Why America Is Starting to Bank on the Net

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When Dennis Sullivan's bank slapped him with a $12 fee last year for dropping below a $3,000 minimum balance on a checking account, his first reaction was anger. His second reaction was to shop for a new bank.

Sullivan, a 38-year-old air-traffic controller from San Jose, Calif., dumped Wells Fargo & Co., his bank of 20 years, and signed up with Everbank, a new FDIC-insured bank that does business solely over the Internet and telephone. Thanks to low operating costs, the bank, based in St. Louis, Mo., pays 6.01 percent interest on checking accounts, versus 2 percent or less at most other banks. And if you keep a balance of at least $1,500, there are no service charges. Sullivan thinks his banking woes are over. "I'm real happy," he says.