs available right now. Even better, you can earn the APY regardless of how much, or how little, you park in the account. You only need to deposit $1 to open the account and there are no monthly maintenance fees.

The online bank also pays its checking account customers something, but the APY is extremely low. You won’t, however, have to pay monthly maintenance fees. Plus, you only need to deposit $1 to open the account. If you write physical checks, this account isn’t for you — it doesn’t offer personal checks.

The reviews of the mobile banking app disappoint compared to other online banks ranking on the list, but the app makes available some useful digital tools to help you budget and save for goals.

7. Discover Bank

Discover Bank made a splash in 2019 by dropping all deposit account fees. Besides that, savers can also get a competitive rate. Right now, you’ll earn 1.70 percent APY on your savings account balance. It’s available to anyone and there is no account minimum requirement.

Discover also offers a checking account that lets customers earn cashback on their debit card purchases. Free ATM access is plentiful, too. You can use 60,000 ATMs for free across the country.

The mobile bank app is reviewed favorably. There, you can redeem rewards, check your balance, turn your debit card on and off, set up travel notifications and much more.

8. E-Trade Bank

E-Trade is best known for its brokerage services but it also offers banking services through E-Trade Bank. You can find higher rates elsewhere, but the banking unit offers competitive yields. Right now, the savings account pays 1.75 percent APY on any balance.

Read Also: Here is how Internet Banking will Look in 10 years

You will need to deposit $100 to open an E-Trade checking account, however, and it won’t pay you any interest.

E-Trade’s checking and savings accounts pair with a highly regarded mobile app. If you also use E-Trade for your investments, the app works with both. In logging into your bank account, you will also see your investing account in the same view.

As a brokerage and bank customer, E-Trade stands out for internal transfers, allowing you to move your money from one account to the other and then invest some or all of your funds immediately. Funds that are transferred to or from an external account are typically available the third day after the request.

9. Quontic Bank

Quontic Bank offers a competitive yield. The online bank with headquarters in New York currently offers 1.85 percent APY for savers. You will need at least $500 to open the account, however.

You will earn interest with the checking account, but it’s tiered and based on your balance and how many transactions you make on your debit card. Regardless, you will have access to thousands of free ATMs nationwide. You will need to make a deposit of at least $500 to open an account.

Through its mobile banking app, you will have access to everything you would expect, like the ability to deposit a check and pay your bills.

10. TIAA Bank

TIAA Bank will appeal to consumers who want a full-service online bank that also offers competitive rates.

You can find higher yields elsewhere, but the online bank is paying savers a respectable 1.10 percent APY. You’ll need $25 to open the account and will want to make sure to keep at least that much in your account on a daily basis. Otherwise, you will pay the bank a $5 monthly fee. If you live in Rhode Island, this requirement is waived.

Its checking account is also accessible: You only need $25 to open the account. Expect to pay a $5 monthly fee unless you live in New York or maintain a daily balance of $25.

TIAA’s app scores well. While other online banks earned higher marks for their mobile apps, it offers what you need, like checking your balance and paying your bills.