8 Best Online Banks: The Future of Banking is Digital and Mobile
Until recently, the primary appeal of online banks has been higher interest rates than their main street counterparts. But as the sector has evolved, its service offerings have widened as well. Many of the banks on this list could cater to all your banking needs – usually with an easier interface than a traditional bank, and often with an innovative approach.
As such, there has never been a better time to switch to online banking. To get you started, here are our picks for the best online banks.
Read more: Neobanks – What Is It?
Our Top Pick: Axos Bank
Axos Bank tops our best online banks list because it’s the closest to a full-service online bank on the market. The APYs may not be the highest, but there are no fees – including full ATM reimbursement. And they offer the widest range of financial products, including loans and CDs. If you’re looking for a cheap, convenient, one-stop-financial shop online – Axos Bank is it.
Runner-up: Betterment Bank
Betterment may have a narrower service offering than Axos, but what it offers is innovation. Beyond fee-free banking, Betterment is innovating in the robo-adviser space, providing automated, goal-oriented investment advice – with the option of a human adviser for a fee. Fundamentally, Betterment offers a simpler, cost-effective way of navigating long-term savings.
Best Digital Bank For:
As is the case with most services, there’s really no one online bank that will be the best for all consumers. But we’ve identified each bank by a distinguishing characteristic or two that will make it attractive to anyone who may be particularly interested in that specific category.
Here are the categories in which we believe each online bank is the best in the industry:
- Best full-service online bank: Axos Bank
- Best for both full-service and high yields: Radius Bank
- Best online bank for non-savers: Chime
- Best financial and investment advice: Betterment
- Best for funds access and low fees: Discover Bank
- Best all-around: Ally Bank
- Best online bank with budgeting capabilities: SIMPLE
- Best for high dollar deposits: TIAA Bank
The Best Online Banks
After sifting through the dozens of online banks now available, we’ve come up with a list of eight of what we feel are the best online banks.
1. Axos Bank
Formerly known as Bank of Internet USA, Axos Bank offers a combination of low/no fees and rewards checking. It comes the closest to being a full-service bank.
Banking products offered:
- Six different checking accounts
- Rewards Checking, paying 1.25% APY on minimum balances of $1,000
- Cashback Checking provides 1% cashback on signature debit card transactions with an average daily balance of $1,500
- High Yield Savings, currently paying 1.30% APY with no monthly fees
- Money Market, currently paying 1.05% APY with no monthly fees
- CDs with competitive APYs
- Traditional and Roth IRAs
- Car loans, mortgages and personal loans
Special features and programs:
- No monthly fees
- Up to a $200 Bonus through 4/30
- No monthly maintenance fees
- No minimal balance requirements
- $250 minimum opening deposit
- Free incoming Wires
- Zero Minimum Balance Requirement
Disadvantages:
- There’s no minimum balance required for checking, but to get the high yield interest and the 1% cash back you do need to meet minimums of $1,000 and $1,500 respectively.
- 2% foreign transaction fee applies to both foreign purchases and ATM withdrawals
- Interest rates on CDs are far from the best among online banks
- It costs $4.95 per deposit to make cash deposits to your account at select retailers, but cash deposits are a weak spot for online banks in general.
- No credit card offered
Non-banking services available:
Axos Bank also offers the full range of business and commercial banking products, including checking and savings accounts, as well as various types of commercial financing.
2. Radius Bank
Based in Boston, Radius Bank operates almost entirely online and is available across the country. For more information, read our full Radius bank review.
Banking products offered:
- Radius Hybrid Checking pays 1.00% APY with a minimum $2,500 balance
- High Yield Savings account, currently paying 1.50% APY with a minimum $2,500 balance
- High Yield CDs
- Mortgages and personal loans
- Credit cards offered, but no detail provided
Special features and programs:
- Full-service online bank
- Unlimited ATM fee reimbursements
- No fees on checking and savings accounts
- $100 to open the checking account, then no minimum balance required balance
- This is one online bank where you CAN deposit cash. It can be deposited in an NYCE ATM
- The High Yield Savings account pays 2.05% APY on balances over $25,000
- CDs can be purchased for as little as $500
Disadvantages:
- No interest is paid on a checking balance below $2,500
- 0.05% APY paid on savings balances below $2,500
- There’s a $5 per day charge if your account has a negative balance for more than five days
Non-banking services available:
Offers business banking, including checking accounts, SBA loans, escrow services, and commercial financing.
3. Chime
Chime is an online bank that enables you to save money by moving change from regular purchase transactions into a connected savings account. In this way it works much like micro-savings apps like Acorns and Stash. Read further our extended Chime review.
Banking products offered:
- Chime Spending Account, which serves as the Chime checking account
- Savings Account
- Visa Debit Card
Special features and programs:
- No monthly fees
- No minimum account balance
- Send checks directly from the mobile app
- Make deposits at over 60,000 Green Dot Network locations
- Uses an Automatic Savings system, where Visa Debit Card charges are rounded up, with the difference going into savings
- No foreign transaction fees
- Free funds transfer with other Chime members using the mobile app
- 38,000 location ATM network
Disadvantages:
- Does not offer traditional bank services, like loans and credit cards
- No paper checks
- Not available for joint accounts
- Savings Account can only be accessed through the Spending Account
- The Chime Savings Account pays minimal interest
Non-banking services available:
None.
4. Betterment
Betterment is a smart online bank. Checking and savings accounts are entirely fee-free. But Betterment also provides automated robo-advice for investment and retirement planning. You define your goals, the algorithm looks after asset allocation, auto-deposits, and tax efficiency.
Banking products offered:
- Betterment Checking account with debit card
- Betterment Cash Reserve no-fee savings with variable interest against the Fed base rate currently 2.25% APY
- Investments, with automated asset allocation and tax savings
- IRA and 401(k)
Special features and programs:
- No monthly fees
- No overdraft fees
- All ATM fees reimbursed
- All foreign transaction fees reimbursed
- No minimum balances required
- Allocate savings to different pots
- Robo-advice and goal-based automation for investment and retirement
Disadvantages:
- No credit or loan services
- No CD options for higher yield on cash savings
Non-banking services available:
Beyond robo-advice, Betterment offers access to human financial advisers for a fee.
5. Discover Bank
Discover Bank is part of the Discover family, which is best known for having some of the best credit cards available. But the bank is one of the better online banks available.
Banking products offered:
- High Yield Savings
- High Yield CDs
- Cashback Discover Debit Card
- High Yield Money Market
- IRAs
Special features and programs:
- 1% cash back (on up to $3,000 in purchases) on certain debit card transactions
- No monthly account fees
- No minimum deposit on savings
- 60,000 location ATM network
- Mobile app with mobile check deposits
- Annual fee forgiveness, for insufficient funds or a stop payment
- Only one insufficient funds fee charge, regardless of the number of redeposits
- Customer support available 24/7
Disadvantages:
- Minimum of $2,500 needed to open a CD
- No auto loans or mortgages offered (though home equity loans are available)
Non-banking services available:
Access to the Discover it credit card series, which offer some of the most generous cash back plans in the industry. Discover also offers one of the better private student loan programs in the industry.
6. Ally Bank
Ally Bank is one of the best-known online banks, offering some of the highest interest on savings by any bank. It’s one of the online banks that comes closest to being a full-service bank.
Banking products offered:
- Interest bearing checking
- High interest savings accounts
- High interest money markets
- Traditional, Roth and SEP IRAs
- High Yield Certificates of Deposit (CDs)
- Home loans
- A cashback credit card with an introductory 0% APR and sign up bonus
Special features and programs:
- No minimum account balances required (except on CDs)
- No fees charged on any account types (except CD prepayment penalties)
- Some of the most innovative auto loan programs in the industry
- Leasing programs on used cars
- ATM network with 43,000 locations
- Transfer money via email or text to anyone with a bank account using Zelle
Disadvantages:
- Ally Bank does not accept cash deposits
- The Ally CashBack Credit Card charges a 3% foreign transaction fee
- Conventional home loans only; no FHA or VA mortgages
Non-banking services available:
You can invest through Ally Invest. There you can participate in either self-directed trading, or have your portfolio managed through their Ally Invest Managed Portfolios.
7. Current Bank
Current refers to itself as “The Bank For Modern Life.” And once you learn more about this online bank, there’s a good chance you’ll agree.
Current takes a different approach than many online banks, with a focus on providing a top-notch experience that matches the unique wants and needs of its customers.
Banking products offered:
Primarily a checking account only, with the following features:
- 24/7 member support
- Earn points on purchases and get cash back
- Free overdraft up to $100
- Get paid up to two days faster
- Visa debit card
- Mobile check deposit
Special features and programs:
- Free withdraws at a network of 55,000 ATMs
- No fees on regular bank activity
- Automated savings
- Teen banking features (such as the ability to set spending limits)
Disadvantages:
- No paper checks or checkbooks offered
- Using points is more complicated than it should be
- $2,000 daily spending limit and $500 daily ATM cash limit
Non-banking services available:
None.
8. TIAA Bank
Formerly EverBank, TIAA Bank, not only offers traditional banking products but also CDs tied to foreign currencies. You can even invest in precious metals with this bank.
Banking products offered:
- Interest bearing checking
- Savings
- High Yield CDs
- High Yield Money Market Account
- IRAs
- Mortgages
Special features and programs:
- High rates paid on checking, money market and CDs
- $5 monthly checking and savings fee is waived with account balance of just $25
- Can be funded with online transfers, paper checks, mobile deposits and wire transfers
- Reimbursement of ATM fees paid to other banks (TIAA Bank has no ATM network)
- A few branches are available in Florida
- Participates in the Certificate of Deposit Account Registry (CDARS) so you can invest in CDs in excess of the $250,000 FDIC insurance limit
- Yield Pledge Checking currently paying 1.21% APY for one year, but requires minimum $5,000 balance
- Interest rates paid on foreign currency CDs based on rates in the issuing country
- Gold, silver, platinum and palladium available in bars and coins
- 24/7 phone banking
Disadvantages:
- Interest on savings account is low for online banks
- Money Market and Yield Pledge Checking require minimum balances of $5,000
- ATM fee reimbursement requires minimum account balance of $5,000
Non-banking services available:
TIAA also offers brokerage services, including mutual funds and investment advisory services. They specialize in retirement planning.
Factors To Consider
In preparing this list of the best online banks, we became aware of a number of factors that need to be considered with online banks. Most of us are well acquainted with how banking works at our friendly neighborhood bank. But online banking is at least a little bit different from brick-and-mortar banking. For that reason, there are several factors to consider when looking at online banking, and in evaluating which bank you’re going to choose.
Some factors to be aware of include:
- Not all online banks pay high interest on savings products. While they generally pay much higher rates than local banks, there are wide variations between online banks.
- Most online banks are not full-service banks. You may want to use an online bank to maximize the interest you’re earning on savings, while keeping a checking account and bank relationship with your local bank.
- As you might expect, use of paper checks is rare with online banks. But then paper checks are becoming increasingly uncommon even with local banks. This is due to a large number of payment alternatives.
- Many online banks specialize in one or two particular products. A bank that has the highest rates on CDs may pay no interest at all on checking accounts.
- With most online banks, loan programs are limited. Some offer remortgages, some car loans, and some credit cards. But very few offer all loan types.
- Depositing cash is a general limitation with online banks.
- Naturally, you’ll have to get used to the absence of physical bank branches with online banks, though some do have branches, if only regionally.
- Most major financial institutions are getting into the online banking game. Your primary reason for choosing a particular online bank may have more to do with non-banking services, like investing.
Our Selection Methodology
There are now hundreds of online banks, with more joining the mix all the time. They range anywhere from terrible to outstanding. We’ve identified what we believe to be the eight most outstanding online banks, based on a number of factors.
It’s because of those factors that you’ll notice some of the higher ranking banks are not even close to being household names. That’s because they offer either a wide range of banking services, or they’re particularly strong in one or two areas.
Here are the criteria we used to determine the best online banks:
- The variety of banking products offered
- Interest rates being paid on savings products
- Fees charged based on accounts or on major banking services
- Ease of access to funds
- Special features and programs offered
- The fewest number of disadvantages in the bank’s programs or operations
- The availability of valuable non-banking services
In considering the overall ranking, we also evaluated the banks that were strong in several areas. It may be that while one bank was the best in one particular category, another was a close second or third.
Final Thoughts on the Best Online Banks
In going through this list of banks, focus on the ones that offer the services that are most important to you. If high yield savings are what you’re most interested in, you may not be very concerned with other services, like checking accounts or credit cards.
Also, with various financial services becoming increasingly connected, the availability of non-banking services may be the primary deciding factor. For example, if you have your investments with a certain company, like Ally Invest, you may want to have an online bank account through one of those companies for the convenience of having combined services.
Lastly, a convenient bonus – you’ll probably find that opening an account with an online bank is easier than opening one at a local bank branch.
**The annual percentage yield (“APY”) on the deposit balances in Betterment Cash Reserve (“Cash Reserve”) is 1.60% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the “Program Banks”) and is current as of August 01, 2022. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
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