Banking online has evolved. Internet access to banking started out with the Web site of your local banks, offering the chance to view your balance, move funds from one account to another and maybe even pay bills. Now, as of about four years ago, there's virtual banking.
Well, the first indication that you're money's in a safe place is the placard that greets you at the door - FDIC.
This federal U.S. agency, the Federal Deposit Insurance Corporation, typically protects up to $100,000 of your deposited funds from loss. Established in the 1930's, the FDIC became a way to curtail the runs on banks that occurred directly after the Depression. By 1934, with the initiation and support of the FDIC legislation bank runs had been reduced by nearly 4000. In addition to FDIC protection, banks also pay for supplemental banking insurance from private carriers. This insurance is set up to protect investors' funds from vandalism and bank robberies.
Online banking is available now with almost any bank, but not all online services are the same. To assume that because a bank is online means you have 24/7 access and adequate convenience is a mistake. Where one bank may allow you to transfer funds from one account to another and offer instantaneous verification of this change in balance, others will delay the transaction, or at least your view of the transaction, by more than 24 hours. This makes using online access to keep track of your balances next to impossible and it can aggravate attempts to use the bill paying and other online features.
With a traditional savings account, you are able to deposit and withdraw virtually at will, with no minimum deposit or balance required. For this you earn a small interest - currently at an all time low range of .6 - 2 percent.
A money market account offers the immediacy and convenience of a traditional checking account along with the interest bearing advantage of a savings account. There are some limitations, however. Generally you can write just a few checks per month - at some banks as few as three. You are also limited to just a few more withdrawals as well. You'll also be held to a minimum running balance, although a money market account almost always pays more interest than a traditional savings account.
Banking online
A certificate of deposit is a banking account purchased in a specific amount for a specified period of time. Banks traditionally offer a variety of time periods for certificate maturities - anywhere from 30 days to 15 months.
The longer the time to maturation the higher the rate of interest paid. For the length of the certificate, however, you are not able to withdraw any of the funds.
They generally offer the highest rate of interest but also deliver hefty financial penalties for early withdrawal except for emergency hardship situations. With as many options as are offered by today's banks, and the protections established by the FDIC, you can indeed bank on your local bank.
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