Is Online Riskier?

Dear Dave, I'm considering opening an online money market account. They're offering a higher interest rate because they don't have as much overhead as a traditional bank. Is this legitimate? Is there any more risk in this than at my local bank? Sean Dear Sean, The fact that it's an online bank instead of a brick and mortar institution doesn't really increase the risk. In the end, it's the integrity of the people involved that matters. You're probably going to be all right, as long as they have a physical presence somewhere, or they're insured by the Federal Deposit Insurance Corporation (FDIC). Don't take just their word for everything, though. Do your homework. Get on the Internet and gather some information first. This is your money we're talking about, so be diligent and check them out! Make sure their security measures are complete and up to date, and that you're personally comfortable with the differences between online and in-person banking. There are some Internet-only banks out there that I wouldn't give a dime of my money. That's because they're not strong banks, though, not because they're "net only." - Dave
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