Are you tired of waiting in long lines, and dealing with too many fees and minimum requirements? Opening a checking account with an online bank could be your solution.
Today, almost every bank offers online banking options, but did you know that there are banks that solely operate online, with no actual branch locations? These banks offer most of the products you find at traditional banks- checking, savings, CDs and money market accounts. A few even offer mortgage products!
Without the overhead of physical locations, online banks can pass the savings to their customers, who will enjoy lower fees and added benefits, including protection from bank fraud. The APY will also be higher than traditional banks.
We break down our list of the best online banks - these are banks that typically deliver value in multiple areas, and no fees, and really easy to use products.
Note: The savings offers that appear on this site are from companies from which The College Investor receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The College Investor does not include all savings companies or all savings offers available in the marketplace.
Top 3 Picks For Online Banks
Here's our top 3 picks for online banks. If you're not using one of these banks, we strongly encourage you to check them out for your checking, savings, and banking needs.
1. Chime - Fee-Free And Top Mobile App
- Easy to use online mobile app
- Fee-Free Overdraft* with SpotMe
- Automatic savings program that currently pays 0.50% APY
2. Discover Cashback Debit
- No monthly Service Charges
- 1% Cashback on up to $3,000 in debit card purchases each month
- Nationwide network of ATMs
3. Axos Bank Rewards Checking - Free Checking With APY
- No monthly minimum, no overdraft fees, basically free free checking!
- Earn up to 1.25% APY on your money
- Unlimited ATM withdrawals via reimbursement
Specialty Banking Products
If you're looking for a specific banking product, we have lists of the top banks in those areas. These banks on this list focus on all-around banking products and service, but you might just have a need for a savings account, CD, or mortgage.
Here's our top picks in each category.
Why Select Online Banks Over Traditional Banks?
Many have no bank fees, and most offer reimbursement for other bank fees. Just make sure the bank is FDIC insured, usually $250,000 in coverage at traditional banks. Consumers love the convenience of doing their banking from anywhere with a few simple clicks.
Most online banks offer the same banking products that you can find at traditional banks. Most online banks include checking, savings, top rated CDs, and money market accounts.
Advantages Of Online Banks
Due to the nature of online banking, there are some distinct advantages that online banks can offer over traditional banks. Here are a few:
Disadvantages Of Online Banks
Of course, making the switch to online banking presents some challenges as well, although they are minor. Here are a few disadvantages of online banks:
Finding The Highest Yield
If your goal is only to have the highest yielding products, then check out this article of high yield savings accounts or this list:
The Best Online Banks
In addition to our top 3 listed above, we’ve put together a breakdown of some of our other best online banks. Make sure you check out each one based on your situation. Our favorites include Aspiration and USAA.
Ally is an award winning online bank that charges no ATM fees. Ally bank offers 0.50% APY on savings accounts, and a $10.00 reimbursement on ATM fees. For checking accounts, you can earn 0.10% APY on balances less than $15,000, and 0.60% APY on balances of over $15,000.
Check out our full Ally Bank review here.
American Express Bank
American Express Bank provides online banking customers with access to online savings accounts and CDs through the American Express Personal Savings online bank. There are no monthly fees or minimums associated with the online savings account. The account links with up to 3 of your current bank accounts, so there is no need to completely switch banks. Check out our full American Express Savings Bank review.
Aspiration is an innovative cash management account that gives you the potential for a solid APY, cash back rewards, and more. This account has no hidden fees, unlimited fee-free ATM withdrawals through a network of 55,000 ATMs, and extra cash back at certain eco-friendly merchants! Check out our full Aspiration review.
Axos Bank has their Essentials Checking account which is truly free! We love free checking, and this account has no minimums, no overdraft fees, and more!
Plus, they offer unlimited ATM reimbursements. Read our full Axos Bank review.
Bank 5 Connect
Bank 5 Connect has a rewards program where Bank 5 Connect debit cardholders earn rewards points for every $2 spent. Bank 5 Connect lets you write checks for free, and provides ATM reimbursements.
With a high interest rate of 0.76%, low minimum deposit requirements, and no monthly maintenance fees, Bank 5 Connect is a great choice with rewards to cash in for gift cards and other merchandise.
Based in the UK, Barclays offers clients in the U.S. access to online savings accounts and CDs. Online savings accounts through Barclays feature no minimum balances to open and no monthly maintenance fees.
Read our full Barclays Bank review.
Capital One 360
Capital One 360 was acquired and rebranded by Capital One. Formerly known as ING Direct, Capital One 360 offers online checking, savings, CDs, business savings, and children’s accounts, many with no minimum balance requirements or monthly fees.
In addition, Capital One 360 also offers brokerage accounts, IRAs, and mortgages. Read our full Capital One 360 review here.
Chase isn't a fully online bank, but they are one of the largest banks in the United States and they have a great online banking system.
You can use their banking services online and on their great app.
Check out our Chase review.
Charles Schwab is geared towards investors who travel frequently and hold accounts with high balances. With the High Yield Investor Checking Account, there are no fees for ATM use anywhere in the world.
There are also no foreign transaction fees, and ATM reimbursement for any international ATMs that have fees. The account offers a 0.15% APY and no minimums or monthly service fees. If you have a linked Schwab brokerage or savings account, there are no fees to cover overdrafts. Check out our Charles Schwab review.
Consumers Credit Union
The Consumers Credit Union is a credit union open to all members. It offers free checking and up to 4.5% APY if you meet certain conditions. In order to join, you just have to pay $5 for membership with their sponsor, the Consumers Cooperative Association. Now, you will be eligible for a free checking account.
To get unlimited ATM reimbursement and 3.09% APY on balances up to $10,000 you need to make at least 12 debit card purchases per month without using the 4 digit pin code, at least one direct deposit or online payment per month, log in at least once per month, and sign up for paperless statements.
If you open a Visa credit card with the Consumers Credit Union and spend at least $500 per month with the card, they kick your interest rate up to 3.5% APY on balances up to $15,000. If you spend at least $1,000 per month, enjoy 4.59% APY on balances up to $20,000. Yes, the requirements are extensive, but the APY is substantial. If you fail to meet the requirements, you only get 0.01% APY with no ATM reimbursement.
Discover Bank is one of the "oldest" online banks - one of the first to offer high yield savings accounts and more. However, most people only think of Discover for their credit cards.
In addition to offering competitive credit cards, Discover Bank offers savings, money market, CDs and IRAs. Online savings offers one of the highest APYs you'll find around.
Read our full Discover bank review here.
Fidelity Cash Management Account
Fidelity’s Cash Management Account is structured similar to a brokerage account rather than a regular checking account. With a 0.07% APY and no monthly fees or overdraft fees, you can rest assured that your savings are growing at a steady rate.
There is a $1,250,000 limit with no required minimum balance. There are no ATM fees, and ATM reimbursement is available for ATMs located in the US. Read our full Fidelity review here.
First National Bank of Omaha currently offers a competitive APY for its online savings account, with a minimum deposit of $500. Even more impressive, it offers an interest bearing checking account that currently pays 0.65% APY and an online savings account that pays 0.35% APY with minimum requirements.
Read our full FNBO Direct review here.
Marcus by Goldman Sachs
Marcus by Goldman Sachs has great online banking options. They specialize in high yield savings accounts and high yield CDs. However, they are continuing to diversify their product offering and offer great choices for users.
They are lacking some features, like mobile check deposit, but they do make up for it with generous online transfer amounts and more. Check out our Marcus by Goldman Sachs review.
LendingClub Bank caught our attention earlier this year with their Hybrid Checking account, which is like the best of checking and savings accounts combined. They are one of the few banks on this list that offer interest bearing checking, but with some really low minimums to earn interest.
Also, they have a great mobile platform that has mobile deposits and more. Plus, no monthly fees, which is what we like to see. They also have some innovative small business checking options as well.
Read our full LendingClub Bank review here.
MemoryBank will give you up to 1.5% APY for the first year on balances up to $250,000 for the first year as long as you meet the following conditions: receive at least one electronic deposit every month, payroll deposited into the account, and select the paperless statement option.
If you have a large balance and want to find the best liquid account, MemoryBank has a good offer. You need at least $50 to open the account. You will get access to AllPoint ATMs.
TIAA Bank (formerly Everbank) is a great online bank because they guarantee that their rates will always be in the top 5% of all rates. Right now their rate is 0.40% APY.
They also offer a great first year introductory APY on your checking account, on balances up to $250,000. They also reimburse ATM fees as long as you keep at least $5,000 in your account.
Read our full TIAA Bank review here.
Synchrony is widely recognized as one of the best banks around, and they have the best interest rates. Account holders enjoy a 0.50% APY, no minimum deposit or balance, and no fees or service charges.
Synchrony also rewards member loyalty with travel rewards such as car rentals, and hotels. Loyal customers can also take advantage of perks such as ATM fee reimbursements, travel rewards, and discounts on theme parks, car rentals, and hotels.
Read our full Synchrony Bank review.
USAA Federal Savings Bank
USAA is a unique bank in that it limits it's membership to current and former service members, as well as their families. However, if you can become a member, USAA is hands down our favorite online bank.
They offer free checking, decent yields on their savings accounts, and a variety of perks that every online bank should offer. These include free checks, ATM fee refunds, mobile check deposit, and more. You can read our full USAA Bank review here.
The Bottom Line: It Comes Down To Your Priorities
We have established that most of the accounts offer a higher APY than traditional banks. If a high APY is your top priority, Bank 5, Bank of the Internet, Consumer Credit Union, and TIAA Bank are some of our top picks. If you want an account that offers rewards and perks, Synchrony is your best bet.
You should compare these online banks with the best credit unions here.
For higher returns on higher balances, Charles Schwab may be your first choice. Whatever you decide, base your decision on how much you can afford to put into the account, and how you plan to use the account.
Have you opened a checking or savings account with an online bank?Do you enjoy the benefits of an online bank over a traditional bank? Tell us in the comments section below!
* Chime SpotMe is an optional, no fee service that requires $500 in qualifying direct deposits to the Chime Spending Account each month. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases initially, but may be later eligible for a higher limit of up to $100 or more based on member's Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime's discretion. SpotMe won't cover non-debit card purchases, including ATM withdrawals, ACH transfers, Pay Friends transfers, or Chime Checkbook transactions.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.