VirtualBank is a totally online banking account which handles mortgages, CD’s, Money Market, and of course, online savings. They no longer offer online checking. Unfortunately, there really is not too much to recommend when it comes to online savings with this bank at this time.

To apply, you will need to do the normal when it comes to opening an online account, need driver’s license, social, date of birth, but they also ask for employer and employer address. They also do not allow cell phones as their phone numbers. Hmmmm, wonder what that means as many consumers no longer have home phones having opted for cell phone use only.

They do offer you an ATM card. They also have your own personal banker when you call. Initial deposits can be mailed or transferred from your linked funding bank. You can directly deposit to your savings account regularly via your linked bank or by direct deposit from payroll or pension or by check.

To retrieve your money out of the account, you can withdraw from any ATM – with a VirtualBank ATM card – or request cash back from a POS sale. It is FDIC secured for individual. VirtualBank does not offer business accounts at this time and you need to be a U.S. citizen or resident alien with a valid social security card to open an account.

They market their savings account as a good starter account for children, not great, just good. Their website also goes on to tell you that there is no minimum balance or monthly service charge for children.

Well, I’m an adult and as of September 2008, 1.34% is not enough to get me to move my children’s account here. Also, not too pleased with the $1000 minimum balance I would need to begin the account. As you read the disclosures, there are some other issues. You can only make six transfers from your account each four week period, either by automatic withdrawal back to your funding checking account, telephone agreement, order, or instruction. However, only three per month can be made by check, draft, debit card, or similar (like POS transactions). If you do not keep $1000 in your account you will be charged a fee of $10 a month. If you close out within the first ninety (90) days you will be charged $50.

If you want the 3% rate with VirtualBank, you will need to get a Premium Money Market account with a minimum deposit of $5,000 and have a balance of $95,000. That’s a bit steep for me.

However, playing the devil’s advocate here, VirtualBank did have a good service and rate record up to 2007. Their customer service was unsurpassed at that time. It appears they invested too much into their mortgages, had some ARM problems, and because of that they seemed to have lost customers and have had a suit against them in California regarding not disclosing terms when it comes to ARM loans.

All in all, currently I would stay away from VirtualBank until they straighten out their issues and get their online savings account on track with some of the other online banks out there.