What is a virtual bank account? (with photos)

Debit cards are often used to access money in virtual bank accounts.

A virtual bank account is a type of bank account that exists only online. Most banks offer some sort of online banking service, but true virtual banks often do not have physical branches or ATMs. With a virtual bank account, most transactions take place over the Internet.

Many types of bank accounts can be virtual, including checking accounts, savings accounts, certificates of deposit, money market accounts, and so on. Users often use the Internet to check their account balances, transfer funds, and perform other routine transactions. Some virtual bank accounts offer online bill payment services, which eliminates the need to write and send physical checks when paying bills.

Virtual bank accounts often do not have physical locations such as branches or ATMs.

While virtual banks often do not have their own branches or ATMs, customers still have ways to access their money. For example, some virtual banks identify partner ATMs, from which customers can withdraw their money without being charged a fee. Other virtual banks sometimes refund a certain number of transactions at foreign ATMs each month. If free use of ATMs is not an option, customers can often get cash back on point-of-sale transactions using their debit cards.

A virtual bank account exists only online.

Most online banks allow customers to sign up for a new account on their website. The account opening process can be lengthy, often involving account paperwork sent by mail or fax between the bank and the new customer. Once the account is opened, the customer typically has electronic access to their account and can carry out most transactions online.

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When selecting an online bank, verify that the banking institution is FDIC insured.

A virtual bank account has several advantages over a standard bank account. As virtual banks do not have physical branches, their overhead costs are much lower than traditional banks. Many virtual banks pass these savings on to the customer by waiving bank account fees or offering higher interest rates on savings accounts.

Also, a virtual bank account is often considered more convenient than a traditional bank account. Customers do not need to restrict their transactions to banking hours; they can usually complete almost any transaction they want, at any time of the day or night. Services like online bill payment help reduce the time spent paying bills, as well as the cost of stamps, checks and envelopes.

Some, but not all, virtual banks still use paper checks.

However, some people are baffled by the disadvantages of online banking. One of the biggest disadvantages of virtual bank accounts is that there is no physical branch to accept deposits. Customers with virtual bank accounts should generally use direct deposit or mail their deposits. Some people find they miss the personal service of a physical bank. Also, many people are afraid to do their banking over the Internet; PC viruses and spyware can put virtual bank account customers at risk of identity theft.

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