Traditional bank accounts can be managed electronically, but they seldom come with the assortment of perks you’ll enjoy with a digital checking account. Plus, digital checking accounts often feature a range of added features and tools designed to improve your financial health, such as credit-building programs and budgeting tools. This guide explores the key benefits of digital checking accounts and why they’re worth considering to help manage your finances as seamlessly as possible.
The Rising of Digital Checking Accounts
Before diving into the advantages of digital checking accounts, it’s worth understanding how they work and differ from their traditional counterparts.
What is a Digital Checking Account?
A digital checking account is a type of account offered by online banks. You can access, manage, and monitor your account entirely online without the need for a physical bank branch. Plus, these accounts feature functionality that lets you conduct specialized banking transactions while on the go or from the comfort of your own home.
How Does a Digital Checking Account Work?
A digital checking account works just like a traditional checking account. You’ll get an account number, a routing number and a debit card. You can deposit money, pay bills, transfer funds and view your account balance and transaction history through a mobile app or web-based platform.
However, you won’t have access to a physical branch as all banking activities are conducted online. The upside is most online banks also offer customer support through phone or live chat if you have any questions or concerns.
Differences Between Traditional and Digital Checking Accounts
There are some key differences between traditional and digital checking accounts to be aware of:
- Accessibility: Digital checking accounts provide 24/7 access to your account online or through mobile apps, while traditional accounts may have limited availability at physical branches.
- Fees: Digital checking accounts often have lower fees compared to traditional accounts due to their lower overhead costs.
- Interest Rates: Digital checking accounts may offer higher interest rates since online banks don’t have the same operating expenses as traditional banks.
- Customer service: While traditional banks offer in-person customer service, digital checking accounts typically provide phone or live chat support.
- Branch access: With a digital checking account, you won’t have access to physical bank branches, which may be important for some customers.
Key Features of Digital Checking Accounts
Here’s a closer look at the key benefits of a digital checking account:
1. Flexibility and Convenience
Digital checking accounts provide you with the ability to manage your finances anytime, anywhere. With 24/7 access to your account through your phone, tablet or computer, you can monitor your account balance, view transactions and transfer funds easily. Plus, you’ll receive a debit card to make purchases and withdraw cash at ATMs.
2. Streamlined Financial Management
Digital checking accounts can simplify financial management by offering tools to help you track spending and set up budgets. You can categorize transactions, set up alerts for low balances and view your spending habits through easy-to-understand charts and graphs.
3. Low/No Fees and Charges
One of the major advantages of digital checking accounts is their low or no-fee structure. You’ll often find accounts with no monthly maintenance fees, minimal or no overdraft fees, and, in some instances, no foreign transaction fees.
4. Mobile Check Deposit and Wire Transfer
With digital checking accounts, you can deposit checks and initiate wire transfers directly from your mobile device. Simply snap a picture of your check or provide wire transfer information, and the funds can be posted to your account. (Note: The funds may not be available for immediate use. Check with your financial institution to confirm timelines).
5. Automated Debits and Deposits
Digital checking accounts support direct deposits for your paycheck, allowing for quicker access to your money. You can also set up automated debits for recurring bills, ensuring your payments are made on time. Automated debits also help you avoid costly late fees.
6. Online Bill Pay
Digital checking accounts offer online bill pay features, allowing you to make payments to a variety of businesses and service providers directly from your account. This eliminates the need to write checks or visit multiple websites to pay bills.
7. Build Credit
Some digital checking accounts offer features that can help you build or improve your credit without taking on additional debt. By reporting your account activity to credit bureaus, on-time payments, and responsible financial management can have a positive impact on your credit score.
8. Enhanced Security Features
Digital checking accounts employ advanced security measures, such as encryption, multi-factor authentication and biometric access, to protect your sensitive financial information. Plus, digital banks usually monitor accounts for suspicious activity and notify you of any potential fraud.
Steps to Open a Digital Checking Account
When you’re ready to open a digital checking account, take these steps to facilitate a seamless process:
Assess Your Needs
Before you begin the process of opening your digital checking account, take some time to assess your specific financial needs. Consider factors such as fee structures, interest rates and access to customer support. It is important to choose an account that offers features best suited to your requirements and preferences.
Compare Different Online Providers
Next, research various online banks and compare their digital checking account offerings. Look for features that align with your financial needs, like low fees, mobile banking and reliable customer support. Keep in mind that different banks may offer additional services like savings accounts, loans or credit cards that might be of interest to you. By comparing options, you’ll ensure that you choose the best digital checking account for your unique needs.
Sign Up and Apply Online
Once you have chosen an online bank, you will need to sign up and apply for a digital checking account. This process usually involves providing personal information, such as your name, Social Security number, date of birth and contact details. Most online banks will use this information to confirm your identity before approving your account.
Deposit and Start Using Your Digital Checking Account
After your digital checking account is approved and opened, you will need to fund it with an initial deposit. Transferring money from an existing account or setting up direct deposit from your employer is a simple way to fund your new account. Once your deposit is processed, you can start using your account for payments or to manage your finances and access various banking features.
Is a Digital Checking Account Right for You?
With the convenience of online banking and numerous benefits, a digital checking account can be a game changer for managing your finances. Below is a recap of why it could make sense for your finances.
- Remote access: One of the primary advantages of a digital checking account is the ability to access your account remotely, anytime and anywhere. This allows you to check your balance, transfer funds, and make payments without physically visiting a bank branch. For busy individuals, this convenience could save you valuable time and effort.
- Little to no fees: Digital checking accounts not only provide added convenience, but they often feature lower fees or waived maintenance fees when compared to traditional checking accounts. Since online banks do not have the overhead expenses associated with physical branches, they can pass those cost savings on to you, the customer.
- High potential returns: Another key benefit of digital checking accounts is the high-interest savings options that often accompany them. Some online banks offer competitive interest rates on savings accounts, which can help you grow your savings more rapidly than with a traditional checking account.
- Enhanced security: Most digital checking accounts provide robust security measures to protect your assets, such as encryption, two-factor authentication and fraud monitoring. It’s important, however, to always check the specific security features offered by the financial institution you’re considering.
To decide if a digital checking account makes sense, assess your financial habits and requirements. If you frequently use online banking services, are comfortable with managing your finances electronically, and appreciate the convenience and potential savings offered by digital accounts, then this option might be a great fit for you.
Get a Digital Checking Account and Build Your Credit
In today’s digital age, having a digital checking account not only simplifies your banking experience but also helps you build your credit. With the help of innovative solutions like Experian Smart Money™ Digital Checking Account, customers can now effortlessly manage their finances while potentially improving their credit scores at the same time.
Experian Smart Money
Experian Smart Money is a digital checking account with added credit-building features. One such feature is Experian Boost, which is embedded into the product. It captures eligible payments made with your digital checking account and adds them to your Experian credit file. That way, making timely payments using the account also benefits your credit score.
The digital checking account comes with no monthly fees and does not require a minimum balance. Plus, customers can get a one-time $50 bonus when they set up direct deposit. These features make the account an attractive option for customers looking to save money and monitor their expenses while building their credit.
Experian’s digital checking accounts are also FDIC insured up to $250,000, providing peace of mind and security for your funds. With the account’s secure and easy-to-navigate online platform, you can effectively manage your finances and track your progress in building your credit.
To open an Experian Smart Money account, you can sign up online within minutes. The application process is simple, and the digital checking account is accessible to residents of U.S. states and the District of Columbia.