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5 Reasons Not to Use an Online Bank

In the future, you'll probably tap your Google Goggles (or whatever) against your barista's Google Goggles when you want to pay for your coffee. Maybe you'll be able to simply think about what sort of tip you want to give her, and it will appear in her virtual tip cup. Your life will be totally unburdened of having to handle physical money, and many people, for a variety of reasons, seem to think this is the best possible use of the technologies we currently have available to us.

Our current banking landscape would have seemed similarly absurd to someone three decades ago: that you can simply take a picture of a check, send it off to your bank through a computer the size of a deck of cards (only thinner), and your bank will put this money in your account--and, stranger still, this bank doesn't have any physical branches. "Yeah, right!" says the 1982 version of yourself upon hearing this, as he leafs through the LPs at Tower Records looking for Air Supply's latest, "That sounds like science fiction."

Some 30 years later, here we are: Everyone does online banking, and mobile deposit is becoming a standard feature on many checking accounts. For many, a brick-and-mortar bank simply isn't necessary. In fact, many online banks offer much more competitive rates and fees, in part, because of their low overhead costs.

But just because these conveniences are here, does it mean everyone needs them? Perhaps not. Here's a few reasons online banking might not be for you:

1. You Receive Large Paper Checks

We're not referring to those novelty oversize checks from the Publisher's Clearing House. We mean the checks you might get for a large design project or a long magazine article. Freelancers often get large checks that cannot be paid through direct deposit and are too valuable to deposit to an online bank for two reasons: either they exceed the limit for mobile deposit (at ING Direct, for example, the mobile deposit limit is $3,000 per check and $5,000 per day), or it would be unwise to put them in the mail and risk them getting lost. Ever tried to get someone to send a $6,000 check twice?

2. You Like Having a Relationship with Your Bank

You don't need to make friends with the cheap-suited loan officer at your local bank branch, but there are benefits to keeping a relationship with your bank. The more money you keep with a bank, the more likely they are to offer certain perks, which can range anywhere from free checking to access to airport lounges. Even without the amount of wealth necessary to get personal banking services, there are often premier banking accounts that offer shorter lines and more personalized services, even from big, impersonal megabanks. Online banks can't really offer a suite of upscale, digitized services, can they? A special VIP web portal where the concierge knows your name?

3. You Own a Small Business

How many times have we heard of the struggling business owner who pleaded and pleaded with her bank to give her another loan, constantly hearing no, bank after bank, until she turned to her local credit union? Community banks and credit unions, strange as it sounds, still operate using business models that might be recognizable to a banker from the past: taking a portion of depositors' money and investing it in the community, growing with the community as it grows--hopefully. If you own a small business, your storefront cannot be down the street from an online bank, but it certainly can be spitting distance from your local community bank or credit union--which knows the potential of your community much better than an underwriter in Wilmington, Del., ever could.

4. We're Here on Earth to Fart Around

Kurt Vonnegut, in an interview with PBS a few years back, told the story of his argument with his wife over going to the store to buy an envelope. It goes like this:

"Oh, she says, well, you're not a poor man. You know, why don't you go online and buy a hundred envelopes and put them in the closet? And so I pretend not to hear her. And go out to get an envelope because I'm going to have a hell of a good time in the process of buying one envelope. I meet a lot of people. And, see some great looking babes. And a fire engine goes by. And I give them the thumbs up. And, ask a woman what kind of dog that is. And, I don't know. The moral of the story is, is we're here on Earth to fart around. And, of course, the computers will do us out of that. And, what the computer people don't realize, or they don't care, is we're dancing animals. You know, we love to move around. And, we're not supposed to dance at all anymore."

5. Depositing Cash and Buying Coins

Even if wasting your time in the real world is less appealing than wasting your time on the Internet, you've got to do laundry eventually--we hope. And if you live in a crappy part of Brooklyn like we do, you have a quarter-operated machine in your basement, but no quarter machine anywhere. This means you need a bank to sell you rolls of quarters so you can actually wash your clothes.

Or maybe you're a bartender. Every night you bring home wads of cash and stash them under your bed in a shoebox. That's definitely a cool way to keep your money, but it's not the wisest--safety concerns aside, you could at least be earning a little interest on that money. Well, you won't be able to bring your shoebox down to your local online bank branch for the simple fact that it doesn't exist.

Willy Staley is a staff writer and columnist for His columns cover banking technology, government policy, and culture.

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