The online bank savings account type of banks account is becoming increasingly popular with savers looking for high interest rates and minimal fees. As a result, many financial institutions now offer competitive online savings accounts. Yet many people have no idea what they are, much less the benefits it offers.

Online bank savings accounts are managed by the respective account holders exclusively online. In almost all cases, there is no branch that you can physically go into to make deposits. Instead, banks provide you with an online interface where you can easily setup and manage your account.

What are the benefits?

Without the overhead of branches, tellers and the paperwork involved with deposits and withdrawals, banks are often able to offer a higher interest rate to their customers than with traditional savings accounts. With an online savings account, you have the potential to earn significantly more money on your savings than you could in a traditional savings account.

Banking online is quick and easy. Potential customers can usually open their online savings account in a matter of minutes. Account holders can transfer money into and out of their online savings account from an Internet connection anywhere in the world with just a few clicks of the mouse. When questions arise, account holders can email or chat via IM with a bank representative with just a few more clicks.

What are the drawbacks?

While having a savings account purely online can be beneficial in many ways, there are some potential drawbacks. For one, online savings accounts don't always offer a quick way to access your money. Some online savings accounts do offer ATM cards, but some still do not. Even with an ATM card, however, you are likely limited to a set amount, usually around $500, that you can withdraw from an ATM machine on a daily basis.

Another potential drawback for some is the lack of personal attention you receive with an online savings account. Some people like to go into branches to make their deposits, receive their withdrawals and discuss their financial options with their personal bankers. Online savings accounts do not offer branches or personal bankers, which could be a drawback for people needing that personal touch.

Having a savings account purely online isn't for everyone. However, it is a great potential product for many people who are looking for a higher yield on their savings as well as the ease of maintaining their account without leaving ever leaving their home. In most cases, potential customers appreciate the ease of opening their new online savings account. Account holders love the higher yields they receive on their money as well as the ability to maintain their account whenever they want from wherever they want. Banks enjoy a low cost way of increasing their savings reserves as well as attracting a client base outside their normal geographic region.