The 6 Best Online Banks for April 2024

Company APY ATMs Types of Accounts
Ally Bank Best Overall 4.25% for savings, 0.10-0.25% for checking No fees at 43,000 Allpoint ATMs, and up to $10 reimbursed per statement cycle for fees incurred at other ATMs Checking, Savings, CDs, Money Market, Investing, Retirement
Synchrony Bank Best for Savings 4.75% for savings, no checking  Free access at any ATM displaying the Plus or Accel logos, both in the U.S. and abroad. For fees incurred at other ATMs, up to $5 reimbursed per statement cycle. Savings, Money Market, CDs, Retirement, Credit Cards 
Capital One Best for College Students 2.50% youth for savings, 0.10% for checking  No fees at 70,000 Capital One, MoneyPass, and Allpoint ATMs Checking, Savings, CDs, Credit Cards 
Discover Best for Checking 0% for checking (1% cash-back), 4.25% for savings  No fees at 60,000 Allpoint and MoneyPass ATMs Checking, Savings, CDs, Money Market, Retirement, Credit Cards 
Charles Schwab Best for Travelers 0.48% for savings, 0.45% for checking  Unlimited fee reimbursements for any ATM worldwide Checking, Savings, CDs, Investing, Retirement 
Axos Bank Best for Couples Up to 0.61% for savings, up to 3.30% for checking  Axos does not charge any ATM fees, and it will reimburse all domestic ATM fees imposed by other banks. Checking, Savings, CDs, Money Market, Investing 

In the News

Savings and CD interest rates reached higher in 2023 than we’d seen in more than 20 years, pushed up by the Federal Reserve’s rate-hike campaign that began in March 2022 to tame decades-high inflation. For its last four meetings, however, the Fed has held the federal funds rate steady, and signaled on Jan. 31 that the committee’s rate-hike cycle has almost certainly ended. While most Fed members expect two to four rate decreases will occur in 2024, the Fed has cautioned that it could be some time before the first cut is implemented.

Deposit account rates closely follow the fed funds rate, so the central bank’s holding pattern has caused the best high-yield savings account rates rates to plateau and the best CD rates to start softening. But once it appears the Fed is ready to make a rate cut, savings and CD rates are expected to begin falling more substantially.


What is Online Banking and How Does it Work?

Online banking simply refers to using a mobile app or desktop computer to access your account and conduct transactions. Since online banks don’t operate physical branches, internet banking is often the only way customers can interact with their bank.

When you open a new account, you’ll be prodded to set up a username and a password, allowing you, and only you, to securely enter the bank’s online customer site. You’ll then be able to use those login credentials to access online banking service anytime you want, such as to check a balance, download a statement, transfer funds, or set up bill payment.


What Are the Pros and Cons of Online Banks?

Online banks offer both benefits and drawbacks, just like any other type of financial institution. Below are some of the top pros and cons to consider when comparing online banks to other banks and credit unions.

Pros

  • Tend to offer higher interest rates

  • Usually charge fewer and lower fees

  • Often provide a good online interface

Cons

  • No way to visit the bank in person

  • May provide a more limited menu of products and services

  • Depositing cash may not be possible


Online Banks vs. Traditional Banks

Traditional banks operate brick-and-mortar locations, giving customers the option to visit a branch to conduct their banking business in person. The biggest of these—like Chase, Bank of America, Wells Fargo, Citi, and U.S. Bank—staff and maintain hundreds of physical branches in multiple states.

Online banks, in contrast, operate primarily, or even exclusively, online. While a rare few may have some branch locations, the vast majority offer no physical branches at all, making it possible to do all of your banking without going to a bank at all.

Because online banks don’t have the overhead costs of operating, maintaining, and staffing brick-and-mortar locations, online banks tend to charge fewer and lower fees (the best online banks charge no fees). They also often offer higher interest rates on your savings. That said, you won’t always get the whole suite of financial services—such as mortgages, personal loans, and retirement—that you can find at traditional banks.

As you can see, for those wanting a very traditional, full-service experience from a bank, including the ability to walk in and deposit cash, a traditional bank may offer the right fit. But for those looking to maximize their financial resources by earning more on the savings and reducing what they pay in bank fees, online banks offer a strong advantage.

“I was an early adopter of online banking, opening my first internet bank account more than 20 years ago. My husband and I were saving for a house at that time, and I saw the opportunity to earn a much higher rate on my savings with the online banking options than I could get from our local banks. In all the years since, we’ve always had at least one online bank account, and often more than one. A pro tip for making this work well is to always have one local banking relationship as well. We have a long-standing account at a credit union in my city, so that if I need to deposit cash or withdraw a large amount of cash, I always have an option to handle that transaction in person.” – Sabrina Karl, Staff Writer, Investopedia Financial Products & Services


How To Choose an Online Bank

Choosing the best online bank is all about finding the right features for your needs. Here are some considerations:

  • Rates: A smart strategy for finding the best checking account, savings account, or CD is to start with those offering the highest interest rates possible, enabling you to make the most out of your money. Opt for banks that offer a high annual percentage yield (APY) compared to competitors.
  • Monthly fees: Monthly maintenance fees are the most common, and they add up quickly. Now that there are so many free bank accounts, there’s no reason to go with one that charges a monthly fee.
  • ATM fees: If you’re getting an account that comes with an ATM card, make sure it doesn’t charge ATM fees. You might still see ATM fees charged by other institutions when using out-of-network ATMs, but the best online banks now offer ATM fee rebates as well.
  • Other fees: Overdraft fees and foreign transaction fees are two other big ones to avoid. Several of the best online banks don’t charge overdraft fees. You can also find checking accounts with no foreign transaction fees, which is important if you travel internationally. Be sure to read the terms and conditions.
  • Minimum balance requirements: Some bank accounts require a minimum monthly balance to keep your account open, while others require one to avoid fees. The best online banks have no minimum balance requirements—that way, you never have to worry about keeping your balance at a certain number.
  • Early paycheck deposit: Some banks offer the ability to access your paycheck up to two days early. So instead of waiting until payday to use your money, banks with this customer-friendly feature make those funds available much sooner. In addition to paychecks, it may also apply to other regular and recurring deposits, such as monthly social security payments.
  • Bill pay: If you want to pay bills directly from your online account, look for accounts that offer a bill pay service. Also notice if it will let you pay as many bills as you want each month, or if there is a cap to its bill pay service.
  • Mobile access: Assuming you want to be able to interact with your account via mobile device, check that the bank you’re considering offers a full-service app. Not only will you want to be able to check account balances, but you may want full mobile banking services that allow you to set up transfers and pay bills.
  • Types of accounts: If you want to do all your banking in one spot, you need a bank that offers it all. While it can be a little less convenient, holding different accounts at different online banks can help you get the best deals. For example, you could open a checking account with the best online bank for checking, but keep some money in a savings account at another bank that offers a higher APY.

Online banks are just as safe as physical banks, as long as you make sure you’re dealing with an FDIC-insured institution. According to the Federal Deposit Insurance Corporation, “if your FDIC-insured bank fails, the FDIC will protect you against the loss of your insured deposits whether the bank is brick and mortar or online-only.”

FDIC-member banks will always have the FDIC logo or the words “Member FDIC” on their website. But to be absolutely certain, the FDIC recommends entering the bank name into the FDIC BankFind tool, which provides details on every FDIC-insured bank.


How to Open an Online Bank Account

One of the notable advantages of online banks is that they are generally easy to interact with from the comfort of your home. Even getting started with a new account can be done via your computer or smartphone. Here are the basic steps:

  1. Visit the bank’s website – Visit the bank’s website and locate a button or link that says “Open an Account” or “Apply Now”.
  2. Complete your application – Follow the online instructions to provide your personal information—such as physical address, social security number, email address, mobile phone number, and so forth.
  3. Indicate the account(s) you want – You’ll then need to answer some questions about the account(s) you want to open, and the features you want (such was whether or not you’d like a debit card).
  4. Prove your identity – You’ll also be presented with a set of questions used to determine if you are who you say you are, and may additionally be prompted to verify your phone number with a code sent to you via text message.
  5. Put money in the account – Once the application is completed, the last step is usually to fund the account. Sometimes a minimum initial deposit is required, other times it is not. If you opt to fund the account at the time of account opening, you’re usually offered the option of transferring funds from another bank account via ACH. Only some institutions will allow you to make the initial deposit with a debit or credit card.

When your application process is complete, you may be provided with your new account number and be able to interact with your account right away. Or you may need to wait a day or two to receive confirmation that the account has been opened and how to establish your online banking credentials.


Alternatives to Online Banks

An online bank can be a solid choice for many people—either as a primary banking option or as a supplement to their primary checking or savings account. But if you’re unsure whether online banks are right for you, here are a few alternatives to consider. 

  • Traditional banks: Large banks sometimes have a negative reputation for a lack of individualized customer support, high fees, and lower interest rates on deposit accounts. But big national banks can offer benefits to their customers as well, such as a broad network of branch and ATM availability, top-of-the-line digital banking apps and tools, a larger offering of financial services, and even generous bank account bonuses for new customers. 
  • Credit unions: Credit unions often offer their members higher annual percentage yields (APYs), lower fees, and superior customer service compared to traditional banks. Yet these member-owned financial institutions may still offer in-person banking solutions for people seeking this type of financial service. And, if you choose one insured by the National Credit Union Administration (NCUA), your deposits are federally protected in the same way that bank coverage is provided by the FDIC.
  • Community banks: If you’re looking for a smaller bank that doesn’t have membership requirements like a credit union, a community bank might be a good fit for you. Community banks tend to offer more personalized customer service and may have more competitive interest rates. However, branch availability tends to be more limited than larger national banks. 
  • Reloadable prepaid cards: A prepaid debit card is an alternative that some people may consider instead of online banks or other types of financial institutions. You can open this type of account even if you’re unable to open a traditional bank account due to ChexSystems challenges or other issues. Some prepaid cards may offer direct deposit capabilities, ATM access, cash management services, and more. Yet these types of cards may also feature significant drawbacks in the form of high fees, no credit-building potential, and no rewards-earning capability.


Why You Should Trust Investopedia Reviewers

Investopedia collected more than a dozen key data points on each online bank we considered to identify the most important factors for readers choosing an internet banking partner. We used data on fees, rates, account features, and minimum balances to review each bank and provide unbiased, comprehensive reviews so readers can make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best online banks since 2021.

Frequently Asked Questions

  • Online banks are well suited to anyone who wants to earn a higher interest rate on their savings, as online banks often pay much more competitive APYs on savings, money market, and certificate of deposit (CD) accounts. They are also a good fit for those who are very comfortable with online and mobile banking applications, and who seldom need in-branch services.

    Still, an online bank works best when it complements at least one other account held at a local bank or credit union. That’s because you may find you occasionally need in-person service, such as depositing cash. So while an online bank can be a great primary banking option for almost anyone, it can help to also have access to a local institution that operates branches in your community.

  • The answer to this question depends largely on you. Online banks can provide a wide variety of banking services, and many customers will find all of their needs met by these online services. But if you are someone who often needs to deposit cash, you may find that having an account at a physical bank in your community is necessary. Though some online banks will let you deposit cash via an ATM, many do not. If you find you’re accumulating too much cash at home and want to deposit it in a bank account, a local bank branch will be useful to you.

    This doesn’t mean you can’t use an online bank for most of your banking, however. In fact, the perfect solution for many people is to use an online bank as their primary institution, but have a free checking or savings account open at a local bank. This way you can still take advantage of the benefits that online banks offer, but when you occasionally need to visit a branch to deal with cash, you can do that locally. You can then make any transfers between to the two institutions online.

  • Online banks often outperform traditional banks in terms of the APYs they offer customers. Yet the interest rates they (and other financial institutions) extend to their customers are typically variable and may change on a frequent basis. 

    Some of our top picks with high savings interest rates include Ally Bank, Synchrony Bank, Capital One, and Discover; Axos Bank has competitive rates for online checking accounts. If you’re shopping for a new savings account, you can always find the top nationwide rates in our daily ranking of the best high-yield savings accounts.

  • Yes, the FDIC does insure online banks, in the exact same way it insures deposits at brick-and-mortar banks. Should an FDIC bank of any kind fail, your deposits up to $250,000 per person and per institution are federally covered.

    In terms of being a trustworthy place for your funds, there is no discernible difference among the banks in our ranking since they are all FDIC-member banks and therefore carry the same federal protections as any other FDIC bank. Just look for the words “Member FDIC” or the FDIC logo on the bank’s website.

  • The best online banking apps are user-friendly and make it easy to manage your money and take advantage of the features of your bank account (e.g., mobile check deposits, funds transfer, bill payment, etc.). Some banking apps (like Ally Bank’s) even offer helpful budgeting options that allow you to set and work toward multiple savings goals within a single account. 

    Stand-alone budgeting apps may provide more control over your money, especially if you use multiple bank accounts and credit cards. It’s important to organize your finances and create a plan for your money to avoid overspending; this will help you achieve the financial goals that are most important to you.

  • Ally Bank is the largest U.S. bank by assets that is an online-only operation. As of March 31, 2023, Ally ranked 20th in size among more than 4,600 FDIC banks, with more than $185 million in assets. Ally was founded in 2004.

  • Generally speaking, online banks have fewer fees than physical banks, with many of them being free for customers. Part of the reason is that institutions that don’t have to pay for and maintain brick-and-mortar branches have more funds available for other things. One way online banks often deploy these funds is to give their customers a positive experience, which includes as few fees as possible.

    As you can see in our reviews above, these six winning banks are all fee-free in terms of monthly maintenance fees. So choosing the best option for you will depend on how you value other differentiating factors.

  • The most common way to both deposit and withdraw funds from an online bank account is via external transfers to or from another bank. Your online bank account will allow you to set up one or more outside institutions where you have an account in your name, establishing a link between them that you can use however often you like. You can also do the reverse: establish a link to your new online account at your existing bank. The transfers can work either way.

    Most online banks will also allow you to deposit paper checks into your account, using the mobile check deposit feature of their app. Wire transfers to or from an online bank account are another possibility of moving funds, and usually are executed with same-day service. But fees may apply.

    Most online banks will not allow you to deposit cash via an ATM. There are exceptions, though, in which an online bank will allow cash deposits at an ATM that’s part of a specified network.

    If not, however, there are ways around this. The most common is to have one local bank account. This is handy for handling cash transactions, and one good way to do it is to hold a free checking or savings account at a local bank or credit union, and link it through online banking for transfers between it and your online bank account.

    One more option is to send cash deposits through the mail. Some online banks may offer this, but it’s of questionable safety since your cash deposit could get lost in the mail. Your better bet is to find a way to deposit the cash via ATM or local branch.

  • We researched and reviewed 19 online banks to choose the 6 best options you see above. Banks that were not selected may have more or higher fees, lower interest rates, fewer account features, or higher minimum requirements.

    Below are all of the online banks we researched, along with links to available reviews, to help you learn more before making a decision: Alliant Credit Union, Ally Bank, American Express, Axos Bank, Barclays, Bask Bank, Capital One, Charles Schwab Bank, CIT Bank, Discover, E*Trade, GO2bank, LendingClub, Marcus by Goldman Sachs, Quontic Bank, SoFi, Synchrony Bank, Varo, and Vio Bank.



How We Picked the Best Online Banks

To select the best online banks, Investopedia researched 19 institutions, reviewing rates, fees, minimum balance requirements, rewards, customer service, mobile banking apps, and types of accounts offered. These are the most important features when it comes to online banking if you want to minimize your costs, maximize your earnings, and enjoy a convenient and easy banking experience. To provide a numeric score to each institution, the most heavily weighted parameters were interest rates on savings, money market, and CD accounts available at the bank, the number of states from which the bank accepts customers, and the number of available ATMs.


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