How good are online-only banks like ING Direct, especially in terms of reliability and quality of service?
If you consider the user interface as part of quality of service, I’ve always found the user interface of ING Direct leaving much to be desired. The visual keypad that requires you to click in your strictly numerical pass code seems anachronistic given that online convention is to support stronger passwords of assorted letters and symbols. I’m hoping this all changes with the launch of BankSimple (https://www.banksimple.net/), a bank built by technologists with usability in mind. As for reliability, as long as the bank is FDIC-insured, you’re safe up to your first $250K, so I wouldn’t be too concerned in that arena other than the rare but possible inconvenience that you’d need to go through if the bank actually went out of business.
Online only banks, as long as they are banks, are definitely as safe as any other type of banks. You get the same kind of FDIC insurance as you would from a regular bank. The main reason for the better interest rates for such services is that they offer less service, and therefore it costs the bank less per user. For example, HSBC direct or the Citibank Ultimate Savings accounts are online and phone only and therefore do not have to pay for the branch network. As a result, it costs them less to support their customer and they pass some of the savings on in the form of higher interest rates. so quality of service and reliability are still the same.
