Best Online Banks for 2018
- November 30, 2018
- Posted by: Ashley Sutphin Watkins
- Category: Banking
At a Glance:
Online banks have grown significantly in popularity in recent years thanks to benefits like higher interest rates on deposit accounts and lower fees. Some online banks excel in other areas as well, and choosing the right online bank can help consumers grow their money and also save money by paying less in fees.
Online banks have been increasing in popularity over recent years. Online banks have two big benefits for consumers over more traditional banks—they have either no or low fees on most products and services, and they usually offer higher interest rates on deposit accounts.
Online banks are also convenient and tend to fit into the digitally driven lifestyle that so many people embrace. They’re always open, you can do almost anything you need to in terms of managing your money online or through an app, and they still have customer service representatives who can help you when needed.
Not all online banks are created equally, however. Some excel in specific areas and are especially competitive not only with brick-and-mortar banks but other online banks as well.
We put together a list of some of the best online banks, and we’ve highlighted key reasons we feel they’re great at what they do and why they have a lot to offer you as the consumer.
The Best Online Banks
Below you’ll find our picks for the best online banks.
- Chime Bank
- Ally Online Bank
- Capital One 360 Online Bank
- Synchrony Online Bank
- Simple Bank Online
Chime Bank is an online-only financial institution that doesn’t charge fees to consumers. Instead, Chime earns money by charging merchants fees when you use a Chime Visa card. Chime offers no-fee checking accounts, and there are also no minimum balance requirements and no monthly charges on these accounts. According to Chime, they are one of the fastest growing financial institutions in the U.S.
You can use a Chime debit card and take advantage of the bank’s roundup program so that you’re saving money every time you make a purchase. Overdrafts aren’t allowed, so you can't rack up high fees for that; instead, your transaction is declined. Chime has a rewards program as well that can help you earn some extra cash for your spending.
Pros of Chime Bank
Some of the many notable points about using Chime Bank include:
- This online bank allows you to set up direct deposit on your account and then get your paycheck up to two days earlier than your payday
- There are no hidden fees and hardly any fees at all with Chime
- The automatic savings tool is a good option for anyone who wants to start saving money but also wants to start small
- There are real-time balance alerts for better money management and budgeting
- The mobile app has robust features and capabilities
Cons of Chime Bank
Of course, as with any bank, there are some possible downsides to weigh with Chime as well.
- You’re not going to earn a lot of interest with a Chime savings accounts
- If you need in-person help, there are no branches of Chime
- Making cash deposits can be somewhat of a challenge and may be expensive because it is done at retailers participating in Green Dot, not at ATMs
Ally Online Bank
Ally Bank is arguably one of the most well-established and well-known online banks. Ally has led the way regarding innovating how people bank online, and the bank tends to earn high marks from financial review outlets as well as consumers. Ally offers a wide selection of products aside from just checking and savings accounts including credit cards, auto loans, home loans, and investment accounts.
The interest rates on Ally deposit accounts are very competitive and are often the highest you’ll find from online banks or brick-and-mortar banks. There are no branches of the bank which is headquartered in Utah, so everything is done completely online. Among online options, Ally is one of the best banks for someone whose goal is low-risk savings, whether that be in an Ally high-yield savings account or something like a CD, and low fees.
Pros of Ally Bank
Some of the advantages of Ally Bank include:
- Ally offers many consumer financial accounts and products—much more than many other online banks, so customers can manage everything in one place if they prefer
- The APY on all balance tiers for the online savings account from Ally is competitively high—it’s currently 1.90% APY
- Ally offers customers access to 43,000 ATMs that are free to use
- There are no minimum balance requirements and no monthly maintenance fees on bank accounts held at Ally
- Money grows faster because the interest is compounded daily
Cons of Ally Bank
Some possible downsides of Ally Bank to think about include:
- If you make outbound transfers, you’re charged $10 for each after you exceed six transfers per statement cycle
- There’s no way to deposit cash—if you want to deposit cash, you would have to make a mobile check deposit or choose one of the other options
- Ally charges a $25 overdraft fee, but they do limit how many can be charged each day
Capital One 360 Online Bank
Capital One 360 offers multiple online bank accounts, including their 360 Money Market, which has some of the highest interest rates among accounts. Capital One 360 also offers other online accounts including checking and savings, and it’s fast and easy to set them up. What’s unique about Capital One is that the company does have banking branches in some states in the U.S.
For the 360 Checking account, which is one of the most popular types of online accounts, there aren’t minimum balance requirements or maintenance fees. Interest is also paid on checking accounts, and the amount varies depending on the balance tier of the account. Checking accounts include a MasterCard and a book of free checks. With savings accounts, there are unique options, such as the ability to name them based on specific goals and to set up multiple goal-oriented accounts.
Pros of Capital One 360 Online Bank
Some of the primary advantages of Capital One 360 as an online bank include:
- There are branches in some states
- There are a lot of CD terms, so you can choose one that works for your financial needs
- The 360 Money Market Account offers a 1.85% APY on balances of $10,000 or more
- There are relatively low monthly fees on most accounts
- Capital One 360 features comprehensive tools to help people track their savings and grow their money more effectively
Cons of Capital One 360 Online Bank
Possible downsides to weigh when comparing Capital One 360 to other online banks include:
- There are expensive opt-in overdraft fees
- The traditional savings account interest rates aren’t as high as with other online banks
- Not all ATMs accept cash deposits
Synchrony Online Bank
Synchrony Bank, similar to Ally Online Bank, is one of the more established, well-known and competitive online banks. Synchrony Bank offers FDIC insurance protection, high interest rates on many of their savings and deposit accounts, and convenience. Accounts available from Synchrony include CDs, money markets, high-yield savings, IRA CDs, and IRA Money Markets.
Synchrony operates one branch in New Jersey, but it offers convenient account features for an online bank, such as mobile check deposit and a Synchrony ATM network.
Pros of Synchrony Bank
Some of the best things about Synchrony in terms of being a top online bank include:
- There are no minimum balance or monthly service fees on most accounts
- If you open a savings account with Synchrony, you get access to their rewards program
- Interest rates are among the highest available. Right now for a Synchrony Bank Savings account, the APY is 1.90%. For CDs, depending on the balance tier, rates range from 2.50% APY to 2.75% APY.
- If you use out-of-network ATMs, Synchrony will reimburse you $5 a month
- CD rates are currently at 3.10% APY if you choose a five-year term
The Cons of Synchrony Bank
Synchrony Bank does have things that some people might not like, including:
- There are no checking accounts available so your savings accounts will have to be completely separate from checking
- You can’t make cash deposits at ATMs
- The mobile app is fairly simple and doesn’t offer a lot of modern functionality compared to some other bank mobile apps
Simple Bank Online
Simple Bank is an online bank that also specializes in budgeting tools and they have competitive interest rates on certain accounts and a great mobile app. With Simple, new customers can create an account and deposit funds by a direct deposit of their paycheck or through a transfer from an external bank.
With the Safe-to-Spend feature of the app, customers know what they can afford to spend in real time and on the go based on how much money they have set aside each month to cover expenses and goals. In addition, customers can set up recurring expenses as well, so they can make sure their bills are going to be covered each month. Simple’s only product offering is a checking account.
Pros of Simple Bank
Some of the best things about Simple Bank compared to other online and brick-and-mortar banks include:
- Simple Bank is entirely built on the use of the mobile app, which is good for consumers who are more comfortable using technology
- Features available with a Simple checking account include a Visa debit card, photo check deposit, external account linking, and instant transfers to other Simple customers
- Simple's excellent budgeting tools can empower customers to make good financial decisions
- It takes only a few minutes to set up an account
- Simple offers fee-free banking
Cons of Simple Bank
Some possible downsides to weigh with Simple Bank include:
- There are only checking accounts available from Simple Bank
- There are no interest-earning accounts
- You can’t deposit cash
Barclays Online Bank
Barclays Online Bank offers multiple account options, including their Online Savings Account with a competitive APY and high-yield CD accounts. Barclays’ accounts are FDIC insured, but there are no branches or ATM networks associated with the bank. According to Barclays, if a customer opens a savings account, they can make transfers from external banks and set up direct deposits.
The online CDs from Barclays offer terms ranging from 3 to 60 months, so there’s a lot of flexibility, and the interest compounds daily. There are no minimum balance requirements with Barclays CDs.
Pros of Barclays Bank
The following are some advantages of Barclays Bank.
- The current APY for the Barclays Online Savings Account is 2.05% which is comparably high
- The online CD rates range from 2.65% APY for a 36-month CD to 3.10% APY for a 60-month CD
- Along with high interest rates, Barclays has relatively low fees as well
- The nonsufficient funds fee at Barclays is only $5, as opposed to $30 which is more typical at other banks
- There are no minimum deposit requirements
Cons of Barclays Bank
Some of the considerations that could be seen as downsides of Barclays Bank include:
- There is no ATM network available
- The types of accounts are limited to savings and CDs
- There’s no mobile banking app
Discover Online Banking
Discover Bank is an online-only bank with a full selection of accounts and banking products. Discover Bank is also known for being one of the largest credit card issuers in the country. Account options available from Discover include checking, savings, money market, CDs, and IRA CDs. Discover has a large network of free ATMs and low maintenance fees on accounts.
Pros of Discover Online Bank
Some of the biggest benefits of banking with Discover online include:
- The checking accounts have no fees and no minimum balance
- Checking accounts offer up to $10 in cash back per month if the Discover debit card is used
- There is a network of 60,000 no-fee ATMs
- Money can be added to an account through transfers, direct deposit, mail and photo checks
- There are no monthly balance requirements on savings accounts
Cons of Discover Online Bank
Negatives of Discover include:
- The APY on a Discover Savings Account isn’t as high as what’s offered at some other online banks
- There is a minimum opening deposit of $500 for the Discover Savings Account
- There is no interest paid on checking accounts
What to Consider When Looking for the Best Online Bank
When you’re choosing an online bank, there are a lot of considerations to keep in mind. You want to choose an online bank that’s going to fit your needs, and not all banks excel in the same areas. Keep the following considerations in mind:
- How do you have access to your accounts and customer service if needed? Are there any branch locations at all, and if not, what are their online and mobile platforms like? If you need to contact a person to ask a question, does the online bank make that easy to do? What are the reviews about their customer service from current customers?
- What kinds of fees are charged on accounts? Keep in mind that most online banks don’t charge any fees.
- What types of accounts are available and can you do all of your banking in one place? Some online banks only offer one or two types of accounts, while others offer several.
- What interest rates are paid on interest-bearing accounts?
- Will you have access to your money through ATMs? Are there ATM fees? What are the fees to use an out-of-network ATM?
Online banks continue to grow and expand their offerings for the increasing number of consumers who rely on them. Using an online bank often means you’ll have more convenience, you’ll earn higher interest on your balances, and you’ll pay lower fees. As online banks’ popularity continues to increase, it’s likely that more will come onto the scene and existing online banks will work on offering even more comprehensive and robust features to clients.
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