*This post may contain affiliate links. As an Amazon Associate we earn from qualifying purchases.
image by pexels
The days when a bank used to be that prestigious institution with a branch located on High Street are gone now. Not only do online banks offer people the same security of deposits that ordinary brick and mortar banks do, they usually have less fees and normally give more generous interest rates compared to traditional banks. Also, bank accounts of many online banks come with a free debit card which usually offers owners access to a broad ATM network. We have compared popular online banks, and we discuss the best online banks this year.
Online Bank FAQ
1. What Is An Online Bank?
An online bank, also known as, online-only bank, virtual bank, or branchless bank is one which does not have branches, but its services are offered exclusively through online banking, telephone banking, mail, and a mobile app. The best online banks usually give customers access to ATMs – usually through interbank ATM networks
2. Are My Deposits In An Online Bank Safe?
Although there is always some risk associated with keeping your money in a bank, online banks usually don’t increase or reduce the risk compared to traditional banks. Deposits in most online banks are insured by the Federal Deposits Insurance Corporation (FDIC) just like deposits in brick and mortar banks. Also, the major online banks are owned by the same major players in the financial industry including Wells Fargo, Charles Schwab, Discover, and more
3. How Do I Deposit And Withdraw Money In An Online Bank?
Because they don’t have physical branches, online banks generally have fewer options when it comes to depositing and withdrawing. You generally need to have another U.S. bank account to deposit and withdraw in several online banks. You can also deposit and withdraw using a debit card through ATMs. Most online banks also allow customers to send and receive money through wire transfer, and ACH.
4. What Should I Look Out For In An Online Bank?
That depends on your objectives, but you should normally look out for more or less the same qualities you seek in a brick-and-mortar financial institution. Choose an online bank that offers great interest rates and low fees. It is especially important to consider the withdraw policy of the bank. Steer clear of banks which enforce a long waiting period before you can withdraw your funds. Also, endeavor to choose banks which give ATM cards.
5. How Can I Access Customer Care Services At An Online Bank?
You can not walk into the bank manager’s office to get clarification on your account details, but there are different ways you can contact a bank. Most online banks have 24/7 telephone hotlines for receiving complaints. You mail email or write the bank by postal mail.
How We Reviewed The Best Online Banks
image by pexels
We have reviewed the following banks based on APR interest rates, account maintenance fees, a variety of products, customer service, whether or not the bank issues a debit card, and whether or not the bank has a mobile app.
Overall Fee Range Of Online Banks
image by pexels
Fees at online Banks are generally lower than at traditional banks. Monthly fees for online checking and savings accounts range from 0 to $10. Most online bank savings accounts that have monthly fees waive these fees if you maintain your balance above a certain threshold. IRAs and MMAs for most online accounts don’t have charges unless your account falls below the minimum allowed deposit. Most online checking accounts are fee-free unless they are interest-checking accounts.
What We Reviewed
- Ally Bank
- 360 Checking by Capital One
- Incredible Bank
- CIT Bank
- Bank5 Connect High-Interest Checking
- Synchrony Bank
- Free USAA Classic Checking
- Discover Bank
- Charles Schwab Bank High-Yield Investor Checking
Ally Bank
Features
Ally has built up a reputation as one of the best online banks. The bank offers great interest rates and outstanding customer service. Ally Bank offers interest rates that customers of brick-and-mortar banks can only dream about. The bank’s checking account gives you access to over 43,000 ATM.
This bank has you covered if you occasionally use a bank outside their network and will reimburse a portion of the charges if you were charged at an ATM outside its network. Interest rates for checking accounts at this bank begin at 0.10 percent for these types of accounts.The only major problem with this bank is that depositing with cash is very hard. You generally have to use mobile check deposit, or set up a direct deposit or use a wire transfer, or you need to use a check mail
PROS
- No maintenance fees
- Gives you access to 43,000+ ATM nationwide
- Great interest rates
- 24/7 customer support
CONS
- Depositing is a headache
Best For
Fee-free savings and checking accounts
360 Checking by Capital One
Features
Capital One 360 is one of the best online banks when it comes to planning tools. The bank gives customers great analytical banking tools to help them manage their money. The bank has a mobile app and is also known for great customer service. Saving accounts and checking accounts by this bank don’t have monthly fees.
The bank has several overdraft options, but charges for some of them are high. Interest rates on checking accounts range between 0.02 – 1.0 percent depending on the balance on the account. The bank also has no opening balance requirement and gives you access to all 39,000 AllPoint ATM in addition to the ones run by Capital One.
PROS
- Low fees
- High-interest rates
- Great CD options
- Saving tracking goals
CONS
- High overdraft fees
Best For
Fee-free savings and checking accounts
Nationwide Bank
Features
Nationwide Bank offers some of the highest APY interest rates for its savings and checking accounts. The bank offer rates as high as 1.30 percent APY on its savings accounts. Like most other banks on our list of the best online banks, this bank’s checking accounts have no monthly fees. The bank does require a $$ minimum initial deposit and charges a $ monthly fee for the saving account.
You can, however, avoid this fee if you maintain an average daily balance of $$$ or a monthly direct deposit of at least $$. The bank allows two free ATM withdrawals at non-Nationwide Bank ATM per statement cycle. This bank’s card gives you access to over 77,000 surcharge-free ATM countrywide. The bank’s checking account also has high rates, and you can expect interest of 1.00-1.15 percent APC depending on your balance.
PROS
- Competitive interest rates
CONS
- Access to surcharge-free ATM-network
- Monthly service fee if you don’t meet their minimum balance requirement
Best For
People who want competitive interest for a savings account.
Incredible Bank
Features
Incredible Bank’s savings accounts yield about 1.21-1.55 percent APY depending on the balance on the account, and it offers a free checking account. The catch is that you need to deposit at least $$$ to open an account in this bank. The bank doesn’t charge monthly service fees, and you can do bank-to-bank transfers starting from 60 days after account opening. The checking account for this bank is fee-free, but you need a minimum deposit of $$$.
PROS
- Competitive interest rates
- No monthly fees
CONS
- Big minimum initial deposit
Best For
Customers who want to save $2,500 or more.
CIT Bank
Features
CIT Bank’s Premier High Yield Savings Account gives some of the best interest rates at the moment. This account yields at 2.15 percent APY! This bank is also suitable for people who want to invest in Certificates of Deposits because it offers pays at a rate of 2.20 percent APY for the 12-month CD. The bank does not require monthly minimum balances and has no monthly fees
PROS
- No monthly fees
- No monthly minimum deposits
- Great interest and CD rates
CONS
- Average customer support
Best For
Savings account and Certificate of Deposit account.
Bank5 Connect High-Interest Checking
Features
This bank offers accounts with no monthly fees and gives customers access to a big ATM network. The bank’s checking account yields at 0.76 percent APY, but you need to maintain your balance above $$$ to qualify for these rates. The bank’s saving accounts give you access to a 2.05 percent APY rate. This bank also offers CD investment accounts, available for 2-5 years. A minimum deposit of $$$ is needed.
PROS
- No monthly fees
- Gives you access to 7,200 surcharge-free ATM
- Reimburses up to $15 per month for fees outside the bank’
- CD investment account has a special rate of 2.70 percent APY for the 24-month term
CONS
- $1 monthly statement fee for a paper statement
- Saving account requires a $100 minimum balance to earn interest
- Low minimum deposit for CD account
- No 24/7 live customer support
- $15 overdraft fee
Best For
People looking for online checking and savings account with reasonable interest rates.
Synchrony Bank
Features
Synchrony is one of the best online banks that offer great savings account interest rate. The bank’s yield of 2.05 percent APY are some of the best in the market, and you don’t need a minimum initial deposit and minimum monthly deposit to qualify for interest.
Synchrony Bank doesn’t charge ATM fees at Plus and Accel ATMs. The bank reimburses up to $ on other bank’s ATM fees per month. The only area in which this bank is deficient is that it doesn’t offer checking accounts. Synchrony Certificate of Deposit accounts are even more impressive with the 5-year term yielding at 3.10 percent, but you need to deposit a minimum of $$$ for this account.
PROS
- One of the best online banks regarding savings interest rates
- No minimum deposit requirements
- No monthly minimum deposit is required to earn interest
CONS
- No checking account
- Poor customer service
- Inadequate website
Best For
People looking for a high-interest savings account with no minimum deposit
Free USAA Classic Checking
Features
The Free USAA Classic Checking account comes with a lot of perks: The account enables customers to make 10 free withdrawals at any of the 60,000 ATMs in its network. This bank, serving only active and former military personnel and their families, reimburses up to $$ per month for ATM fees for transactions done of non-USAA-preferred ATMs. Although this bank has a few branches, most people can only access its services online.
PROS
- Access to a huge network of surcharge-free ATMs
- No monthly fees
- No monthly balance requirements
- Money managing tools
CONS
- Membership is only for military personnel and their family members
Best For
Military personnel and their families looking for an online bank that offers competitive interest rates.
Discover Bank
Features
Discover Bank offers a number of products including checking accounts, savings accounts, MMAs, and CDs. The bank has competitive rates with CDs yielding at rates as high as 2.40 percent APY. The bank’s online savings accounts yield more than 1.30 percent APY and have no monthly fees or minimum deposit requirements. The bank also offers a checking account. That gives a 1-percent cashback if you purchase items worth $$$. The bank’s card gives you access to a network of 60,000 surcharge-free ATM.
PROS
- No monthly fees
- No minimum deposit requirements
- Access to a network of 60,000 ATMs
- 1 percent cash-back rewards for the checking account
- Opening account takes just 10 minutes
- 24/7 live help
CONS
- Big overdraft fees
Best For
People who make big purchases with their checking account and want to get cash back.
Charles Schwab Bank High-Yield Investor Checking
Features
This bank has some of the best ATM fee reimbursement programs of any online bank. The bank reimburses ATM fees whether you use a domestic or foreign ATM. The account also gives you access to an optional Charles Schwab brokerage account. The bank also has no monthly fees or minimum balance requirements.
Charles Schwab is one of the best online banks because it is among the few banks whose interest-checking account has no fees and minimum requirements. It is worth noting that this bank does a hard credit check when you apply for an account (this might affect your credit score). You can access about 10,000 surcharge-free ATM nationwide if you open an account with this bank
PROS
- Rebates at ATMs
- Good interest for a checking account
- Zero monthly fees
- No minimum balance requirements
- Free overdraft transfers between linked accounts
- Free stock trading account
- 24/7 customer support
CONS
- Credit check when you apply for an account
- Limited deposit options
Best For
People who do a lot of domestic and international ATM withdrawals or who want a stock trading account too.
The Verdict
image by pexels
We believe that Ally bank is the best online bank overall. We like the fact that this bank has no monthly maintenance fees or minimum balances. You can access your money at over 43,000 surcharge-free ATM, and their savings accounts have great rates of 2.00 percent APY. This bank has also set itself apart from the crowd by offering reliable 24/7 live customer support. People who are looking for the best online banks for high-interest rates savings accounts should consider opening an account with Synchrony Bank and CIT Bank.
