Virtualbanking Reviews and Comparisons

Virtualbanking offers a number of benefits over traditional banks. The most evident of these benefits is the typically higher rate of return on investments, and the lower interest rates on loans. Virtualbanking is done entirely over the internet, as online banks have very few (as in the case of ING) or no (as in the case of VirtualBank) branches. This lack of payroll, property taxes, health insurance, building maintenance, etc., allows the banks to profit on smaller interest rate spreads than traditional banks.

Two of the best-known online banks, ING Direct and VirtualBank, have recently raised the rates on their savings accounts. As of June 30, 2006, ING Direct’s Orange Savings has an APY of 4.35% for all amounts on deposit. VirtualBank’s eMoney Market has an APY of 4.60% on deposits up to $50,000.00; an APY of 4.86% for deposits between $50,000.00 and $99,999.99; and an APY of 5.13% on deposits of $100,000.00 or more.

These would be pretty respectable rates of return for 1-year CDs, but with these online accounts, your money is always available with no withdrawal penalties.

Both online bank accounts work much the same way. You ‘connect’ your online account to one or more checking accounts at a traditional bank, and transfer money between the online bank account and your checking account through the online bank’s web site. You can also deposit money into the online bank account via your employer using direct deposit—forms are available on each bank’s web site.

Both ING Direct and VirtualBank offer a referral program, one of the other benefits of virtualbanking. When a first-time customer opens a new account using a referral, he or she receives a bonus of $20–$25 (depending on the bank) which is deposited into the account. He or she can then send out referral emails to friends, and when one of the friends opens an account, they both receive a bonus. It’s a great way to build up your balance.

Take advantage of the relative newness of virtualbanking, while the banks are still aggressively pursuing new customers.

And of course nothing is keeping you from joining both of these banks and receiving both referral bonuses, then sending out referral invitations from both banks, and keeping your money in whichever is offering the better rate.

Here’s a brief comparison of the main points of each virtualbanking product: