November 22, 2024

Cash News

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The 10 best for August 2024 #CashNews.co

The 10 best for August 2024 #CashNews.co

Cash News

The emergence of online banks has changed the way we manage our money. In the past, we’d visit a bank branch to open an account or make a withdrawal. But now, online banks offer the ability to perform almost every banking task on a mobile device or a home computer.

We compared the top online banks with federal deposit insurance, examining key metrics including fees, customer experience, product choice, account features, and commitment to environmental and social responsibility to narrow down the 10 best. (Click here for the full methodology.)

Discover Bank is an online bank that first launched nationally in 1986 with the Discover Card. Since its founding, Discover has expanded to offer a variety of personal and business banking products.

Discover Bank took the top spot on our list thanks to scoring the highest possible score in our fee category and its account security features, among other key reasons. Discover doesn’t charge monthly fees on any of its accounts. It has done away with insufficient funds and overdraft fees for the Discover Bank Cashback Debit, Online Savings, and Money Market accounts.

Discover scored the maximum points in our security category. Customers who place a premium on account protection can opt into alerts for suspicious activity. What’s more — there’s a $0 fraud liability guarantee, so you’re never on the hook for fraudulent credit card purchases.

Read our full review of Discover Bank

Ally Bank is an online bank headquartered in Utah that offers a range of personal banking and retirement products, as well as lending and investment services.

Ally Bank secured the second spot on our list — only one point behind our top contender because of its slightly smaller ATM network. Ally offers free ATM access through the Allpoint network and up to $10 ATM reimbursement at the end of each statement cycle for using out-of-network ATMs.

Ally is a viable option for customers who prefer to use one bank for all of their accounts. It offers fee-free checking and savings accounts as well as credit card and other financing options.

Another key factor: Ally offers 24/7 support via telephone and chat for customers who value the ability to speak to a live banking specialist.

  • Ally Bank’s products:

    • Checking account: Ally’s Spending Account is a fee-free checking account option that lets users organize their cash into spending buckets, deposit checks remotely, and even get access to their paycheck up to two days earlier than their payday.

    • Credit cards: Ally offers a platinum Mastercard option, as well as two different cash-back cards that reward cardholders with up to 3% cash back for spending at gas stations, grocery stores, drugstores, and other retailers.

    • Lending products: Customers can use Ally’s lending products to get a mortgage, finance their vehicle, or get a personal loan to pay for expenses including medical treatments, home repairs, and renovations.

Read our full Ally Bank review

Quontic Bank is a New York-based digital bank founded in 2009. This bank offers three types of banking products: checking accounts, savings accounts, and certificates of deposit. Quontic offers a suite of traditional mortgages, such as conventional and FHA loans, as well as non-traditional mortgages such as bank statement loans and foreign national loans. Quontic also offers mortgage refinancing for current homeowners.

While Quontic fell behind some of the other banks on our list for having fewer banking products, it stands out for its large ATM network of about 91,000 fee-free ATMS. It also offers a wide range of CD terms for short-term and long-term savings goals. Additionally, its mobile banking app averaged an almost perfect score on both the Apple App Store and Google Play storefronts.

Quontic’s online and mobile banking platform allows users to deposit checks remotely, round up their savings, automatically pay bills, lock and unlock debit cards, transfer funds between accounts, and more.

Quontic also earned a high score in the customer service department, offering customers three different ways to contact a customer service representative – phone, email, and chat.

Read our full Quontic Bank review

Capital One has roots that stretch back more than 25 years as a credit card company, and it has since expanded to offer customers a full suite of banking products and services. In addition to a long list of financial products and services, Capital One offers an educational hub to teach customers how to manage their finances and plan for financial milestones.

Capital One has a large library of educational resources and credit tools. It features articles on how to build credit, make the most of your credit card benefits, increase your loan approval odds, and more. Capital One’s Creditwise tool gives users a more personalized experience that helps them better understand their credit score, keep up with changes to their credit, and monitor the use of their personal information.

Capital One also ranked highly in our customer experience category for having a high mobile app rating and a clear, easy-to-use website.

Although Capital One is a major player in online banking, it fell behind some of our top contenders for a few reasons. At 70,000+ ATMs, Capital One’s ATM network is not as large as our top picks, and it doesn’t offer reimbursement for out-of-network ATM fees.

Capital One also scored lower in our fee transparency category. While it does have individual account disclosures for each account type, the disclosures and fee schedules required a bit more digging to find than our top picks.

Read our full Capital One review

American Express, or Amex, is typically associated with credit cards, but this online bank has plenty to offer. Its products and services include personal savings and checking accounts, loans, investment management, and business accounts and lines of credit.

American Express took the fifth spot on our list for its high score in our environmental and social responsibility category, as well as our security category. Amex offers multi-factor authentication to provide an added layer of security, alerts for suspicious account activity, and fraud protection.

On the environmental front, American Express has made a commitment to net-zero emissions by 2035. In addition to its low-carbon goals, Amex has expressed its commitment to serving communities around the world through the American Express Foundation.

Read our full American Express National Bank review

SoFi, or Social Finance Inc., was founded in 2011 by a group of Stanford business school students and in 2012 launched its Student Loan Refinancing program for federal and private loans. As of today, SoFi serves more than 6.9 million customers and has expanded its product offering to include lending, investing, personal banking, insurance, and more.

SoFi didn’t fall far behind our top contenders in terms of overall points. This bank scored the maximum amount of points in our security category and our fee category for its no-fee model. It did lose a few points for not having any Zelle integration within the mobile app and slower external transfers.

While SoFi’s roots began in the student loan refinancing space, it now offers personal, business, investing, retirement, and insurance products. In addition to its product offerings, SoFi offers a financial insights dashboard for customers who need extra help budgeting and monitoring their credit scores.

  • SoFi’s products:

    • Checking and savings account: SoFi offers an interest-bearing combination checking and savings account with no account fees or balance minimums.

    • Credit cards: SoFi currently offers just one credit card, which earns users unlimited 2% cash-back rewards for every dollar spent on purchases.

    • SoFi invest: SoFi customers can trade stocks and ETFs right in their SoFi mobile app with an investment account.

    • Private student loans and student loan refinancing: SoFi offers student loan refinancing options with no origination fees, pre-payment penalties, or late fees. It also offers private student loans with no fees and multiple repayment terms.

    • Personal loans: SoFi’s personal loans range from $5,000 up to $100,000 to help you cover the cost of personal expenses such as your wedding, travel, and home improvements. Once you’re approved, your money could be available as soon as the same day.

    • Mortgages: SoFi’s home mortgage loans offer fixed terms ranging from 10 years to 30 years, with as little as 3% down.

    • Insurance: For extra protection, SoFi offers auto, home, life, renters, and cyber insurance.

Read our full SoFi review

Axos Bank, founded in 2000, is a digital bank offering banking, lending, and investment products for individuals and businesses. Axos Bank’s digital-first approach means that its products are tailored to customers who prefer the online experience. Axos offers online wire transfers, biometric identification, mobile deposits, and more to give customers a high level of convenience and security.

Axos Bank scored highly in our fees category for having several no-fee account options and transparency around its fee structure. This bank also has an extensive ATM network of more than 91,000 fee-free ATMs. For customers who want an online bank but don’t want to limit quick access to cash, Axos could be the right choice.

  • Axos Bank’s products:

    • Checking accounts: Axos offers three different checking account options with zero monthly maintenance fees — the Essential Checking, Rewards Checking, and Cashback Checking.

    • Savings accounts: Axos offers a high-yield savings account with no monthly maintenance fees or minimum balance requirements. For customers who want to start building their savings early, Axos offers a savings account for teens ages 13-17.

    • Certificates of deposit: Axos’s CDs range from three months to five years, with a $1,000 minimum amount to open an account.

    • Mortgages: Homebuyers can take advantage of a host of mortgage options offered by Axos with $0 lender fees and up to 3% annualized cash back.

    • Personal loans: For customers hoping to finance a large expense, Axos offers personal loans of up to $50,000 with terms ranging from three to six years.

    • Auto loans: Axos’s auto loans can be used to cover purchases and refinancing with no payment for up to 90 days. Terms can be as long as 96 months.

    • Investment accounts: Axos’s investment products include managed portfolios and self-directed trading accounts that users can link to their mobile app to monitor in one dashboard.

Read our full Axos Bank review

Varo Bank is an online bank with just a few product offerings, but its accounts have zero minimum balance requirements and no fees.

Varo Bank made our list for its perfect score in our fee category. This bank doesn’t charge any monthly fees and offers overdraft protection at no charge. It also offers more than 40,000 fee-free ATMs.

Varo has low-cost checking, savings, and credit options, for customers with simple needs who don’t care for a long list of products and banking services. Varo’s 5% APY on its online savings account is significantly higher than national averages.

  • Varo Bank’s products:

    • Checking account: Varo’s fee-free checking account offers perks like cash back and early access to your paycheck with no hidden fees.

    • Savings account: Savers can take advantage of Varo’s 5% annual percentage yield (APY) on up to $5,000 and 3% APY on everything else with no fees or minimum balance requirements.

    • Credit card: The Varo Believe Credit-Builder Card helps customers build credit without a minimum security deposit, extra fees, or interest. Varo doesn’t require a certain credit score to qualify, but applicants must have a Varo Bank account with money in it and $500 or more in qualifying direct deposits.

Read our full Varo Bank review

First Internet Bank was founded in Indiana in 1999 and was the first state-chartered, FDIC-insured institution to operate entirely online. First Internet Bank’s suite of products includes personal and business banking products, health savings accounts, and even accounts for kids.

First Internet Bank made the ninth spot on our list for its variety of products, low fees, and transparency around fees and product details. First Internet Bank is also the only bank on our list that is part of FedNow — the Federal Reserve’s instant payment service that allows financial institutions to send and receive money within seconds. For customers who make frequent funds transfers, this could be a major perk.

Read our full First Internet Bank review

NBKC is a Kansas-based online bank that offers online mortgage lending and consumer banking products. NBKC provides products and services to individual and business customers.

NBKC Bank made our list for its low fees and low minimum balance requirements. NBKC’s combination checking and savings account could also be an appealing product for consumers who want to simplify their finances and keep all their money in one place.

One drawback we noticed is that NBKC is not currently part of the Zelle network. This could be a challenge for customers who frequently send money to friends and family or use it to pay for recurring bills.

  • NBKC Bank’s products:

    • Checking and saving account: NBKC offers a combination checking and savings account that allows customers to spend and save money with one account and earn interest on their balance. Customers can set up autopay for their regular bills, savings goals for future expenses, and track their progress and spending along the way.

    • Money market account: Savers can take advantage of NBKC’s money market account which doesn’t charge any fees and has a minimum balance requirement of just one cent to earn interest on your balance.

    • Certificates of deposit: NBKC’s CD terms range from six months to five years and require a minimum opening deposit of $1,000.

    • Mortgages: Homebuyers and owners can benefit from NBKC’s home loans which include purchase loans, refinancing options, and home equity loans.

    • Lending services: NBKC also offers other types of financing options like auto loans and personal loans.

Read our full NBKC Bank review

Online banks and traditional brick-and-mortar banks typically offer the same types of products, but the lack of physical locations for online banks makes the banking experience quite different.

  1. Branches: The most obvious difference between these two banking models is that brick-and-mortar banks have physical branches and online banks do not. If you’re the kind of customer who prefers to speak with a banking associate in person to open an account or resolve issues related to your account, an online bank may not be the right option for you.

  2. Fees and interest: Online banks usually have lower operating costs because they don’t have to maintain office buildings or other physical infrastructure. As a result, an online bank may offer more competitive APYs or lower fees on their products. This isn’t a guarantee, but it’s worth comparing both types of banks to secure the highest interest rates and lowest fees for the products you’re interested in.

  3. ATM access may be limited: Online banks typically do not have their own ATM network and rely on third-party networks to offer their customers ATM access. If you don’t like to carry cash and frequently use electronic transfers or payments, this is probably a non-issue. However, if you do use cash for certain expenses, it may be more difficult to access it without paying an extra fee. Certain third-party networks have the power to charge their own fees, even if your bank doesn’t. Many online banks offer ATM fee reimbursement, but it’s usually capped at a certain amount per month.

  4. Mobile app and online banking experience: Online banks exist solely online, so it’s only natural that most of them will invest heavily in those platforms and provide you with greater digital banking capabilities. This could include mobile check deposits, mobile wallet integration, card locking and unlocking, ATM locator tools, budgeting tools, and more. Many traditional banks offer mobile apps, but they may be more limited in what they offer.

Read more: Online banking vs. traditional banking: Which one is right for you?

If you’re considering opening an online bank account, there are a few key factors you should consider to ensure that you choose the best bank for your personal finances.

Before considering any bank, whether it’s online or traditional, you should first verify that the bank is FDIC-insured. FDIC insurance protects the money in your deposit account up to $250,000 per depositor, per ownership category. Common ownership categories include single accounts, joint accounts, retirement accounts, trust accounts, business accounts, and more. The easiest way to verify that your bank offers deposit insurance is to use the FDIC’s “BankFind” tool which allows you to type in any bank’s name, URL, or FDIC certification number to verify that it is indeed covered by the FDIC. Many banks also denote their status with “Member FDIC” noted on their homepage.

The benefit of a bricks-and-mortar institution is that you can usually stop by your local branch to deposit cash and withdraw money free of charge when you need it. Online banks can be a bit tricker. Many online banks offer fee-free ATM networks, but it’s not guaranteed that you’ll have an ATM close to home. ATM cards are also not a guarantee with every online bank, and in some cases your only option for accessing your funds could be via electronic transfer to another bank account.

If you plan to make frequent cash deposits or prefer to pay for certain expenses in cash, you’ll want to consider whether an online bank’s ATM network and ATM card privileges will work for you.

Customer service may not be at the top of your list of considerations when choosing a bank, but mishaps can happen, and when they do, you might want to have a real human helping you to resolve it rather than a chatbot.

Be sure to review each bank’s customer service options to learn more about its customer service hours and the different methods for reaching a representative.

Online banks don’t typically have the same operational costs as brick-and-mortar banks, which is good news for their customers. The bank might offer fee-free or low-fee accounts in certain instances, or higher APYs. However, this isn’t always the case. Be sure to read the account terms and conditions of any accounts you’re considering and compare those figures with rates and fees from other banks to find the best option for your needs.

Research the features available to customers on this bank’s mobile app and online platform. Some banks may not invest heavily in their digital tools and websites, and as a result, you could be limited as a customer. Functions you may find useful include transferring money between accounts, mobile check deposits, setting up automatic bill payments, and more. Think carefully about the features and capabilities that matter most to you and factor those in when making your decision about the best online bank for you.

What is online banking?

Online banking involves banking at financial institutions that don’t operate physical branches. These banks typically offer similar products and financial services to credit unions and traditional banks, but customers do all of their banking online or via mobile app.

Are online banks safe?

Online banks are just as safe as traditional banks, if not more so. As long as your bank is protected by federal deposit insurance, your deposits are federally insured up to $250,000 per depositor, per ownership category.

What is one con to using an online-only bank?

The most obvious drawback of online banking is that you don’t have access to a physical branch or face-to-face customer service when you need it. However, many online banks have expanded their customer support offerings to include late-night, weekend, or even 24/7 service hours to give customers greater access to a service representative.

The best free online bank will depend on your needs and preferences. That said, we chose Ally Bank’s spending account as our top free checking account for its no monthly maintenance fees, competitive interest rates, and great customer service. Learn more about how to find the best online checking account.

To open a bank account online, you typically need to visit the bank’s website, choose the type of account you want (e.g., checking, savings), and provide personal information such as your Social Security number, a valid ID, and address verification. The process is usually straightforward; simply fill out an online application, which can often be done in a matter of minutes.

Many online banks provide access to ATMs. They often partner with nationwide ATM networks such as Allpoint or MoneyPass, which allow customers to use ATMs across the country without incurring fees. Some online banks may also offer reimbursements for fees charged by out-of-network ATMs.

You can see a list of banks that offer savings accounts with 5% APY or higher here. Keep in mind these rates are subject to change, so always verify rates and account terms directly with the bank before opening an account.

The benefits of using an online bank include higher interest rates on deposit accounts, lower fees, and 24/7 access to banking services via desktop and mobile.

To withdraw cash from an online account, you can often use network ATMs or electronically transfer money between accounts. Many online banks also allow you to deposit checks through mobile apps, while some accept cash deposits at network ATMs or via reload networks like Green Dot.

Our grading system, collected and carefully reviewed by our personal finance experts, comprises over 600 data points for over 20 FDIC-insured online banks to develop our list of the top 10 best online banks. We compared these banks across key metrics, including fees, customer experience, product selection, account features and security, and environmental and social responsibility.

The banks on our list could earn a maximum of 75 points across all five categories. Here’s a closer look at the categories we considered:

Fees: 20 points

We weighed each bank’s fees for its most basic checking and savings account options, as well as overdraft fees and ATM fees. Banks were awarded points for having no or lower fees, greater fee transparency, and clear, easy-to-access fee structures.

Customer service experience: 28 points

Customer service is a key element in a bank’s product offering, especially with online banks, where visiting a branch and asking for in-person help is usually impossible. Banks were scored on metrics including mobile app ratings on Apple and Google storefronts and methods for reaching customer service representatives. Banks that offered phone, chat, and email contacts were awarded the maximum points in that category.

We examined each website for information clarity as part of the customer service offering assessment. This subjective assessment looked at each bank’s website design, ease of navigation, language clarity, and whether customers could easily gather all the needed information to make an informed decision about any particular product.

We also awarded points to banks that offered more extensive ATM networks, credit monitoring tools, and educational resources.

Product selection and account features: 14 points

Each bank we analyzed could earn one point per product for each of the following:

We also looked at the speed of ACH transfers and gave banks points for same- or next-day transfers, early access to paychecks, Zelle as a service, and being part of FedNow — the Federal Reserve’s instant payment service.

Security: 10 points

We carefully considered each bank’s security measures to protect your money and sensitive information. We looked at factors such as multi-factor authentication, website encryption, alerts for suspicious activity, zero fraud liability, and whether each bank had a dedicated security page or hub.

Environmental and social responsibility: 3 points

Many consumers consider a bank’s carbon footprint and philanthropic efforts before deciding on a particular institution. As such, banks that have dedicated pages to their philanthropic efforts and environmental goals, and have pledged to reach net zero CO2 emissions by 2050 scored up to 3 points for doing so.

Our team identified the top 10 online banks available today. However, there are many more reputable online banks out there, and one of them may be a better fit for your financial needs. Check out our reviews of these additional online banks to learn more about your options:

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