5 Features to look for in the best online banks

By Kelly Richardson

The tech revolution encourages us to perform many of life's tasks on the Internet--and banking is no exception. So rather than fight upstream, I decided a few years ago to try online banking. I was with one of the major players in the industry, so naturally I went with the Internet banking interface that they offered--which turned out to be a major mistake. Here's why.

First, opting to bank online meant that they expected me to no longer need the assistance of branch tellers and charged me hefty fees if I did. Next, getting online help was a purely stressful process--the FAQs were hardly any help and the toll-free number was frequently busy. And, finally, they imposed a monthly fee to download my own banking records to the financial management software I used on my local machine. Long story made short--my foray into online banking was frustrating to say the least.

However, there is a golden lining to this story. And that lining is choice.

Online banks have sprung up all over the World Wide Web, giving you and me the option of comparing institutions to choose from the online banks that actually want our business. So I compiled a quick list of the 5 features that the best online banks possess in hopes you'll follow me to financial bliss.

1. The best online banks take your privacy seriously.

The Federal Deposit Insurance Corporation (FDIC) has published a set of guidelines that all banks must follow to ensure your personal information stays private and secure. These include high-level site encryption, passwords and personal identification numbers (PINs), and general security tools such as virus protection and physical access controls.

The best online banks offer all of these protections and more to reduce fraud and hacking risk. If the online bank you're considering doesn't incorporate these must-have tools in its interface, take your business elsewhere.

2. The best online banks offer high yield savings accounts in addition to traditional checking options.

Oftentimes, giving your business to a new bank or one with a name not so recognizable has its advantages. Namely, they do more to earn your business such as offer higher interest rates or enhanced customer service. But make sure the online bank you consider offers both checking and high yield savings accounts. If a newbie bank only offers limited services, they may be too new to take seriously.

3. The best online banks publish return rates on all investment options openly.

Beware the online bank that hides their cd rates on some random page hidden deep within their site. This might be because they want to hide low return possibilities while satisfying FDIC requirements for full disclosure. You might find out well into the future that the money you've been pouring into that cd hasn't been working as hard for you as you envisioned.

4. The best online banks offer several customer service options and don't charge extra to help you.

Look for banks that offer customer service portals in branches, over the phone and online. After all, just because you're choosing to bank online doesn't mean that you should forfeit the traditional services you've grown to expect. Also, the best online banks provide a live chat feature that puts you in touch with a warm body without having to go into the branch. Also, they assemble an online catalogue of FAQs and video tutorials that guide you through very basic operations.

5. The best online banks will negotiate fees, rates and terms to match competing offers.

This one catches many online bankers off-guard. While the big players tend to shy away from doing so, it's a little known fact that many up-and-coming banks will negotiate terms to earn your business. If you get a better offer from another provider, give your online bank a call and see if they can match or beat it. All they can say is no, and you might just get a great deal. But beware the bank that refuses to discuss making a change.

Needless to say, I learned a great deal as I ventured into the world of online banking. But the biggest lesson of all is that with so many options out there, it pays to do some comparison shopping.