The concept of traditional banking is not something new. It has been the talk of the town for ages. In old times, people used to do everything with cash and preferred the traditional banking practices to spend and store money. Honestly, there seemed to be endless bank options, but all offered the same typical services.

However, as technology evolved, a new form of banking, ‘online,’ caught the customers’ attention. Credit cards, debit cards, secured and unsecured cards became the new norm. And, the best thing about them all? Almost every card allows the clients to

  • Build their credit score
  • Get benefits from rewards
  • Review the credit report

And most importantly,

  • Improve their financial condition

Still, the debate goes on and on about which way is better and most convenient? Let’s find out!

What Is Traditional Banking?

It is most likely to be the type of banking you’ve most heard about. In simple words, it involves a physical location where the bank is located. The individual has to go in person to open the user account. Yes, you can apply online, but still, you might need to visit the bank for legal documents and processes. Or, to simply:

  • A traditional bank has to have an actual location. For instance, any local bank branch near you can be considered a traditional bank
  • The customer can submit the application form via a website but still needs to verify the documents and his identity by visiting the bank
  • The bank or authorized company will most likely issue a ‘bank card’ to support the modern transaction methods
  • A bank card or debit card works by deducting the money directly from the user account (money is submitted at the time of account opening)

Before online and mobile banking got their breakthrough, it was more like we were living in a stone age of payments.

  • Imagine if you still have to line in a long queue just to credit cash into your account or take the money out of it
  • Yes, it won’t be much convenient if you had to make the transactions in an emergency
  • Literally, the emergency would be long gone before you get the chance to make it through the long line

Phew! How lucky we are to live in the mobile banking era! Huh? Mobile banking? Isn’t it the same as online banking? Nope! They definitely aren’t the same. There’s a fine line that separates the two.

Online & Mobile Banking: Same Concept or A Different Thing?

It is interesting to understand that a mobile bank can also be an online bank, but it can’t be true vice versa. So yes, an online bank can’t be considered a mobile bank. However, both types’ working is similar to having credit cards, secured cards, and similar functions.

Online Banking

According to Investopedia, internet, web, or online banking is best described as virtual transactions via the internet or web. It provides almost every service you get to experience in a traditional brick-and-mortar bank.

  • Almost every traditional banking service can provide an online banking experience to customers
  • The client can make transactions, pay bills, access accounts, etc., without visiting the branch in person
  • An online bank can have a physical location. However, it’s not always mandatory
  • Still, the customer needs to have a bank account and register to the traditional bank to use the online banking services

Mobile Banking

It can be defined as a type of online banking where everything is done virtually: the account opening, verification, transactions, and account review – only via the internet.

  • The services provided are similar to an online or traditional bank
  • The client can open an account, verify identity, send or receive money, withdraw cash, use the mobile app, etc. with the provided credit card and account information
  • A mobile bank usually works via an online website or mobile application
  • It doesn’t have a physical location, so there are no specific working hours. You can access your account or card and withdraw or transfer money anytime

Let’s compare both to have a clear understanding of their similarities and differences:

Traditional, Online & Mobile Banking: An Interesting Comparison

By reading out the basic things about online and mobile banking, you might think they have the same concept. Well, it’s mostly true, but in all senses. So, here’s a comparison table for you to know what’s similar and what not:

✔️ = Yes     ❌ = No    ⭕ = Not Mandatory

Concept  Online


Mobile Banking Traditional Banking
Must have a physical location ✔️
Transactions over the internet ✔️ ✔️
Fees (Monthly/Annual) ✔️
Access To Mobile Application ✔️ ✔️
In-person verification ✔️
Quick & Convenient ✔️ ✔️
Accessible worldwide ✔️ ✔️
Customers can operate accounts anytime anywhere ✔️ ✔️
Fast Banking Transaction ✔️ ✔️

Cards Issued By Online & Traditional Banks

Mobile, online, or traditional – almost any type of bank issues a card to their customer to have a convenient transaction. Of course, the services and usage will depend on the type of bank you are registered to but in general; every customer can apply for a card.

  • Traditional bank accounts don’t usually have an ATM or bank card. One has to apply for it and pay some annual fees to use the card regularly
  • While on the other hand; an online or mobile bank comes with a card as there’s no physical location of the specific company

Let’s continue to read which type of bank issues what type of card to their customers:

Bank Card

Bankrate explains a bank card to be any card issued by the bank to make transactions. It can be a bank card, debit card, payment card, credit card, or ATM card. The point to ponder here is that the card becomes the type depending on the authorizer.

Here are some cards that traditional, online, or mobile banks can issue:

  • Debit Card

If you don’t like the pressure of having to pay back to the bank, this might be the right card for you. It allows the user to make purchases in real-time, i.e., the money is deducted from the current account.

You’re not buying the amount from a credit line but are using the money you already have in your checking or savings account.

  • The account must have a credit amount for the perfect working (for online or ATM transactions) of a debit card
  • A debit card works perfectly well online and offline transactions (ATM or mobile application). In fact, it can also be connected to cash transfer applications
  • A debit card may or may not have a fee. However, it can still include the annual usage fee or a foreign transaction fee

An ATM card with a Mastercard or Visa card logo can also function as a debit card at the transaction time.

  • Credit Card

If you are the type of person who likes to make payments without having to take the pressure to pay at that instant, then this card is the right one for you. The traditional bank or mobile bank issues a credit card for situations where payment isn’t real-time.

For instance, you pay with your credit card, but the money isn’t deducted from your current account. Instead, you’ll get a bill that you’ll have to pay at the end of the month.

  • The account issuer usually pays for all the payments when they’re being made. You purchased a credit card and used it to pay your electricity bill. Still, you won’t be paying from your current account at that moment, but from the merchants’ profile
  • It has a standard line of credit depending on your account terms and conditions
  • The user might have to pay a high-interest fee on the missed or late payments
  • It can also have a set borrow limit for different users
  • The rewards and benefits vary as your credit score changes. Good credit history is an essential factor for an excellent working credit card.

You can also increase the credit limit by asking your bank online, traditional, or mobile. Click to read Nerdwallet’s step-by-step guide on how you can increase your credit limit.

  • Prepaid Cards

It is a good alternative to typical credit cards. You can get this one if you want to pay in real-time and want to benefit from the rewards and excellent credit score. A prepaid credit card is similar to a credit card except for overdraft payment.

As the name suggests, you first have to load money into your account to use a prepaid credit card for payments.

For instance, you credited $400 into your prepaid account, and you made purchases using $100, then you’ll be left with a $300 balance in your account.

A prepaid card can function similarly to a credit card but without the challenge of getting a loan from the bank.

  • ATM Cards

As mentioned above, it is a type of bank card. It can be a credit card, debit card, or any card with which you can withdraw money at a machine. Paytm explains that it is a card similar to a credit card in withdrawing and a debit card in using the account loaded money.

  • Using an ATM card means using the money directly from the account (similar to the debit card)
  • An ATM card requires you to load the money (like a prepaid card), and you have to pay in real-time (unlike the credit card)

Other Types of Cards

A bank can issue its customers literally endless cards depending on the services and status the account holds. Here are some other commonly used cards you might encounter in the banking world:

  • Secured Credit Card

It is a type of credit card backed up by a secured deposit. According to Forbes, you must submit a payment for the authorized company to open your account. For instance, if your secured deposit is $500, it will automatically become your credit limit. The issuer takes this amount as collateral which will be used if you fail to make payments regularly.

  • You only need to submit the deposit and user details for account opening
  • User can access the account via mobile and make online transactions anywhere
  • It can be issued with a bad credit card or poor history as the user submits a deposit to use in the future
  • It can have a high-interest rate. Still, you can also find low-fee cards with fewer reward programs

Secured credit card is a type of card loved by people with a poor and bad score or no credit history. It is also perfect for students who can afford to apply for a credit card because they fear higher interest rates.

  • Unsecured Credit Card

It is a type of card that doesn’t require you to pay any deposit. An unsecured credit card doesn’t provide much security to the lenders except for the excellent credit score and stable financial history. So, it is almost impossible for a normal user to get this card.

  • The bank only issues this card if the applicant’s history is excellent and absolutely risk-proof
  • You don’t need any amount for the account opening
  • Usually has a low-interest rate and monthly/annual fee
  • It offers high reward programs and insurance rates

You can also find rewards, gifts, travel, cash-back, and other types of cards, but that’s a discussion for another time. Let us know in the comments below if you want us to cover that.

Final Thoughts

Traditional, online, and mobile banking can be good or bad depending on the services you want to get. Of course, every banking type has its pros and cons, but some can be beneficial and convenient compared to others.

We have covered the similarities and differences of these banking types to understand each better. As a bonus, we also discussed the cards you can get that suit your lifestyle. So, give it a read to increase your financial literacy!

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