Best Online Banks of 2018
- February 20, 2017
- Posted by: Jeff Gitlen
- Category: Banking
This is our comprehensive guide to the best online banks. We’ll give you the information to understand how some of the top online banks work and which banks will work best for you. At the outset, let’s distinguish between the online banks and online banking.
In this guide, we refer to banks that have no physical branches as online-only banks, whereas online banking involves tasks accomplished via an Internet connection through a web browser or mobile app. Most of the best online banks nowadays offer some online functions, but this guide will be concentrating on online-only banks as well as branched banks with extensive online offerings and services.
Best Online Banks of 2018
N/A (6 mo: 0.40%)
Min. to Open
Min. Balance Fee
24/7 Live Help
ATMs in Network
How Online Banks Work
The best online banks, sometimes called “direct banks” or “virtual banks,” perform many of the same functions as old-style brick and mortar banks do, but without the overhead associated with physical locations and large staffs. Older folks may find it hard to believe, but a growing number of Millennials have never stepped into a financial institution. If they had, they would likely have encountered a nice-looking but basically empty space, with a few tellers, managers and a smattering of customers. There would no doubt be an automatic teller machine out front, and plenty of colorful signs and posters inside touting the latest and greatest accounts and features.
It’s easy to know how to open an account at a traditional depository – simply walk in and ask somebody for assistance. Using one of the best online banks can be even easier, because you don’t have to travel anywhere to open an account or perform a banking task. In fact, with an online-only bank, there is nowhere to go!
We review how to open an online bank account below. Once you’ve opened an account, you can access it any time by logging in -- that is, providing your user ID and password/PIN. You’ll probably be directed to a home page that summarizes your account status and recent transactions. If it’s your first login, take the time to familiarize yourself with all the features of your account and the website/application. If you have any questions, take advantage of facilities such as online chat, FAQ screens and a customer help desk.
The two most basic tasks associated with a bank account are deposits and withdrawals.
There are several ways to deposit money in an online bank account:
- ATMs: Because your online bank has no branches, it would arrange for you to use one or more ATM networks for free. Some of the best online banks partially reimburse you for out-of-network ATM usage fees.
- Transfers: You will be able to deposit money via online transfers from other accounts or from mobile wallets. Smartphones and tablets equipped with card readers, such as Square, GoPayment and PayPal Chip Card Reader, will allow you to deposit money by swiping a debit or credit card.
- Checks: Many of the best online banks accept deposits via photo-checks (also called e-checks and mobile checks): You use your mobile device to photograph a check and deposit it by transmitting the image. If you are in no rush, you can even mail the check using the bank’s postage-paid envelopes.
- Direct Deposits: You can direct deposit your paycheck, Social Security check or other regular sources of money, just as you would at a traditional banking company.
As with deposits, you can use ATMs and transfers to withdraw money from your account or to make a payment. In addition, you have these tools:
- Debit Card: When you make a purchase with your debit card, the money is withdrawn automatically from your checking account. You can also ask a merchant for cash back when making a purchase. Your debit card might be plastic, or it can be an electronic debit card within your digital wallet, such as Apple Pay, Android Pay, Samsung Pay and MasterPass.
- Write a Check: You can write a paper check against your account and cash it at a check-cashing facility, supermarket, or other convenient location. Of course, you can write checks for purchases at any location that accepts them. Not all online banks provide paper-based checking.
Naturally, you can perform many other tasks when banking online, including checking your balance, reconciling your account, stopping payments and arranging automatic payments.
Are Online Banks Safe for Consumers?
Some of the best online banks would quickly cease to exist if consumers felt unsafe using them. That’s why online banks put much thought and care into keeping their customers’ money safe.
It begins when you first open an account. As described below, the bank may send you an email or text message to confirm your identity. You’ll then be asked to create a solid password of sufficient length and complexity so as to thwart most hackers. The bank will usually grade your password and reject ones that are too easy. Some banks make you change passwords periodically.
A powerful security procedure is two-factor authorization, in which you must provide a second piece of data in addition to your password when signing in. For example, you may be asked to create a PIN, which is a four or five-digit number that serves as a secondary password. Some banks may ask you personal questions, such as your mother’s maiden name, and use your answers as a secondary factor. Asking you to choose a picture from an image library and associate it with your account is another secondary factor banks can use to verify your sign-in.
Perhaps the most powerful two-factor approach is the use of a security token. You carry around a fob that generates a new six-digit token every 30 seconds. You must provide the current token to sign onto sites that use this procedure. If you are very concerned about security, find a bank that uses security tokens and have them provide you with a fob. A verbal password can also be used as a secondary factor.
Just about all of the best online banks use high-end decryption to prevent hackers from stealing your information as it travels over the Internet. Encryption scrambles your data in a way that can only be decoded by the intended recipient. The most secure form of encryption allowed by U.S. law uses a 128-bit algorithm, and you might want to verify that your online bank uses encryption at that level.
There are some common sense steps you should take to ensure an online bank is legitimate and your deposits are safe:
1. Read the “About Us” section of the bank’s website to learn how long it's been in operation and whether your deposits are FDIC-insured.
2. Verify the financial institution's description of itself by checking its Better Business Bureau entry. Do an online search to see if the bank is or has been the subject of a lawsuit or regulatory action. You can also verify FDIC coverage using the Bank Find service.
3. Be wary about using public Wi-Fi networks, especially ones that do not require a password. Just to be safe, ensure your device’s security software is up to date (you do have security software, don’t you?). Turn off file sharing to prevent unwanted connections. Using a virtual public network (which you can download for free from several sources) is a further protection against snooping when using a Wi-Fi hotspot.
4. If using a browser to connect to the bank website, verify that you’re using the correct URL. The prefix should be “https:” where the ‘s’ indicates an extra layer of security. Sometimes, crooks set up spoof websites with names that are similar to legitimate ones.
5. Request your bank institute dual authentication for all wire transfers. This requires the bank to contact you directly before wiring money, and will block criminal attempts to wire money out of your account.
As long as you take precautions, you can assume that the best online banks are relatively safe. However, stay alert for news stories about hackers stealing data from a bank. If that happens to your bank, you’ll need to change passwords and order new bank-issued credit and debit cards.
Advantages of Online Banks
The best online banks are growing in popularity, thanks to these advantages. You will surely notice some benefits of banking online versus the traditional in-person banks with physical locations.
You’ll have 24/7 account access with no more trips to a bank branch and no more waiting on line. You can check your balance anytime you want, or wire money in the middle of the night, when traditional banks are closed. Also, if you move, you don’t have to change banks. You can also access your bank account when traveling virtually anywhere around the globe.
The convenience provided by the best online banks is especially valuable for folks with disabilities that limit their movements. The logistics of using a bank branch can be daunting if you are bound to a wheelchair or don’t drive a car. Computers offer speech synthesis and enlarged fonts, which can be very useful to bank customers who are blind or sight-impaired, and the visual nature of a device screen might ease banking tasks if you are deaf. In addition, there are a number of physical and emotional conditions that might prompt some consumers to avoid the public setting of a bank branch.
A top online bank may offer many services and products that are only a few clicks away. You can apply for a loan, check your investments, review interest rates, and even check out products like life insurance and annuities. The same information might be spread across multiple departments and brochures at a physical bank branch.
High Savings Rates
If you search for the banks that offer the highest interest rates on savings accounts and certificates of deposit, you’ll find the top of the list dominated by the best online banks. It’s no mystery – running a bank is less expensive if you don’t have to pay for and staff brick-and-mortar branch offices. The top online banks pass on (some portion of) the savings to customers, which means more interest income in your pocket.
As with higher savings rates, low fees are part and parcel of the lower cost structure of top online banks.
The best online banks deploy some of the money that isn’t needed for maintaining bank branches into technology to make the online experience easier and safer. Features like photo-checks allow you to deposit checks at your convenience. The top online banks invest heavily in their digital infrastructures to help ensure customers receive safe and reliable service. After all, if your online bank’s website often suffers from sluggish performance, you might be tempted to switch to a competitor. Customer retention drives online banks to use the latest hardware/software solutions.
It’s easier to monitor and manage your money when your bank is online. You can check your balances as often as you like, and immediately flag transactions that you don’t recognize. Most of the best online banks provide a transaction download facility that feeds into money management software such as Quicken. Many online banks offer real-time alerts that you can set to warn you of specific events, such as low account balances or money wired out of the account. These alerts can help you avoid fees for bounced checks or insufficient funds.
Disadvantages of Online Banks
While many people prefer the convenience of online banking, there are some disadvantages:
No doubt about it, some folks prefer to conduct their banking face to face. It can be a social outlet for some, and folks may find it reassuring to deal with familiar individuals week after week. It might also be easier for some to ask questions or explain problems in person rather than over the phone. Stopping at the depository branch might be a part of a person’s weekly shopping routine. If you need a smile or a free lollipop when you make a deposit, a banking company branch might be your first choice.
Some folks who grew up before the Internet age (and some younger people as well) might find computers and mobile apps confusing or threatening. If a computer keyboard causes you to break out in a sweat, you will be comforted by the fact that you can do all your banking at a branch without the need to acquire any computer skills.
This is more a problem of perception rather than reality. Most of the best online banks typically belong to a widely accessible ATM network in which transactions are either free or reimbursed by the financial institution. You might feel more secure using the ATM at a bank branch than one at a convenience store or gas station.
Limited Product Offerings
Many online banks prefer to keep it simple and offer only the most widely-used banking products. Products that you might not find at some online banks include mortgages, car loans, insurance, annuities and trust services. But online banking differs in the offerings, so it’s best to shop around if you know you’ll need certain products not supplied by all online banks. For example, Ally Bank offers credit cards, auto financing and home loans online.
No Safety Deposit Boxes or Currency Exchange Services
There is no substitute for a physical bank branch if you need a safe deposit box or want to exchange currencies, although non-bank currency exchanges are available in most medium to large cities. But if you travel a lot, you will find exchanging currencies at your local depository branch convenient.
Branched financial organizations that have served the community for a long time are naturally well-trusted by their customers. You don’t think much about the legitimacy of a Citibank or Bank of America branch. Using one of the best online banks requires some due diligence. You’ll want to know if it’s FDIC-insured and has a clean record with regulators.
Online banking differs in the quality of customer phone support. Many offer ‘round-the-clock customer service, either through direct phone support or via emails or chats. If you prefer to hash things out in person, a banking company with branches will suit you better.
Opening an online banking account is easy and can be done in mere minutes. It requires a one-time setup in which you register with the financial institution via a website or mobile app. (For the sake of conciseness, we’ll use the term “screen” to apply to a webpage or a screen on a mobile app).
You may be asked to first specify a product, such as a no-fee checking account, savings account, money market account or CD. You will also indicate whether the account is individual or joint, as well as other options appropriate to the type of account, including:
- Your opening deposit amount
- Whether you want an ATM card/debit card
- Whether you want checks
- For CDs, the term (time until maturity) of the certificate
- Acknowledgement that you are at least 18 years old and are a U.S. citizen or permanent resident
- To fund your new account electronically, you’ll need to provide the routing number and account number of your current banking company
You’ll enter your personal information, including your name, physical and email address, date of birth, driver’s license ID (or state identification card number), phone number and your Social Security number. You may also be asked to name one or more beneficiaries, and then select your funding method. The depository financial institution may want to verify your identity in one of two ways:
- It will send an email with an embedded link. Click on the link and you’ll be brought back to the online bank screen. Alternatively, the email will contain a temporary password which you then enter onto the screen – you’ll be asked to change the password later.
- It will send you a text message containing an identification number. You then type the ID number into the online bank’s page or app.
You’ll be asked to take steps to help secure the account, as explained in Are Online Banks Safe for Consumers?
Top Online Banks for 2018
Chime Online Bank Review
Chime Bank is an online financial institution that makes its money from fees just like any other bank. The difference, however, is that those fees aren’t charged to you – they’re charged to merchants when you use your Chime Visa card. What’s more, the bank shares its profits with its customers. It sounds crazy because Chime is the only bank doing it – and they’ve been pretty successful, with many happy customers. Their mobile app has over 2,000 five-star reviews and has been featured in the Apple App Store as one of the best money management tools.
Summary of Products Offered
- Free Checking Accounts: Chime Bank has no fees on its checking account. No minimum balance requirement and no monthly charges. They also allow you to get your paycheck up to two days early through its instant direct deposit. One of the biggest features is their automatic savings; when you make a purchase with your Chime debit card they round it up to the nearest dollar and put the change in a Chime Savings account for you. There are also no overdraft fees because Chime Bank doesn’t allow overdrafts. That means Chime won’t allow your account to go negative just so they can collect the fees; your transaction will simply be declined.
- Savings Accounts: Chime makes it easy to save money with its savings accounts. Easy mobile tools let you see where your money’s going, and the automatic feature is great. In addition, you can automatically divert 10% of your direct deposit into savings as well. There is, however, a big drawback – low interest. The annual percentage rate on Chime’s account is currently 0.01 percent. That means you’re not going to make any money on interest, even if you carry a high balance in your savings.
Pros vs Cons
Chime Bank has a lot of great features and also some drawbacks that, depending on what you’re looking for, may steer you in another direction. Let’s break it down to the basics:
- No account or transaction fees
- No monthly minimum balances
- Automatic savings and direct deposit diversion
- Real-time online customer support and balance alerts
- Fantastic mobile app
- No in-person branch locations
- Cash deposits can be costly
- Low interest rates on saving accounts
- No checks available for your account (Chime sends checks for you, however)
- No overdraft ‘grace’ or line of credit
History of Chime Bank
Chime Bank is the brain child of Chris Britt, a former Visa and Green Dot senior executive, and Ryan King, the former Vice President of Engineering for Plaxo. Their goal was to make a bank for the smartphone generation that allows easy, upfront banking on the go while protecting customers and giving them more control over their money.
Ally Online Bank Review
Ally Bank is one of the best online banks that offers high rates to attract savers. It is headquartered in Utah and has no branches. The financial institution is FDIC-insured and offers a mobile app.
Summary of Products Offered
- Checking: The checking account offered by Ally pays interest and has low fees. You earn 0.10 percent APY on balances below $15,000, and 0.60 percent on higher balances. Use of the Allpoint ATM network is free, and the depository reimburses up to $10 per statement cycle for fees at other ATMs. Ally eCheck Deposit uses your mobile device’s camera to deposit checks remotely, and you can wire money via Popmoney. The account can be opened as a trust. You can link to another Ally account for overdraft protection. The overdraft fee is $25.
- Savings: The Ally Online Savings Account pays 1.00 APY, compounded daily, on all balances. There is no maintenance charge, but you are charged $10 a month if you make more than six outbound transfers (excluding checks). You can deposit checks with eCheck. Ally offers three types of CDs. The standard CD pays the highest rate, up to 1.75 percent. The Raise Your Rate CD lets you increase your APY once or twice to match current rates. The third type of CD doesn’t charge an early withdrawal fee.
- Other Products: Ally Bank offers a Visa CashBack credit card that gives you 2 percent cash back on purchases at grocery stores and gas stations, 1 percent on all other purchases. You get a 10 percent bonus by depositing your rewards into an Ally bank account, and a $100 bonus if you make $500 in eligible purchases during the first three billing cycles. The credit card works with popular e-wallets. Ally Bank also finances automobile purchases and leases for individuals and businesses, and offers vehicle service contracts. The bank issues and refinances mortgages - the APR on its 30-year fixed rate mortgage is 4.316 percent.
Pros vs Cons
- No minimum balances
- No monthly maintenance fees
- More than 43,000 free ATMs
- Among the highest APYs on savings
- Offers mortgage and car loans
- $10 charge for every outbound transfer (excluding checks) once you exceed the six free transfers per statement cycle
- No mechanism for depositing cash
History of Ally Bank
The forerunner of Ally Bank opened its doors in 1919 as General Motors Acceptance Corporation (GMAC), a division of GM. Its mission was to help dealers finance their inventory and to extend automobile loans to consumers. During the 1930s, it publicized the concept of vehicle cost segments, from basic to luxury models. GMAC helped finance hardware during World War II, including locomotives, trucks, tanks, airplanes and submarine engines. It introduced time-payment auto loans in 1956. GMAC continued its primary mission for the remainder of the century. In 2000, it opened its Ally Bank subsidiary, and in 2009, it transformed GMAC Bank into Ally Bank, soon renamed Ally Financial. It was spun off as a public company in 2014. Today, Ally is a top online bank with $63 billion in customer deposits.
Capital One 360 Online Bank Review
Capital One 360 is one of the best online banks. It also has branches in eight states and Washington, D.C. The bank is FDIC-insured and offers a mobile app.
Summary of Products Offered
- Checking: 360 Checking has no maintenance fees or minimum balances. It pays checking account interest ranging from 0.20 percent to 0.90 percent APY, depending on the account balance. You can deposit money into the checking account via direct deposits, transfers from other accounts, ATMs and mobile check deposits, The account gives you free access to more than 40,000 ATMs nationwide. You get a free MasterCard debit card and a book of checks with the account. Overdraft options are available.
- Savings: The Capital One 360 Savings Account pays 0.75 percent APY on any saving account balance. This is a good rate, but not as high as some of its competitors’ rates. You can set up multiple savings accounts, name each one according to its goal and then track your goals. You can also set up an automatic savings plan to periodically transfer money in from your checking account. You can opt for an FDIC-insured 360 Money Market account that is also fee-free – the minimum balance is $10,000, which earns 1.00 percent. Capital One 360 offers FDIC-insured CDs with terms from six months to five years, all with no minimum balance. For CDs of one-year or less, the same interest rate can be earned using the regular 360 Savings Account. The APY on the five-year CD is 2 percent, and the premature withdrawal penalty is three or six months of interest, depending on the term.
- Other Products: Capital One 360 Bank offers two credit cards. The Quicksilver Rewards credit card is for customers with excellent credit. It has no annual fee, earns 1.5 percent cash back on all purchases, a 0 percent APR on purchases and transfers for the first nine months, and a $100 bonus if you spend $500 on purchases during the first three months. The QuicksilverOne Rewards card is for customers with average credit, and has a $39 annual fee. Capital One also offers mortgages, home equity loans, mortgage refinancing and automobile financing.
Pros vs Cons
- Consumer-friendly overdraft protection
- Good interest rates
- Extensive ATM network
- No minimum balances or maintenance fees
- Automated saving plan and multiple savings accounts
- Wide range of CD terms
- Not the highest rates for savings accounts
- Some of its cash machines do not accept cash deposits
- Limit of one 360 Checking account per customer
History of Capital One 360 Bank
Capital One Financial Corporation began life as a credit card company, spun off from Signet Financial Corp in 1995. Initially, Capital One was a monoline firm, meaning it specialized in consumer lending, especially credit cards. The company expanded into retail banking in 2005 with a focus on subprime customers. It acquired several financial institutions, and received government bailout money in 2008. It repurchased its stock from the U.S. Treasury in 2009. Then, in 2012, Capital One acquired ING Direct USA, a popular online banking option, and renamed it Capital One 360 Bank. ING Direct had been founded in 2000 and acquired defunct NetBank in 2007.
Synchrony Online Bank Review
Synchrony Bank, a subsidiary of Synchrony Financial, is an online bank with a single branch in Bridgewater, NJ. It offers FDIC-insured savings products, but no checking accounts. Mobile check deposit is available. The Synchrony Bank ATM network allows you to freely use your ATM card at any U.S. or overseas ATM displaying the Plus, NYCE or STAR logos. You receive up to $5 a month reimbursement for out-of-network ATM fees. The mobile app supports photo check deposits but lacks features for mobile wallets and person-to-person money transfers.
Summary of Products Offered
- Savings: Synchrony Bank offers some of the highest rates available for savings accounts, 1.05 percent APY. The rate is good on all balances, and there is no minimum balance or monthly service fee. You can access your money via ATM withdrawals or transfers to other accounts (initiated online or over the phone). You are limited to six free outbound transfers per month. Customer service representatives are available Monday-Friday from 8 a.m. to 10 p.m. EST, and Saturday from 8 a.m. to 5 p.m. EST. Synchrony Bank offers a money market account that pays 0.85 percent APY on all balances. The minimum opening deposit is $250. The bank also offers CDs ranging from 3 to 60 months with an open deposit minimum of $2,000. APYs range for 0.25 percent to 2.01 percent, depending on term and balance. You lose from three-months to one-year of interest on CD early withdrawals.
- Other Products: Synchrony Bank offers individual retirement accounts in the form of IRA CDs and IRA money market accounts. The minimum initial deposit is $250 for the CD and $2,000 for the money market. The APYs on the IRA accounts are the same as those on the regular accounts. Synchrony Financial, the parent of Synchrony Bank, offers the CareCredit credit card that offers interest-free payments for healthcare expenses when the balance is repaid within the specified period.
Pros vs Cons
- High APY savings account
- Free in-network ATM use and $5/month reimbursement for other ATMs
- Loyalty program includes travel rewards
- No checking account
- No cash deposits at ATMs
- Rudimentary mobile app
History of Synchrony Bank
Synchrony Bank, formerly GE Capital Bank, went public in June 2014. GE Capital Bank was founded in 1988 and offered a variety of retail banking and credit services. The bank’s parent, Synchrony Financial, entered into a $225 million consent decree with the Consumer Financial Protection Bureau in 2014 regarding deceptive and discriminatory credit card practices dating back to 2009, when the bank was part of GE.
Simple Bank Online Review
Simple has a unique business model for a branchless online bank, in that it does not offer savings accounts. Instead, it offers free online FDIC-insured checking accounts with bill-paying services. Simple is owned by BBVA Bank and is affiliated with Bancorp Bank and Compass Bank. Simple Bank charges no fees, but makes its money by earning interest on customer deposits and by collecting interchange fees from the use of its debit card.
Summary of Products Offered
- Checking: True to its name, Simple’s sole offering is a checking account that deposits customer funds into an account maintained at a partner bank. Only U.S. citizens and permanent residents can open a Simple account, you must be at least 18 years old and have a Social Security number. The checking account pays no interest and does not issue printed checks. You can deposit funds into the account via its mobile app’s photo-check feature, as well as by ATM deposit, direct deposit and mail. If you want to deposit cash, you will have to buy a money order and deposit it via the mobile app. Although Simple offers no savings products, its partner banks do, and they offer many other services as well. Simple offers bill pay, a free service that prints and mails checks on your behalf. Larger businesses may be paid electronically. Simple is a member of the Allpoint ATM network of 50,000 machines. In-network ATM usage is free, but Simple does not rebate out-of-network fees. You can also get cash back from participating merchants when you pay for a purchase using the Simple Visa Debit Card. Simple Instant allows you to transfer money between accounts for free. You can download your transactions into applications like Mint and Quicken. Recently, Simple began offering joint checking by connecting two individual accounts. Simple also allows you to set up goals for individual expenses, and its Safe-to-Spend feature tells you how much of your balance is not earmarked for a particular use. The app also lets you search for transactions and generate activity reports.
Pros vs Cons
- No minimum balance or maintenance fees
- Large ATM network and Visa debit card
- No overdraft charges
- Full-featured mobile app
- No savings accounts (although available from partner banks)
- Can’t deposit cash
- Can’t pay some payees, such as the IRS.
History of Simple Bank
Initially known as BankSimple, Simple was founded in 2009 by three entrepreneurs. It raised $10 million in private capital in 2009 and went operational in 2012. The company relocated from Brooklyn to Portland and volumes grew. Then, in 2014, Simple was acquired by Banco Bilbao Vizcaya Argentaria (BBVA) via its BBVA Compass Bank subsidiary for $117 million. At the time, the price represented about $1,200 per customer.
Barclays Online Banking Review
Barclays is a huge global financial company headquartered in London. It runs an American online-only bank called Barclays Bank of Delaware. Barclays’ accounts are FDIC-insured, and the bank offers savings products only, no checking accounts. It has no branches or ATM network.
Summary of Products Offered
- Savings: Barclays Online Savings pays 1 percent APY with no monthly maintenance fees, no minimum balances and low fees for insufficient funds (only $5 per instance). You can make online transfers to and from other top banks, and the account accepts direct deposits and mailed checks. You can also deposit photo-checks (except money orders, foreign checks and third-party checks) via your computer or mobile device. The limits on photo-check deposits are $5,000 per check, $10,000 per day, 10 checks per day, and a 10 business-day limit of 20 checks or $50,000. You can make six withdrawals per month before triggering a fee. Barclays offers a Dream Account that receives a 2.5 percent bonus of interest earned when you make monthly deposits for six consecutive months or you refrain from withdrawing money for six straight months. You can deposit up to $1,000/month into a Dream Account. Barclays also offers online CDs with terms of 3 to 60 months and APYs of 0.35 percent to 1.75 percent. The CDs compound interest daily, have no minimum balance and provide easy transfers. Early withdrawals lose 90 or 180 days of interest, which may reduce the principal amount of the CD.
Pros vs Cons
- High APYs on savings products
- Low fees, including insufficient funds fee of only $5
- No minimum deposits
- No ATM network
- No checking account
- No ATM cash deposits or withdrawals
- No mobile banking app
History of Barclays Bank
Barclays Bank traces its roots to a London goldsmith banking business founded in 1690. In 1736, James Barclay became a partner, and the merger of several banks in 1896 created Barclays Bank. In 1967, Barclays introduced the first ATM. It has grown over the years into a huge financial multinational corporation. It’s global credit card business, Barclaycard, acquired Juniper Bank in 2003 and evolved into Barclays Bank of Delaware. Juniper was an online-only bank founded in 2000, but later focused on credit cards, leading to its acquisition by Barclaycard.
Discover Online Banking Review
Discover Bank is an online-only bank (except for a single branch office in Greenwood, Delaware) that offers a full array of banking products. It issues the fourth largest credit card in the U.S., the Discover Card. Discover Bank is a member of the FDIC.
Summary of Products Offered
- Checking: Discover offers a no-fee, no-minimum-balance checking account that offers up to $10 cash back per month -- one dime per purchase -- on purchases made with the Discover Debit Card. You are also rewarded for checks cleared and online bill payments. The checking account does not pay interest and does not allow ATM cash deposits, but it does offer free checks. Its no-fee ATM network has 60,000 machines, but charges do apply on out-of-network ATM usage. There is no charge for ACH transfers or incoming wire transfers. Returned checks are assessed a $15 penalty, and the insufficient funds fee is $30. Besides transfers, you can add money to the account via direct deposits, mail, and photo-checks. Online bill-pay is available.
- Savings: Discover Savings Account pays 0.95 percent APY on all balances. The minimum opening deposit is $500, which is higher than that of several competitors, but the account has no monthly fee, and official banking checks -- even ones with expedited delivery -- are free. Interest is compounded daily and paid monthly. Withdrawals in excess of six per month draw a $15/item fee. If you open a Discover Savings Account by January 31, 2017 and deposit at least $15,000 by February 15, 2017, Discover will pay you a $100 bonus. The Discover Money Market Account pays 0.80 percent APY for balances under $100,000 and 0.85 percent for higher balances. You can access cash by check, debit card or ATM. The bank offers CDs with terms from 3 months to 10 years and APYs of 0.35 percent to 2.20 percent. The minimum initial deposit is $2,500.
- Other Products: Discover bank offers the Discover credit card, and provides student loans, personal loans and home equity loans.
Pros vs Cons
- Cash back checking account
- Low fees
- Strong interest rates
- Bonus on large savings deposits
- ATM cash deposits not allowed
- Checking account doesn’t pay interest
- Savings products require high minimum opening deposits
- Early withdrawal penalties on CDs
- Mobile app is only OK
History of Discover Bank
Discover Bank began life in 1911 as the Greenwood Trust Company of Greenwood, Delaware. Discover Financial Services bought the bank in 1985 and renamed it Discover Bank. The original bank is the only operating branch location.
List of Online Banks
Reviewed in This Article
- Ally: A highly rated top online bank that attracts savers with strong rates. It is headquartered in Utah and has no branches. The bank is FDIC-insured and offers a mobile app.
- Barclays: A huge global financial company headquartered in London. It runs an American online-only bank called Barclays Bank of Delaware. Barclays’ accounts are FDIC-insured, and the bank offers savings products only, no checking accounts. It has no branches or ATM network.
- Capital One 360: A top-rated online bank. It also has branches in eight states and Washington, D.C. The bank is FDIC-insured and offers a mobile app.
- Discover: An online-only bank (except for a single branch office in Greenwood, Delaware) that offers a full array of banking products. It issues the fourth largest credit card in the U.S., the Discover Card. Discover Bank is a member of the FDIC.
- Simple: Simple has a unique business model for a branchless online banking process. Instead, it offers free online FDIC-insured checking accounts with bill-paying services. Simple charges no fees.
- Synchrony: An online bank with a single branch in Bridgewater, NJ. It offers FDIC-insured savings products, but no checking accounts. Mobile check deposit is available. The Synchrony Bank ATM network allows you to freely use your ATM card on machines with the Plus, NYCE or STAR logos. You receive up to $5 a month reimbursement for out-of-network ATM fees.
Other Top Online Banks
- Bank of Internet USA: Low fees and above-average interest rates. Offers a variety of checking accounts with different perks. No overdraft fees and some accounts provide unlimited ATM fee reimbursement.
- Bank5 Connect: Highly competitive rates and no monthly checking fees. The savings account pays 0.90 percent APY and requires a minimum balance of $100. Website has online chat, and the mobile app provides photo-check remote deposit. Reimburses up to $15/month for out-of-network ATM usage.
- EverBank: Offers an unbeatable first-year APY of 1.11 percent on its money market account. The minimum deposit on accounts is $1,500. No monthly maintenance fees or ATM fees, and the bank reimburses ATM surcharges if your account balance is at least $5,000.
- First Internet Bank: A high 1.11 percent APY on one-year CDs, but the free savings account pays only 0.40 percent. No-fee checking pays no interest, but 0.55 percent APY is paid by the interest-bearing checking account. A $10 monthly maintenance fee is charged for balances below $500.
- FNBO Direct: No maintenance charges on its accounts, and the checking account pays 0.65 percent APY. Supports Popmoney for person-to-person payments. The CD rates do not lead the pack.
- Nationwide Bank: If you use its debit card at least eight times per month and utilize direct deposit, then the checking account is free. You get up to six out-of-network ATM reimbursements per month.
- State Farm Bank: Miserly rates on savings accounts and CDs, but good customer services, including a mobile app and 24/7 phone support. Offers up to $10/month rebates for out-of-network ATM usage.
Recent Regulation of Online Banks
The growing popularity of some of the best online banks has drawn the attention of financial regulators. The Office of the Comptroller of the Currency (OCC) is moving ahead with a plan to issue national bank charters to financial technology firms, such as online-only banks and other firms that move money around. Recipients of these charters would be regulated and supervised the same way as national banks are. The new charters would allow some online firms to operate nationally, thus upending state regulations. New York and other states have voiced their opposition to what they consider usurping of state regulatory authority.
The CFPB is pushing for more transparency regarding financial account-related information and how banks, including top online banks, manage that information. The Federal Trade Commission is seeking public comment about the information security practices of fintech firms.
In 2018, expect even greater regulatory scrutiny for online banking in the areas of cybersecurity risk, consumer compliance, and third-party risk management.