Last week’s Money magazine ran a short feature on online banking, which seems to be the order of the day. Gone are the snaky queues at our neighborhood branch, often with a growling stomach yearning for a delayed lunch. This visual is still futuristic, but the day may not be that far away, with virtual banks sprouting up everywhere like wild mushrooms.

The money market yield of a brick-and-mortar bank averages a measly 0.5% nationally, which means the money parked in there loses its value at 2% a year (taking the CPI of 2.5% as the measure of inflation). By contrast, yields offered by the web-only banks often exceed 5%, outpacing inflation by a fair clip. Unburdened of the cost of maintaining an elaborate branching network, they can afford to give generous yield to their clients.

These banks are also trying to lure away customers from competitors by offering slightly better yields. Of course, it does not make much sense to jump from one bank to another every other day for a mere 0.1% difference. Unless you have lot (really lot!) of money riding on this, the gain of a few bucks cancels out in the process of transfer itself, which usually takes a few days to complete, and you do not get interest for those days.

Besides money market accounts, these banks offer vastly superior yields on their short-term CDs and interest checking accounts. The check writing privileges, often without any additional fees, is what really makes online banking that much more convenient. For those concerned with security issues, money invested in most Internet-only banks is FDIC insured for upto $100,000, same as any brick-and-mortar bank can offer.

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1. Leave some money in your local bank