February 4, 2019

Best Online Bank: March 2019

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An online bank can save you money on fees and pay you higher interest rates. Does it sound too good to be true? It might not be.

Online banks have a distinct advantage over your standard brick-and-mortar banks: they don't have excessive costs. Many banks pass that savings on to the customers by providing a higher APY and fewer fees.

What Is Online Banking?

As the name suggests, online banking is done strictly online. Many of the banks offering this service do not have physical locations. If you choose this method of banking, you have to be comfortable conducting your business online in order for it to work.

Luckily, if you choose the right online bank, you don't have to worry about the security of your funds. They have the same FDIC protection that your funds at a traditional bank have. You'll likely even have your choice of typical bank products, such as:

If you choose a bank with mobile capabilities, you may even deposit your checks without physically providing the check to the bank. Keep in mind, though, that you may have to wait a few extra days for your funds. This is seen as a downside by some people.

Keep reading to learn our top picks for online banks offering the most common banking products today.

How to Make Deposits and Withdrawals from Online Banks

The most concerning factor regarding an online bank is often how to have access to your money. Without the ability to drive up to your local bank branch, where do you make deposits and withdrawals?

Making Deposits

Getting your money into your bank account is easy with online banking. If you are talking about getting your paycheck into your online bank account, set up direct deposit. This works the same as it would at your local bank. You provide your HR Department with your bank's routing number and account number. Your company then deposits all or part of your check into the designated account. Many companies allow you to split up the deposits based on your preferences, too.

If you don't have direct deposit or you have other funds you want deposited in your online bank, you have a few options:

  • Make a deposit at your local branch: This requires an extra step, but you can deposit your cash or checks in the account at your local bank (the one with a physical branch). You can then initiate an electronic bank transfer to send the funds to your online bank. Make sure to allow for the extra time this takes (sometimes up to three business days).

  • Use the mobile deposit feature: Some online banks offer mobile deposits. You take a picture of both sides of the check via the bank's app and the money is deposited. You'll have to check with your online bank to see if they offer this feature, though. If you have cash rather than a check, you can buy a money order (for $1 or $2), and then use the above method for the mobile deposit.

Watch Your Transfers: According to Regulation D, you may only make up to six outgoing transfers from your savings account or money market per month. If you exceed the limit, you may pay penalty fees as a result.

Making Withdrawals

Gaining access to your money is somewhat easier with an online bank than making deposits. Most banks offer:

  • Use of the ATM: Some online banks have agreements with partner ATMs throughout the country. This may allow you to withdraw your funds without any fees. It's important to read the fine print of your agreement with the bank to determine which ATMs you can use and what (if any) limits may exist.

  • Use of a debit card: Some online banks offer a linked debit card along with your checking, savings, or money market accounts. You can use the debit card to make purchases, just like a credit card. However, you should know the daily purchase limits before using it.

  • Electronic transfer: You can transfer your funds to your local checking or savings account for immediate withdrawal if you choose. You'll have to allow a few days for the transaction to process, though.

  • Checks: Online checking accounts include checks (either free or paid for). You can then use the checks as you would with any other checking account at a brick-and-mortar bank.

What to Look for in an Online Bank

Online banks aren't a one-size-fits-all approach. Each bank has strengths and weaknesses. Don't assume the bank you choose has ATM access, a mobile app, or stellar customer service. Shopping around and looking for the following features will give you the best results.

  • High interest rates: You are likely looking into an online bank to obtain the higher interest rates. There are many options to choose from, so make sure you shop around.

  • Low fees: Many online banks don't charge any monthly maintenance fees. If they do, they're often minimal and can be waived if you meet their minimum monthly balance requirements.

  • Few restrictions regarding deposits and withdrawals: Make sure you read the fine print to understand the bank's deposit and withdrawal policy. Of utmost concern should be the waiting period to access deposited funds or the time it takes to receive a withdrawal.

  • Use of ATMs: Be sure to ask any banks you consider about their network of ATMs. Some banks partner with other banks while some banks don't have any network ATMs that you can use.

  • Reimbursement of ATM fees: If a bank does offer use of the ATM, inquire about the fees you may incur and whether they will be reimbursed. Some banks reimburse all ATM fees, while others reimburse only a specific amount each month.

  • No monthly minimums: Many online banks don't have a minimum account balance you must meet. This eliminates the risk of paying hefty monthly maintenance fees.

  • Simple account opening: Opening an account online should only take a matter of minutes. If you hear there are numerous forms you must complete and obstacles you must jump, consider finding another online bank, as they are a dime a dozen.

  • Accessible customer service: Without the ability to walk into a local bank and talk to a teller, you need superior customer service from your online bank. Not only should you concern yourself with their level of customer service, but also the hours you can contact them. 24/7 customer service is ideal.

  • FDIC insurance: This almost goes without saying: you want your money protected should anything happen to the online bank.

  • Strong security: Conducting your banking online puts your money at a whole new risk level. However, most banks have superior security, including data encryption.

Best Online Banks

There's a lot to look at when choosing the best online bank for your money. Here we've compiled the best banks for various purposes to help make your decision making easier.

Best Online Bank for Savings Accounts

    Synchrony Bank

    High Yield Savings

    2.25% APY. $0 minimum opening deposit. No minimum balance requirement. No fees to open or maintain account.
    • Great Rates + Safety = Peace of Mind
    • Member FDIC

If you don't need access to your money often and just need a place to park it while earning a decent interest rate, Synchrony Bank is a great choice. They offer a high yield APY along with several benefits you don't often see with savings accounts, including:

  • High interest rates compared to the average available today
  • No charge for overdrafts
  • No monthly minimums or fees
  • Use of an ATM card with reimbursement for ATM fees
  • Multiple ways to contact customer service (phone, online chat, and email)
  • FDIC insured

Best Online Bank for Checking Accounts

    Discover Bank
    Read Review

    Discover Bank

    • 1% cashback checking
    • High APYs
    • 24/7 customer service
    • No interest checking
    • $2,500 minimum deposit for CDs
    • Overdraft fees

    Our Review: (4.8) Discover offers high interest rates on its online savings and CD accounts. But there are downsides. Here's what you need to know before you open an account... Read full review

If you need more frequent access to your money, an online checking account may be a better choice. We like Discover checking because of the various benefits they offer aside from a higher interest rate, including:

  • Cash back incentive for purchases made with a debit card
  • No minimum balance requirements or monthly fees
  • More than 60,000 ATMs available for use with no fee throughout the US
  • Free checks
  • Free online bill pay services
  • 24/7 customer support
  • Mobile check deposit

Best Online Bank for CDs


    Online CDs

    Up to 3.10% APY. No minimum balance, no account open fees, no maintenance fees

If you want to earn a little more interest on your savings, consider putting the money in a CD. Online banks generally have lower minimum deposits for opening the account and higher interest rates. We think Barclays offers the best choices when it comes to CDs at an online bank. They offer the following benefits:

  • No minimum balance to open a CD
  • No hidden monthly fees
  • Varying terms to choose from, starting at 3 months all the way through 60 months
  • Your money is FDIC insured

Best Online Bank for Small Business

    Axos Bank
    Read Review

    Axos Bank

    If the perfect checking account for you is one with no monthly fees while offering rewards, you may have found your match with Axos Bank... Read full review

Small businesses trying to keep their fees in check often benefit from online banks. With lower minimum deposit requirements and fewer fees, the accounts can be more affordable. We chose BofI as the best online bank for small business for the following reasons:

  • Minimal $1,000 minimum required to open a basic checking account
  • No monthly fees
  • Large ATM network worldwide
  • Mobile deposit
  • First 200 transactions (debits and credits) are free; afterwards, each transaction is $0.30

Best Online Bank with a User-Friendly App

    Capital One
    Read Review

    Capital One

    • Overdraft protection options
    • No account minimums
    • 27 Capital One cafes for in-person support
    • Lower savings APY compared to other online banks

    Our Review: (4.3) Capital One 360 checking and savings accounts are free to open and offer higher-than-average APY rates. Does this popular web bank live up to its claims? Find out if it's right for you... Read full review

Online banking relies on technology. Without a quality app, it can be hard to get immediate access to your funds or even deposit funds into your account. Capital One 360 does a great job of providing a top-of-the-line app for its customers. We also like this bank for the following reasons:

  • Transfer and deposit funds on the Capital One 360 app
  • Receive instant alerts if your account is in danger of overdraft
  • No fees charged on any deposit accounts
  • No minimum balance required to open any of their deposit accounts, including checking, savings,
  • CDs, and money market accounts
  • Incorporate Zelle with your mobile app to transfer money to friends and family

Other Online Banks to Consider

  • Ally Bank: If your primary need is a checking account, Ally offers the same interest rate on any checking account balance (no tiered systems or minimum balance required). They also provide you with free use of any ATM in the US.

  • CIT Bank: This online bank offers the features we prefer, including no maintenance fees and a user-friendly app. As an added perk, CIT Bank offer free outgoing wire transfers, which can save you as much as $30 per transfer, if this is a feature you would use.

  • TIAA Bank: You may pay a few more fees with TIAA Bank, but they offer decent APYs for a bank that only requires a low monthly balance. TIAA does require a minimum $1,000 opening balance for its CDs, though.

Bottom Line

Online banking can be a great way to make a little more interest on your money while paying fewer fees. It sounds like a win-win situation for anyone. Before you settle on just any online bank, though, read the fine print. Sometimes the terms can be too good to be true. Do your due diligence and find the bank that suits your needs while giving you the best return on your investment.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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