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What Are Virtual Wallets and How Do They Work?

by gbaf mag
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With the recent problems in the banking industry and the credit crunch experienced by most Americans, many consumers are wondering what is a virtual wallet. Many people, when they hear the word “virtual” have visions of pocketbooks stuffed with dollars and their need to jump into their favorite credit card or banking service provider’s ATM machine. While this image is not far from reality, the fact remains that a virtual wallet is much different than it used to be. In this article I will explore what is a virtual wallet and how you can use one to benefit your financial life.

A virtual wallet, also called a virtual checking account, is simply a bank account that does not require a balance. The Reserve account, which did not factor into ratings, is designed for emergency savings (as the bank calls the account an interest-only checking account.) Virtual Wallet Reserve, one of the basic checking accounts offered by most PNC banks, offers free online bill paying and free mobile banking. When you link your account to the Internet it looks like your normal checking account.

You do not have to have a balance in your traditional bank account to open these accounts. What you do need is to have access to an Internet connection. Most virtual wallets have a minimum balance requirement, usually ten thousand dollars, to open the non-banking version of their online spending accounts. If your checking and savings accounts are located within the same building, you can choose a Reserve Account with the same location. The account will appear as both a checking and savings account to your financial institution.

The benefits of having a digital “virtual wallet” are many. The most obvious is the ability to conduct all banking transactions without leaving home. You can conduct all financial activities in the comfort of your own home. This also eliminates the need for additional phone lines, such as your cellular phone or your land line. The ability to conduct all banking and electronic spending with a virtual wallet is ideal for people who are self-employed, home-based, or have a small business where they are responsible for their own banking.

A virtual wallet has a number of features that make it stand out from traditional banking. One of the first features is performance spend. With this feature, you set up how much money you want to set aside to spend throughout the year on specific financial services, such as travel, entertainment, and dining out. Once you have established this amount of money to spend, you can monitor what you are spending with your virtual wallet. You can compare your performance to spend to your financial limits to see if you are getting close to your performance spend target and if you are still over your limit.

Another feature available on virtual wallet accounts is auto-draw. With auto-draw you can configure how many times a month you want to automatically transfer your money to your bank accounts or your credit cards. The funds are automatically transferred without any action on your part. This feature helps you maintain healthy banking practices, because you do not have to do anything manually. These auto-draws are free, and you do not pay any virtual wallet fees, although you may be subject to sales and service charges when you use your card to make purchases at online merchants, and when you apply the credit to an account.

Some of the account types that include performance spend are no-load, monthly-fee, limited account, and direct-load. No-load virtual wallet funds do not need to be funded each month. Monthly fee and direct-load virtual wallet funds require you to pay a fee each month for both balance transfers and transactions. Limited account types also have no-load funds, but you do not have to pay any monthly fees.

Virtual wallets are beneficial for people who want to keep their finances organized but do not want to have to constantly manage their money. The convenience of using a virtual wallet saves users the time and effort required to open and manage several accounts. If you want to earn cash with your bank accounts, or if you want to make deposits or withdrawals quickly and conveniently, then consider investing in a virtual wallet.

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