Updated May 21, 2019

Best Online Bank: October 2019

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An online bank can save you money on fees and pay you higher interest rates. But not all online banks are good. Read on for the list of top banks.

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Online banks have a distinct advantage over your standard brick-and-mortar banks: lower costs.

Many banks pass the savings onto their customers by providing a higher APY and fewer fees.

Where is the Best Place to Open an Online Savings Account?

Best Interest RateCIT Bank
Best BonusDiscover Bank Bonus
Best Savings With ATM CardSynchrony Bank
Best Big BankHSBC Direct
Best Customer ServiceAlly Bank

What Is Online Banking?

Online banks don't maintain physical branches. You'll handle all your transactions over a computer, tablet or smartphone.

If you choose a bank with mobile capabilities, you can often deposit checks without physically providing the check to the bank. Keep in mind that you may have to wait a few extra days for your funds.

Online banks offer the same accounts and products as brick and mortar institutions, including:

Keep reading for a list of our top online banks.

Online banks are FDIC insured, just like as traditional banks.

How to Make Deposits and Withdrawals

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Online banks let you handle your business without leaving your home. But without the ability to drive up to your local bank branch, where do you make deposits and withdrawals? Keep reading for the answer.

Making Deposits

You can set up direct deposit just as you would with a local bank. Simply provide your HR Department with your bank's routing number and account number.

Your company then deposits your paycheck into the designated account. (Many companies allow you to split up deposits between accounts, 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 cash or checks in a local bank account (the one with a physical branch). You 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. 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 can 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.

Making Withdrawals

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

  • ATMs
    Some online banks have agreements with partner ATMs throughout the country. This may allow you to withdraw your funds without any fees.

  • Debit card
    Some online banks offer a linked debit card along with your checking, savings, or money market accounts. Use it to make purchases, just like a credit card.

  • 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 for a small fee). You can use them as you would with a checking account at a brick-and-mortar bank.

You need a checking account for day-to-day use. A savings account is not easily accessible, especially from online banks and if you need cash fast, then you're kind of out of luck. That is why you should have a checking account for purchases you need to make frequently. Keep the bulk of your money in a savings account where you are earning interest and then keep some money in your checking for the purchases you need to make. Michael Outar, founder, Savebly.com

What to Look for in an Online Bank

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Before choosing an online bank, make sure to compare features like:

  • High interest rates
    Online banks tend to offer higher APY but rates do vary.

  • Low fees
    Many online banks don't charge a monthly maintenance fee. Those that do can often be waived by meeting a monthly balance requirement.

  • Few restrictions regarding deposits and withdrawals
    Read the fine print to understand the bank's deposit and withdrawal policy. Pay special attention to any waiting period to access deposited funds or receive a withdrawal.

  • Reimbursement of ATM fees
    If a bank offers access to an ATM network, inquire about the fees you may incur and whether they will be reimbursed.

  • No monthly minimums
    Many online banks don't have a minimum account balance. 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're being asked to complete a lot of paperwork, consider choosing a different bank.

  • Accessible customer service
    Without the ability to walk into a local bank, you need superior customer service from your online bank. 24/7 customer service is ideal.

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

  • Strong security
    Conducting your banking online can put your money at risk. Most banks have superior security, including data encryption.

Best Online Banks

© CreditDonkey

We've compiled a list of the best banks for every need.

Best Online Bank for Savings Accounts

    High Yield Savings

    1.90% 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

Current Rates:

  • Savings: 1.90% APY. No monthly service fee and no minimum deposit. An ATM card is provided for easy withdrawal. Synchrony will refund ATM fees for other banks up to $5 per statement cycle
  • Money Market: 1.20% APY. No monthly service fee and no minimum deposit.
  • CD: 0.75% to 2.45% APY. Terms of 3 months to 5 years. Minimum deposit of $2,000 to open.

Best Online Bank for Checking Accounts

    Discover Bank
    Read ReviewVisit Site

    Discover Bank

    • High yield
    • Cashback checking
    • 24/7 customer service
    • No interest checking
    • $2,500 minimum deposit for CDs

    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 fees and no minimum balance requirements
  • 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

Current Rates:

  • Checking: Earn 1% cashback on up to $3,000 in debit card purchases each month. No fees and no minimum deposit.
  • Savings: 1.85% APY. No fees and no minimum deposit.

Best Online Bank for Small Business

    Axos Bank
    Read ReviewVisit Site

    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 Axos 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

Current Rates:

  • Savings: 1.30% APY. No minimum opening deposit. No monthly maintenance fee. Daily Compounding Interest.
  • Checking: Earn up to 1.25% APY if you meet 2 out of 3 conditions. 1. Monthly direct deposits totaling $1,000 or more 2. Use your Axos Visa┬« Debit Card for a total of 10 transactions per month (min $3 per transaction). 3. Use your Axos Visa┬« Debit Card 5 more times, a total of 15 transactions per month (min $3 per transaction).
  • CD: 0.55% - 2.25% APY. Terms of 3 months to 60 months. No maintenance fee. Minimum deposit of $1,000.
  • Money Market: 1.05% APY. No minimum balance requirements. No fees to open or maintain account.

Best Online Bank with a User-Friendly App

    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

Current Rates:

  • Checking: 0.20% APY under $50,000; 0.75% APY $50,000 or more; 1.00% APY $100,000 or more. No monthly service fee and no minimum deposit. Overdraft options prevent you from being charged when you accidentally overdraw
  • Savings: 1% APY. No monthly service fee and no minimum deposit.
  • Money Market: 0.85% APY up to $9,999.99; 1.90% APY $10,000 or more. No monthly service fee and no minimum deposit.

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.

    Current Rates:

    • Savings: 1.80% APY. No monthly service fee and no minimum deposit.
    • Checking: 0.10% APY under $15,000; 0.60% APY $15,000 or more. No monthly service fee and no minimum deposit. Ally will refund ATM fees for other banks up to $10 per statement cycle.
    • Money Market: 0.90% APY under $25,000; 1.00% APY $25,000 or more. No monthly service fee and no minimum deposit.
    • CD: 0.75% to 2.30% APY. Terms of 3 months to 5 years. 12-month CD APY of 2.25%. No minimum deposit to open.

  • 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.

    Current Rates:

    • Savings: Savings Builder up to 2.10% APY with $25,000 minimum balance or $100 monthly deposit. $100 minimum opening deposit.
    • Money Market: 1.85% APY. $100 minimum deposit. No monthly maintenance fee.
    • CD: Term CDs up to 2.10% APY. $1,000 minimum opening deposit. No monthly maintenance fee.

  • 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.

    Current Rates:

    • Checking: Yield Pledge Checking: 0.25% - 0.65% APY depending on balance. 1-year 1.01% intro APY on balances up to $250,000. Minimum deposit of $5,000. No monthly service fee.
    • Money Market: 1.00% - 1.80% APY depending on balance. 1-year 2.00% intro APY on balances up to $250,000. No monthly service fee. Minimum deposit of $5,000.
    • CD: Basic CD: 1.45% - 2.10% APY. Terms of 3 months to 5 years. Minimum deposit of $1,000. Yield Pledge CD: 1.70% - 2.35% Terms of 3 months to 5 years. Minimum deposit of $5,000. No monthly service fee.

Bottom Line

Online banking can be a great way to make more interest on your money while paying fewer fees. 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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