Banks have always been viewed as the safest place to park your money but, in the wake of the financial crisis, this perception has changed. Not only have people’s confidence in the stability of banks been shattered by collapse of WaMu, etc., but ever increasing bank fees and executive payouts have engendered distrust. On a more practical level, there are just fewer banks to go around. Many banks have either folded or been swallowed up by larger financial institutions, forcing people to look around for more options.

Bank online

Online banking is a relatively recent phenomenon that has become increasingly popular as consumers become more comfortable with doing the majority of their activities — from shopping for books or music to booking their airline tickets — in the cloud. Most major banks offer online services today, which provide 24/7 access to your accounts and advanced services such as the ability to pay bills online. There are even Internet-only banks such as First Internet Bank of Indiana or Smartypig that, because they don’t have the overhead of physical infrastructure, can offer substantially higher interest rates on savings accounts. Smartypig pays an APY of 2.75%. Let’s take a look at the pros and cons of online banks.

Pros

1. They tend to offer higher interest rates than local banks due to lower overhead costs such as paper mail, lease and other real estate expenses.
2. Some banks offer customer service available 24/7 or till late evening hours.
3. You can quickly initiate transactions online such as a transfer, withdrawal request or a bill payment in a matter of minutes.
4. Most paperwork can be filled out on the computer and transmitted electronically.
5. You can set up alerts so the bank will let you know when your balance is low.
6. Less paper mail such as bank statements and utility bills will decrease the amount of paper trail left behind for identity thieves.
7. No Fees- The majority of online banks do not charge fees. HSBC for example has no monthly fees and no minimum balance requirement for their online savings account.

Cons

1. Limited Access – you can’t just drop off your deposit like you would at a local bank. It must be mailed or transferred from another account.
2. At some online banks, the customer doesn’t have the opportunity to get to know the staff. Calls are often handled through a random system where you will get to speak to different customer representatives every time you call for an issue.
3. Make sure you select a bank with many ATM’s available, otherwise you will end up paying fees for using machines not part of the bank.
4. It takes longer to clear a deposit.
5. Paperwork requiring signatures has to be done through mail, taking longer to process.
6. Your bank’s website can go down, limiting access to accounts temporarily

Just to give you an idea of the services online banks offer, HSBC has an online savings account with an interest rate of 1.85%. Wachovia has several online services available in addition to online banking such as bill pay, brokerage and retirement accounts. Bank of Internet has an online interest checking account that pays an APY of 1.30% and a high yield savings with an APY of 2%. At the time this article was written, national overnight averages for savings accounts were of .77% for interest checking accounts and 1.39% for a savings.

Although some consumers have remained skeptical about doing their banking online, the majority have been easily seduced by the ready access to balances and the ease with which these services categorize transactions. The advancements in technology and privacy protection have also pushed more people to take the leap.

Bank locally

On the other hand, with distrust in the banking industry at a fever pitch, some people are taking solace in the old-fashioned comfort that can be found in a local brick and mortar bank where you know the teller by name and she remembers yours. Let’s take a look at the pros and cons of local bank accounts.

Pros

1. Easy access – you can just drop off by your local branch to make deposits or get cash withdrawals.
2. Familiarity – by becoming a regular customer, you get familiar with staff, getting to know some on a first name basis.
3. Quick access to cashier’s and certified checks.

Cons

1. Limited hours of operation – At most banks, after 4 or 5 pm you can’t get a representative to help you – you’d have to wait till the next day.
2. Interest rates tend to be on the low end in comparison to online banking.
3. More opportunity to spend your money because it is so easy to access it.

With the banking industry in a state of reorganization, there’s never been a better time to be a customer. All banks, whether an established brick and mortar institution or a scrappy newcomer that only exists in cyberspace are scrambling to regain your trust. Of course you want the best interest rate you can get but you’ll also want to consider things like ease of access to your money, any fees that may be associated with your accounts, and the security and stability of the financial institution in question Decide what options you would like to have and what you can do without when considering the pros and cons of either method of banking. And it doesn’t have to be an either/or decision. The best approach if you decide to open an online account is preferably to keep your local bank account open, this will enable you to have the access you need to some of your cash if an emergency arises.

New! Know your true monthly cash flow

Did you spend more or less than you made last month? Mint’s new monthly Cash Flow graph can tell you. Keep track of your net saving or spending over time with this new feature on your Overview page.

 
New! How you doin’ – budget wise

Mint users told us that they wanted to watch their spending vs. their budgets over time, to understand whether they were sticking to – or blowing past – their spending goals. We had to support that kind of fiscal restraint, so you can now look back in time to see how you’re doing versus your budgets for each spending category this year. Congratulate or motivate yourself with the facts.

Please visit Mint.com today to check out these added, new features…and share your feedback.

I’m pleased to announce Mint.com is officially launching today at TechCrunch 40 in San Francisco. Our free online personal finance web-app is now open to everyone!

For those of you who have enjoyed our private beta and financial content, now is the time to tell your friends, family, and anyone who could use:

• A little financial organization.
• Free personal finance software
• Insight into where their money goes, across all accounts.
• Email & SMS bill reminders and alerts.
• Personalized savings suggestions averaging over $1,000 during our beta.

Since Mint is free, and only takes a few minutes to setup, why not pass along a good financial tip?

Private Beta Feedback:

We’ve received nearly 3,000 emails in the past few weeks with product suggestions, bug reports, and requests. We read every single one of them, and I just want to say: Thank you; you’re helping make Mint better in a very real way.

While it may take us some time to add all the banks and credit unions requested, we’re working on it. Here are some user suggested features we will be rolling out in the next few months:

• Transaction-level drill-down from the spending pie graph
• Rename / nick-name an account
• Exclude accounts (e.g. don’t show my business account, just my checking)
• Support for student loans, mortgages, and brokerages.

Keep the suggestions coming!

Bloggers & Journalists:

Thank you for respecting our press embargo. The rules of TechCrunch 40 forbade advanced coverage – any leaks would have meant being kicked out of the conference entirely! You are now free to write what you like about Mint, good and bad, screen shots and all. You can find a company background, logos, and screenshots on our PR & Blogger Resources page.

Again, I want to thank every Mint beta user for taking the time to provide such tremendous feedback. I hope Mint continues to be a product you use in your daily life. On our side, we’ll do our best to help you “do more with your money.”

Aaron Patzer
Founder & CEO, Mint.com

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