If you’re still using a brick-and-mortar bank, you might want to think about switching over to online banking.
Why? Online banks have lower overhead since they don’t have physical branches. As a result, they pass their savings onto the consumer via higher rates and less (or no) fees.
Online banking is also more convenient than traditional banking. With many online banks, ATM fees and minimum monthly balance requirements are a thing of the past. There’s no need to go out of your way to a branch to deposit a check or take money out, either. Plus, the annual percentage yield (APY) offered by online banks (as high as 1.05 %) is much higher than the common .01% offered by traditional banks.
The four best online banks we’ve reviewed offer these exact features and more. Let’s take a look at the checking, savings, and investment options available so you can start saving more.
Ally bank offers some of the best rates out of all the online banks, and has minimal fees.
Its checking account has no monthly maintenance fee to worry about, no ATM fees, plus ATM reimbursements if you get charged using another bank’s ATM, and no minimum amount required to open an account. The APY is .60% with a balance of $15,000 or more, and .10% APY with less than $15,000. Ally does charge an overdraft fee of $9 with a maximum of once per day, but this fee can be avoided by setting up overdraft protection. Ally does not charge for the service of moving money out of savings to checking in order to cover your overdraft.
Ally Bank’s savings account currently offers a .99% APY, has no monthly maintenance fee, and no minimum to open.
Ally also offers competitive rates on Money Market Accounts (.85% APY), CDs (.87%-1.05% APY), and IRAs (starting at .99% APY).
Lastly, they have 24/7 customer service just a phone call away.
If you’re looking to save money on fees, then Bank of Internet USA is right for you.
Its rewards checking account has no monthly maintenance fees, no minimum monthly balance, and no overdraft or non-sufficient funds fees. You only need $100 to open an account with them. Domestic ATM transactions are completely free, while International ATMs may charge a fee. Bank of Internet USA offers a tiered APY system, currently capped at 1.25%.
Its high interest checking account offers a .71% APY, but you’re required to have a $5,000 minimum average daily balance, otherwise you incur a $7.50 monthly fee. $500 is required to open an account, and ATM fees are reimbursed up to $8/month.
The Bank of Internet USA savings account offers a .61% APY with no monthly maintenance fees or minimum monthly balance, though you need $100 to open an account. Its money market savings account has slightly higher APY at .75%.
Bank of Internet also offers CDs at .55% APY (12 months), .70% APY (24 months), and .1.35% APY (60 months). There is a $1,000 minimum to open a CD account.
Charles Schwab is the bank we like to recommend for those that love to travel as there are no foreign exchange fees.
Its checking account has no monthly service fees, no minimum required balance in the account, and unlimited rebates on ATM fees anywhere in the world, with a .10% APY. Checks returned due to insufficient funds incur a $25 fee, up to a maximum of $100 per day.
The Charles Schwab savings account has no monthly service fees, no ATM fees, no minimum balance requirement, and no account minimums. There is a $15 NSF fee though, and its APY is not stated on the website.
To open either a checking or savings account with Charles Schwab, you’re also required to open up a Schwab One brokerage account, which has no minimum requirements.
Charles Schwab also offers money market accounts with an initial investment of $2,500, and CDs with a $1,000 minimum to open.
You might be familiar with Capital One, as its one of the banks that offer both physical and online branches. It’s important to note that Capital One 360 is Internet–only – you can’t go to one of their physical branches as they won’t be able to access your account. However, the bank is pioneering cash deposits for the Internet-only bank account by allowing certain Capital One ATMs to accept cash.
The Capital One 360 savings account has no fees, no minimums, and a .75% APY. You can open multiple savings accounts, and there are unique savings tools built into your account to help you meet your financial goals.
Capital One 360 also offers CDs at the following rates: .40% APY for 6 to 24 months, .70% APY for 30 to 48 months, and .90% APY for 60 months.
How to Choose
Internet-only banking is all about convenience. If these four banks all sound great to you, and you’re having a difficult time choosing, consider these factors:
- Do you travel a lot? Having no foreign exchange fees to worry about, along with being able to use any ATM in the world, would be beneficial to you. Go with Charles Schwab.
- Do you want to reap the small reward you can get for keeping some money in a savings account? Choose Ally for its high APY.
- Want to have 6 different savings accounts for all the goals you want to fund? You can open multiple savings accounts with Capital One 360 and use its “My Savings Goals” to track your progress.
- Sick of dealing with the fees that banks love to charge? Pick Bank of the Internet USA for their no-fee, no-hassle accounts.
Make the switch to one of the best Internet-only banks today and get higher rates and the peace of mind that comes with not having to worry about meeting any minimum requirements. Just be sure you have all the equipment needed to bank online: a smartphone and a computer with Internet connection.