Should I keep a local bank account after opening an online bank account?

A couple sitting at a table with a bank employee discussing financial documents
July 12, 2022 | Ben Heinze

Are you considering opening an online bank account? In today’s digital age, there are many online banking options that mostly eliminate the need for a local, physical branch location to visit. Gone are the days of needing to leave the comfort of your couch on a rainy Saturday morning to deposit a check, inquire about a loan or apply for a credit card.

With that in mind, you may be wondering if there’s any need for a local bank account. While the vast majority of banking tasks can be done completely online or over the phone, it may be helpful, depending on your personal situation, to keep a local account to maintain access to a physical bank location.

Here are the benefits of a local bank account, as well as tasks you may be surprised you can still perform at an online-only bank.

Surprising things you can do at an online bank

While online banks are now mainstream, not everyone realizes just how far online bank functionality has come. If you’re hesitant to switch away from your current local bank because you don’t think you’ll be able to perform certain tasks online, be sure to double-check if that’s actually true! Here are some online bank features you may not be aware of.

Deposit a check

Because checks are a physical item, you need to visit a physical branch to deposit one, right? Nope! Online banks allow you to securely deposit a check by taking a front-and-back picture of it on your device. Once you’ve seen for yourself how easy it is, it’s hard to go back to the old-fashioned way of depositing checks!

Withdraw cash

Many online banks are part of huge ATM networks that allow you to withdraw money. For example, Alliant members have access to over 80,000 ATMs. Many online banks even reimburse ATM fees, meaning you have easy access to cash when you need it with no extra charge!

Apply for a loan

Online banking isn’t just for basic tasks; it can be used for more complex tasks such as applying for a loan as well. Whether you’re interested in a car loan, a mortgage, a personal loan or something else, there’s no need to speak with anyone in-person if you’d prefer not to. Even for more complex situations, online banks almost always offer service over the phone.

Transfer money to external accounts

With digital tools such as Zelle, transferring money between both your own accounts across multiple institutions and to your friends and family is as simple as can be. Sometimes online banks are seen as having limited transfer options, but they typically have almost all of the same options that don’t involve cash!

Reasons to keep a local account

Despite all the features online bank accounts do have, there are still a few tasks that cannot be performed online. These may or may not be essential tasks for you, so you’ll need to evaluate how important it is to be able to have easy access to these features.

You need cash or coins in particular denominations

As great as ATMs are, it’s common for them to restrict the exact amount of money you can withdraw. Many ATMs only allow withdraws in increments of $20, meaning you’d need to seek out change somewhere else. If you need exact change or smaller amounts (rolls of quarters for laundry, anyone?), having access to a local bank makes things much easier.

Depositing cash

While online banks make depositing checks simple, there’s simply no way to deposit cash online. If you frequently find yourself in possession of large amounts of cash, keeping a local bank account will ensure you have a place to deposit that money. You definitely don’t want large amounts of cash sitting around, not earning interest and susceptible to any number of bad things happening to it.

You prefer in-person interaction

Finances are an incredibly person thing, so it stands to reason you should handle them in whatever way makes you feel most comfortable. If you simply feel more at-ease going into a physical branch to perform certain banking tasks, that’s totally okay!

Do note that online institutions can still carry the same FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration) insurance of a local bank, as well as highly-regulated security measures in place to keep your money safe. So, while there’s nothing to worry about when banking with a reputable online institution, it ultimately comes down to personal preference.

Benefits of an online-only bank

Even if it’s possible to do almost everything you need at an online bank, you may be wondering what the advantages are over a local bank. As it turns out, online banks are more than just an alternative for the tech-savvy among us, in many ways they’re simply better!


Being able to take care of your banking needs online from wherever you are is a huge benefit of an online bank. While many local banks have online functionality, it’s not uncommon for them to restrict what can be done online vs in-person. For example, some local banks may require you to visit a branch in-person to apply for a loan, whereas an online bank would allow you to do that online or over the phone.

Higher rates and lower fees

There are a ton of costs associated with maintaining local bank branches. The building itself, utilities, staffing costs and so on. Because online banks don’t have the overhead local banks do, they’re able to pass those savings along in the form of higher interest rates!

Online banks also typically have far fewer fees than their local counterparts. Between overdraft fees, account maintenance fees, ATM fees and more, these can really add up! However, every bank has a different fee structure, so be sure to carefully research what fees each bank you’re interested in does and doesn’t have.

No need to switch if you move

Moving involves a ton of work, and needing to switch to a different local bank is yet another step you may need to take when moving far away. Since online banks typically only require you to be located in the same country, that’s one less thing you have to worry about! Frequent travelers will also benefit from knowing they can access their bank while on the road.

Superior Online Functionality

Many local banks have online functionality, but online banks are naturally incentivized to be at the forefront of the digital banking experience. If you’re tech-savvy and prefer doing most or all of your banking online, an online bank is generally going to deliver the best experience. Technology is constantly advancing, and the banking world is no exception. Whatever new features come out in the future, you can expect them to be available at online banks first.

Overall, the decision to keep a local bank account when switching to an online bank account will depend on your personal banking needs. Online banks come with many clear benefits over their local brick-and-mortar counterparts, but are not able to fill every single need that a physical branch can. If you do decide keeping a local account is the right decision for you, there’s no reason why you can’t also take advantage of all online banks have to offer at the same time!


Looking for more banking tips? Here are more articles that may help:

Photo deposit: How to deposit a check

Comparing savings accounts: What’s the difference?

How to choose a bank that fits your lifestyle

Ben Heinze is a marketing content specialist with a passion for financial education. Instilled with a strong sense of frugality from a young age, he views money as a means to building the life you want, rather than an end in itself. From reading Money Mentor, he hopes you discover new ways money can be used to build your ideal life - whatever that may look like.

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