The high interest rates touted by on-line banks are tantalizing, but many people are fearful of virtual banks. How do you make a deposit? Get cash? Or do all the other things that you do at your neighborhood bank? I asked Greg McBride, senior financial analyst at Bankrate.com, an on-line provider of financial information, to address these concerns. Here is what he told me…

Making deposits. Checks that can be electronically deposited directly into accounts at traditional banks, such as payroll checks, can be deposited directly into E-bank accounts.

Paper checks can be mailed in postage-paid envelopes supplied by the E-bank. As with any bank account, customers do not have access to the money until the bank has cleared the checks — so considering time in the mail, the process is likely to take slightly longer than depositing a check at a traditional bank. E-banks do not accept cash deposits.

Alternative: Deposit cash or checks in your account at a local bricks-and-mortar bank. Then transfer the funds electronically to a higher-interest E-bank account.

Getting cash. E-bank customers won’t have problems finding ATMs. All virtual banks own ATMs or belong to ATM networks. They let customers withdraw cash without fees or automatically reimburse customers for the ATM fees that other banks charge — although sometimes only up to a certain amount.

Customer service. Just like traditional banks, E-banks have toll-free phone numbers for customer service. However, people who frequently require special services — say, cashing checks rather than depositing them — may be better off using a bricks-and-mortar bank.

Security. Most ID theft occurs through such activities as stealing mail and trash, not electronic transactions. Greg emphasizes that any bank you use, virtual or not, should be insured by the Federal Deposit Insurance Corporation (FDIC). Call the FDIC’s toll-free number, 877-275-3342, to find out about specific banks — or check its Web site, www.fdic.gov (click on “Deposit Insurance”).

Interest rates. Greg says that the top annual percentage yield (APY) for a checking account at a traditional bank these days is only about 0.3%. The top APY for an E-bank’s checking account can exceed 4%. Per $1,000 of savings, that works out to earning about $3 versus $40 a year. As with any checking account, watch for fees that could erode returns.

E-banks also may have significantly lower minimum balance requirements for opening accounts and avoiding fees. Greg’s site, Bankrate.com, provides current yields on checking and savings accounts at traditional and Internet-based banks. All banks listed on the site are FDIC-insured.