Years ago, when ATMs were a new-fangled invention and there was no such thing as "online bill-pay," the idea of utilizing on online-only banking institution would've been laughable. Trust a faceless, building-less bank with your money? No way!

Nowadays, though, electronic banking is a secure and often expedient way to handle your money, and most of us are no strangers to handling our finances via the Internet. Here's a quick rundown of things to keep in mind if you're considering banking with an online-only bank.

CONS:

No such thing as instant access. You can't go to the ATM and withdraw your money, so this isn't a good option for funds you may need at your immediate disposal.

No Internet access means no access, period. Should you run into a problem with Internet access (though that's kind of hard to imagine, in this time of wireless hotspots, but still), you're out of luck. It's not as though you can drive to their office and conduct a transaction.

Customer service may be lacking. Some online-only banks have reasonable customer service, actually, but it's definitely harder to get ahold of a real, live human when you want one. Also, they tend to have one-size-fits-all approaches, whereas smaller, local banks may be able to taylor solutions to your specific needs.

PROS:

Out of sight, out of mind. I always recommend an online savings account to anyone struggling to set aside more money. Set up an automatic monthly transfer from your local account and forget about it; the fact that you can't ever withdraw that money on a whim (there's no ATM access, and you'll need a couple of days to complete a transfer) means you're more likely to let it accumulate and consider it "untouchable."

Higher interest rates and other bonuses. Quite often, online institutions are able to offer higher interest rates than their brick-and-mortar counterparts. Why? Their overhead is lower, and they can convert some of those savings into incentives to lure you away from full-service institutions. For example, I was given a sign-up bonus when I started with my online bank, and each time I refer a friend who opens an account, I earn another bonus.

Access to additional services. Another service many online banks offer is companion products and special discounts with partners to which you might not otherwise have access. It's worth investigating what "bennies" go along with your account.

Ease of use. I do online banking with my local bank, too, but let's face it---they're not in the online business, not really. The interface for banking with my online-only bank is simpler and easier to use, and never seems to be down for maintenance the way my local bank's portal is half the time. Banks that are online-only are easier to use online, period.

My bottom-line recommendation is that almost anyone can benefit from an online-only savings account to give yourself a little leg up in the rainy-day-fund department, although many of us will continue doing our "everyday" banking through local institutions. It's certainly not an either/or proposition, so look into adding online savings to your overall portfolio, if you haven't already.

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