The Best Banks You'll Never See - Internet banking

Internet banking can deliver supercheap checking and robust CD yields.

Hardly ever set foot in your bank? Maybe you're ready to take a bold step into the frontier of Internet-only banking. Your reward for leaving the neighborhood branch behind can be supercheap checking and robust yields on CDs.

Of the six banks that do business exclusively over the Internet, CompuBank of Houston (www .compubank.com) offers the best checking-account deal: free checking with no minimum balance and a minimum opening deposit of just $100. CompuBank charges no ATM fees and reimburses you for other banks' ATM surcharges--up to four per month at $1.50 each. Electronic bill-paying is free, too, along with your first order of checks. And the bank rates first in ease of use in Gomez Advisors' spring 1999 Internet Banker Scorecard

Because online-only banks have no ATMs of their own, those that reimburse you for the cost of using other banks' machines are the best bet for most consumers. Telebank  also reimburses you for four $1.50 surcharges a month if you apply for your account through Yahoo!

Virtual banks can also pass along the benefit of lower overhead expenses in the form of higher interest rates. NetBank's offerings for instance, often appear on our monthly list of top-yielding CDs (see page 56). Recently, the bank paid 5.75% on a 30-month CD and 5.35% on a six-month CD.

Most of the banks also pay far more than the average 1.2% on checking-account balances. Until next January, Security First Network Bank is paying 6% on balances. And USA Access Bank of Louisville  which caters to small-business owners, pays 4% on business checking accounts with a $1,000 minimum.

What's at risk when you bank online? Not a lot. All the banks named here are FDIC-insured. Online transactions are encrypted, and under federal law the banks bear the burden of any computer fraud. You can usually access your account 24 hours a day, and telephone customer-service hours tend to be substantially longer than traditional banking hours. You typically receive your statement online rather than on paper--but you can always print it out.

As with ordinary banks, service can be uneven. The biggest drawback: If you do have a serious problem, you can't march into a branch to get it resolved.