Should You Switch To An Online Bank Account?

It's no surprise that 80% of Americans would rather bank digitally than visit a brick-and-mortar branch. Online banking is simple, fast, convenient, and can be done anywhere, anytime. Not only do you have several banking options at your fingertips, but online banks provide all, if not more, convenient resources than traditional banks. If you are new to the idea of taking your checking and savings account fully virtual, this guide will answer all of your questions and put your mind at ease. 

Which Account Is Right For You?

	Savings Account	Checking Account	Money Market Account (MMA)
Earns interest	✓	✓ (varies by bank)	✓
FDIC-insured	✓	✓	✓
ATM access	✓ (varies by bank)	✓	✓
Debit card & check writing access	✗	✓	✓ (with federal limits)
Higher yield potential	✓ (varies by bank)	✗	✗
Our Top Choice:

Top 5 Benefits of Online Banking

1. Lower Fees: Online banks are able to offer little to no fees because generally, they don’t have to worry about maintaining hundreds of brick and mortar branches. Some banks, like Chime, offer overdraft protection up to $200 without fees on top of zero monthly, transaction, and foreign fees. 
2. Better Interest Rates: Online banks typically have higher APY rates on its savings accounts, as well as select interest-earning checking accounts. According to Investopedia, “The most generous of them offer as much as 1% to 2% more than you'll earn on accounts at a traditional bank.”This is a significant difference once you do the math. If you kept $10,000 in a traditional with a 0.01% APY, you would earn $1 on your savings during the year. Alternatively, keep that money saved in an online bank account that earns 0.40% APY, like at CIT Bank, you will earn $50. 
3. Accessibility: Just because your online bank is technically in the cloud, it doesn’t mean you are going to have a harder time managing your money. In fact, most online banks are connected to ATM networks, so you can withdraw money from your account almost anywhere. Varo has no-fee ATM withdraws from over 55,000 Allpoint® ATMs, which are conveniently placed in stores like Walgreens, CVS, Target, and more. 
4. Better Online Experience: While most traditional banks have online bill pay and mobile apps, online banks still dominate the fintech space. You can expect better online customer service and more online options. You can even contact your bank representative late at night or on the weekend. 
5. Many Banking Products Offered: Some online banks stick with a variety of checking, savings, and money market accounts. Other banks like Capital One offer a suite of banking products to keep all your finances in one easy-to-manage spot. Capital One offers savings, checking, credit cards, and auto loans.

Our Top Online Banks as of Nov 29th 2021

Bank	APY	24/7 Support	Explore
	0.40%	Yes	Visit Site
	1.00%	No	Visit Site
	0.50%	No	Visit Site

All the Answers to Your Online Banking Questions 

Q: What Are the Downsides of Having Online Banks?

A: The biggest drawback of online banking is the liquidity of your money. Yes, you can easily use an ATM to pull out a few hundred dollars, but if you need to access $700 or more same-day, that can be an issue. One way to get around this is to choose an online bank with traditional bank locations too. Chase is the best of both worlds since there is a good chance you have a Chase bank near you. 

Q: What’s the Difference Between Net Banking and Mobile Banking?

A: Mobile banking is a convenient add-on for most banks. Depending on your bank, mobile banking might be limited, but most apps should allow for check deposit, account monitoring and quick bill pay. Net banking, or online banking, can refer to using your bank’s website on a personal computer rather than banking through an app. It can also refer to online-only banking where you perform all of your banking functions and purchase products via the web. 

Q: Are Online Banks Safe?

A: Yes! Online banks, like traditional banks, are FDIC-insured up to $250,000. However, all banks and even credit cards with online access can be vulnerable to fraudulent conduct if a hacker gets to your account. 

The easiest way to protect your account is to avoid clicking on links in any emails you receive about your bank. Scammers are notorious for sending emails that look like they came from your bank and usually make you want to click a link quickly. If you are unsure if an email is real, check the sender’s email address, not just the name. Then close the email and open up a new window and access your online bank account. 

Q: How Can I Secure My Online Bank Account?

A: Choosing a unique and strong password is an excellent start to keeping your online bank account secure. If possible, enable Two-Factor Authentication. It takes longer to sign in, but offers another layer of security. Another essential step to keeping your bank account secure is to never log in to your bank account through someone else’s computer or through public Wi-Fi. If you need to check your bank account while at a local coffee shop, do it with your phone either through phone data or the app. 

Services and Features You’ll Enjoy with Online Banking

Online banks offer a fleet of services to help you stay on top of your money management and achieve your financial goals. Here are features you can expect no matter which online bank you choose:

• Wire transfers - Send money to any account at any time
• Digital check deposit - Instantly scan and deposit a check with your smartphone
• Bank-to-bank transfer - If you use more than one banking account, you can easily transfer funds between the accounts
• Bill payment - Pay bills one-time or set an automatic payment so you never receive a late fee
• Digital/downloadable account statements - Quickly integrate your statements into budgeting software or send them to your accountant or mortgage broker 
• Mobile banking - An easy-to-use banking app to manage your money on the go
• Identity theft insurance - An extra layer of protection for you and your family 
• Personal loans, student loans, home loans, and more lending options - Online banking can also provide solutions to get ahead in life

Now is the time to reap the benefits of online banking. Even if you just use an online bank for a savings account, you will quickly see the perks of higher APY and have many money market accounts to select. 

Explore Leading Online Banks

1. American Express®  

With one of the highest APYs around, American Express®  savings, Member FDIC, gives you an incredible edge over traditional banks. Plus, you’ll get the award-winning customer support, convenient online accessibility, and rock-solid security features that come from an industry leader like American Express®  *ˢᵖᵒⁿˢᵒʳᵉᵈ. 

American Express® National Bank Visit Site

2. Aspiration

Aspiration is a socially conscious online financial services firm that offers users variable interest rates and gives some of its profits to charity. Aspiration is best known for its cash management accounts, where users decide their own monthly fee and earn conscious cash back. 

Aspiration Visit Site

3. Chime

While Chime does not resemble a traditional bank, users can reach their financial goals with this banking app. With Chime, you can choose a spending and savings account and rest easy knowing your money is FDIC-insured.

Chime Visit Site

HSBC Premier Disclosure

Get up to $600 with a 3% Cash Bonus Checking Offer when you open a new HSBC Premier checking account and complete the following qualifying activities. Open your new HSBC Premier checking account online by January 7, 2021; and Set up Qualifying Direct Deposits into your new HSBC Premier checking account; and then Enjoy 3% Cash Bonus, up to $600, on Qualifying Direct Deposits up to $100 per month, during the first 6 calendar months after account opening. You will automatically receive the 3% Cash Bonus in your new HSBC Premier checking account approximately eight weeks after completing that month’s qualifying activities. Deposit products are offered in the U.S. by HSBC Bank USA, N.A. Member FDIC. ​

Chime Disclaimer

Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Chime Spending Account is required to be eligible for a Savings Account. ˜ Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM. Cash deposit or other third party fees may apply. *Eligibility requirements apply. Overdraft only applies to debit card purchases and cash withdrawals. Limits start at $20 and may be increased up to $200 by Chime. See chime.com/spotme. ^Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date. ⁺The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of November 1, 2021. No minimum balance required. Must have $0.01 in savings to earn interest. ¹ Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Spending Account into your savings account. Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more into your savings account. ² FDIC deposit insurance limit to $250,000 per depositor, per insured bank, per ownership category. For Stride Savings Account depositors, funds are eligible for FDIC insurance when it arrives at the bank. Please visit www.chime.com/savings-apy-and-program-banks/ for more details on FDIC insurance. ³ Sometimes instant transfers can be delayed. The recipient must use a valid debit card to claim funds. See your issuing bank’s Deposit Account Agreement for full Pay Friends Transfers details. ⁴ The average national savings account interest rate of 0.06% is determined by FDIC as of November 1, 2021 based on a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Visit https://www.fdic.gov/regulations/resources/rates/ to learn more.

Varo Disclosure

¹Annual Percentage Yield (APY) is accurate as of Oct 1, 2021. All Varo Savings Accounts earn 0.50% APY beginning on that date. APY is variable and is subject to change. No minimum balance required to open an account. Balance in Savings must be at least $0.01 to earn interest. To earn 3.00% APY, the Varo Savings Account must meet these requirements: Account Holder must 1) receive total qualifying direct deposits of $1,000 or more to a Varo Bank Account or Varo Savings Account in the same qualifying period. 2) The daily balance in the Varo Savings Account must not exceed $5,000. 3) Keep your Bank Account and Savings Account balances above or equal to $0.00 the entire calendar month. If these conditions are not met, you will earn 0.50% APY on the Savings Account balance for that period. The Qualifying Period is defined as the first day of the calendar month through the last business day of the calendar month.

PenFed Disclosure

The Annual Percentage Yield (APY) PenFed offers on all its products are variable rate accounts and subject to change. The rates stated are current as of June 2021 unless otherwise noted are subject to change. The fees on your PenFed account can reduce earnings. This credit union is federally insured by the National Credit Union Administration (NCUA). Premium Online Savings account holders must agree to electronic delivery of account opening disclosures and monthly statements.