By Joe Palumbo III
These banks do their business exclusively on the Internet and are supplemented via phone and mail. The rates are attractive, with a one year CD now offering 2.25 percent (nearly 3 percent for two years), which we all know is a far cry from the low 1 percent yields offered by traditional banks. Internet banks are able to offer these rates because of their low overhead in dealing on the net. However, many people shy away from online banks because of online fraud and the risk of moving sizeable amounts of money.Online banks list as FDIC insured. But are they? If you are considering an online bank, it is recommended that you place a call and conduct due diligence as to whether the online bank piqued your interest is actually FDIC accountable and insured. Also consider the software being utilized. And lastly, watch for a practice called “phishing,” when scam artists, through a series of e-mails, request from the depositors an update on their billing information. The scam artist requests that you link up to an authentic looking Web site and submit your information. Never respond to requests of this nature. Deal directly with the company and the contact information provided by the online bank after you have conducted your own background check and feel comfortable.So how's business with regard to online banking? It can seem more attractive when looking for a better overall return on parked cash. Just make sure that before you entrust your hard earned monies to anyone, that your money is being placed into a verifiable account with the proper safeguards in place.Joseph J. Palumbo III is a managing partner for the Palco Group. The Palco Group deals in asset management, real estate, sales training and business consultation. Palumbo can be reached at 718-461-8317, or at palcogroup@aol.com.
