First, the rates are more competitive for online banks. Most pay you interest if you keep a balance. However, most retail banks no longer do this. Many online banks give you a free checkbook, regular banks give you starter checks. Online banks give overdraft protection; regular banks you usually have to demand it. Some won't even give it to you if you demand it. And many online banks offer free electronic bill payment and wire transfers while regular banks usually charge for it.

Also, many online banks allow you to use any ATM machine and they will pay for the charges that the bank charges. This allows you to be able to go to any ATM machine and get cash without having to check to see first if it is the same as the bank you are using.

I ended up going with X.com, a bank that is probably one of the most innovative banks when it comes to making payments. The company recently merged with PayPal.com, a company that offers online auction payments. With this, it now has one of the fastest growing payment companies around and has PayPal services already built into the banking services.

What is all of the hype about? Well, X.com has the potential to revolutionize banking. They offer a service where you can email money electronically to anyone with an email address and a PayPal or X.com account. This service has been taking over auction sites as the payment method of choice and could do the same in many other areaas.

Right now, this service is proprietary and can be used only with PayPal or X.com customers, but others may adopt this service in the future to save costs.

For more info on other online banks check out Gomez.com.