Internet banking has revolutionised the way banking functions. All financial transactions are now quick and easy, and most importantly, they do not require a visit to the bank branch. It is very easy to open an internet based account through your bank. However, before doing this, it is essential to know the various types of internet accounts that are available.
Kinds of Accounts
When it comes to online banking, you will find a wide range of accounts to choose from. The kind of account you choose will depend on your individual goals and financial considerations. Here are the main types of internet accounts:
- Current account: A current internet account provides all the features that an ordinary current account provides. It will also provide you with credit and debit cards, cheque books and financial statements on a regular basis.
- Offset accounts: Offset types of internet accounts serve to consolidate all your mortgage, current accounts, as well as your savings account with one single bank. Such accounts also allow a person to consolidate personal loans and outstanding credit card balances into it. This provides a means to build substantial savings because of an overall lower rate of interest that gets applied. Such accounts are also known as all-in-one accounts. The reason offset accounts work favorably is because any incoming money into the account serves to reduce the overall payment towards the mortgage or loans.
- Student accounts: These accounts are primarily targeted at students, as the name implies. Unlike other account types, these accounts are more flexible, owing to the fact that students are not financially as stable as regular salaried professionals. Therefore, these internet accounts provide overdraft protection, access to money whenever needed, as well as a rising overdraft limit every year. These also provide a much lower interest rate on credit cards. In many cases, students will not be charged if they accidentally slip into a negative balance.
- Savings accounts: This type of an internet account provides a higher rate of interest and therefore helps to promote good saving habits. You do not receive a cheque book or a debit card, which means you cannot shop in stores with this account type. Some accounts require you to seek permission before making any withdrawals or they may place a limit on the number of withdrawals you can make per month.
- ISA: Also known as an individual savings account, these internet accounts allow you to deposit money while also saving money by earning interest. One of the good things about an ISA is that it is exempted from tax. There are two types of ISAs ? a cash ISA and a stocks and shares ISA. Currently the limit for each component of the ISA is £3,600. However, this is shortly to rise to £5,100 (in October 2009 for savers aged 50+ and in April 2010 for everyone else).
- Offshore accounts: These refer to accounts which are held with banks located outside the UK banking system. An offshore account located in the Channel Islands will serve to operate in the same manner as a mainland account. Not all UK citizens are allowed to open an offshore account. However, a British citizen who is staying in another country can open an offshore account in the Channel Islands for maximum convenience. This is because it serves to operate just like a mainland account thus providing all the conveniences associated with it.
As seen above, there are many different kinds of internet accounts, each with its own features and benefits. You now have a base of information from which to draw when deciding what type of internet account will best suit your needs.