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As you work on your bank account comparison you will notice a rising number of online banks that you can open accounts with. The concept of an online bank does not refer to a brick and mortar bank with online account access; it refers to a bank that has no physical location but exists only in an online format so all business is conducted online, over the phone and through the postal service.
Online banks often offer attractive interest rates for their interest checking and savings accounts. Part of the reason for this is that they have less overhead than traditional banks. Online banks can have fewer employees, more efficient processes, and fewer maintenance expenses. All of this reduction in expenses can then be shifted over to customers in the form of attractive interest rates and lower loan rates.
Online banks are great resources for busy professionals, individuals with personal accounts, investors interested in CDs and more. Online banks, like their brick and mortar cousins, should be FDIC insured and should follow all financial regulations established for traditional financial institutions.