Online Banking Explosion

According to the Pew Internet and American Life Project, 44% of American internet users (53 million people) now bank online. That’s one-quarter of all American adults! This represents an increase of 47% since 2002 and, of all online activities tracked by the Pew, online banking has grown the fastest. In terms of age structure, 60% of internet users between the ages of 28-39 bank online, making them (actually, us) the most likely to bank online. This isn’t all that surprising when you consider that people in this demographic (like me) are young enough to have fully embraced the internet, old enough to have a decent amount of money to manage, and are busy enough to need to do it online.

Beyond the convenience of accessing your brick and mortar accounts from home and paying your bills online, internet banks such as ING Direct and Emigrant Direct (as well as others) offer substantially better interest rates than are available in most (if not all) local banks (ING and Emigrant currently stand at 3% and 3.25% APY, respectively). In fact, I passed several banks on the way home today that were offering 12-18 month CDs for no more than these banks pay for completely liquid deposits. You’d be insane to lock your money up in such a deal when much better deals are just a mouse click away.

Of course, the growth of online banking hasn’t been all good — after all, without online banking there’d be a lot less phishing going on.