Here are the best online banks of October 2020
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Here are the best online banks of October 2020
|Axos (Member FDIC)||Capital One 360 (Member FDIC)||Ally (Member FDIC)||Alliant (Federally Insured by the NCUA)||Discover (Member FDIC)|
|Checking APY||0% – 1.25%||0.10%||0.10% – 0.25%||0.25%||0%|
|Savings APY||0.61% APY||0.50% APY||0.60% APY||0.65% APY||0.60% APY|
|24/7 phone support||✓||✗||✓||✓||✓|
|Mobile app rating||iOS: 4.7 Android: 3.4||iOS: 4.8 Android: 4.7||iOS: 4.7 Android: 3.7||iOS: 4.7 Android: 4.5||iOS: 4.8 Android: 4.5|
|ATM fee reimbursement||Varies by checking account||None||Up to $10/month||Up to $20/month||None|
|Learn More||Learn More||Learn More||Learn More||Learn More|
Many of us grew up making the journey to a brick-and-mortar bank to hand a paper check to a teller — but this isn't necessarily the norm anymore. Thanks to online banks, you can now bank without leaving your home.
Online banks offer more than just convenience. Because they don't have to pay for physical branch locations, online banks typically pay higher interest rates and charge fewer fees.
A good online bank should make it easy to navigate its website and mobile app. It should also provide high-quality customer service with live agents, since you don't have the ability to visit a branch and speak with someone face-to-face. Above all else, an online bank should be FDIC insured, just like a brick-and-mortar bank.
Below, you'll find our best online bank picks right now. We know "best" means something different for everyone, so we've listed each bank's strengths, as well as its limitations.
- Here are the best online banks of October 2020
- How our list compares to other publications
- Keep reading to learn more about our top picks
- Other online banks we considered and why they didn't make the cut
- Frequently asked questions
- The experts' advice on choosing the best savings account for you
Our expert panel for this guide
We consulted banking and financial planning experts to inform these picks and provide their advice on finding the best online banks for your needs. You can read their insights at the bottom of this post.
We're focusing on what will make an online bank most useful, including customer service, fees, rates, and more.
How our list compares to other publications
Research is an important part of choosing an online bank, and Business Insider isn't the only website looking for the best online banks. To help you make a decision, we've compared our top picks with lists from other publications.
Keep in mind that each publication has different methodologies for identifying the "best" online banks. We included a checkmark under each publication name if it recommended an app in its roundup.
|Personal Finance Insider||Bankrate||Forbes||Nerdwallet||The Balance|
|Capital One 360||✓||✓||✓||✓|
Keep reading to learn more about our top picks
Why it stands out: Axos offers five different checking accounts, all geared toward specific needs:
- Essential Checking (get paid two days early)
- Rewards Checking (earn a high APY)
- CashBack Checking (earn up to 1% cash back on purchases)
- Golden Checking (age 55+)
- First Checking (ages 13-17)
You can also open a savings account with a competitive rate, and both checking and savings accounts come with a debit card. Axos doesn't charge monthly maintenance fees.
Customer service is definitely one of Axos' strongest features — speak with a live representative 24/7 on the phone, online, or through the app.
What to look out for: Initial deposit. You'll need at least $250 to open a high-yield savings account.
There are also several requirements to earn the full 1.25% APY with an Axos Rewards Checking account. You'll earn 0.4166% for $1,000 in monthly direct deposits, another 0.4166% for using your debit card 10 times per month, and another 0.4116% for using the card a total of 15 times in a month.
Capital One 360
Why it stands out: Capital One 360 Checking (Member FDIC) ranks as our top checking account overall. It doesn't charge any overdraft, foreign transaction, or monthly service fees, and Capital One ranks No. 4 on J.D. Power's US National Banking Satisfaction Study.
Capital One's mobile app has received positive reviews. You can do things you might not be able to do with competing banking apps, such as lock your debit card and receive a free credit report.
Capital One 360 doesn't require initial deposits for any of its accounts. Although Capital One 360 is Capital One's online operation, you have the benefit of speaking with someone face-to-face if you live near a branch location or Capital One Café.
What to look out for: No out-of-network ATM fee reimbursements. You can use your debit card at over 39,000 ATMs nationwide for free, but unlike many online banks, Capital One doesn't reimburse any fees charged by out-of-network ATM providers.
Why it stands out: Discover is a good option for people who want to do all their banking, investing, and borrowing with one institution. It offers a wide range of products, including credit cards. Its debit card offers 1% cash back on up to $3,000 of purchases per month.
Although Discover doesn't reimburse out-of-network fees, its network includes more fee-free ATMs than most competitors — over 60,000.
What to look out for: Minimum deposits. While you don't need to place an initial deposit for a checking or savings account, you'll need at least $2,500 to open a money market account or CD account.
Why it stands out: Ally ranks as our top high-yield savings account and top savings account overall. This bank has been a power player in the high-yield savings space for a few years now, and it consistently nabs top awards for online banking. Its mobile app has features many banking apps lack, such as mobile check deposit and an in-network ATM locator.
Ally is known for paying competitive rates and not requiring initial deposits for any of its accounts. It also has solid customer service, which you can reach 24/7 over the phone or via live chat.
What to look out for: Wide range of CD types. Ally offers 11 CD options total, so if you plan to open a CD with this bank, be careful to select the one that's the best fit for your needs.
Alliant Credit Union
Why it stands out: Like Capital One, Alliant has separate checking and savings accounts for minors. These pay relatively high interest rates and allow parents to have joint ownership, which provides a balance of children's independence and parental control.
Alliant offers an impressive 80,000 ATMs nationwide, and it reimburses up to $20 per month for out-of-network ATM fees.
What to look out for: Overdraft fees and compound interest. Most banks will only charge you overdraft fees up to a certain number of times per day. But Alliant can charge you an unlimited number of times, which can cost you a lot if you keep swiping your debit card without realizing you've overdrawn. Like most credit unions, Alliant compounds interest monthly rather than daily, which will limit how much you earn in the long run.
Other online banks we considered and why they didn't make the cut
- Simple (Member FDIC): This is a good online bank with a built-in budgeting feature, but you must have a Simple checking account before opening a savings account — so you can't earn a high APY unless you have both accounts.
- American Express (Member FDIC): American Express pays a competitive APY on savings account balances, but the bank doesn't offer a checking account.
- Barclays (Member FDIC): Like American Express, Barclays offers solid rates but doesn't provide a checking account.
- Radius Bank (Member FDIC): This online bank offers a wide range of account types, but rates are low and minimum account balances are high.
- Bank5 Connect (Member FDIC): You'll earn some interest on your Bank5 Connect checking account balance, but its savings account rate isn't as high as our top picks' APYs.
- CIBC Bank (Member FDIC): This online bank offers a variety of checking and savings accounts, but most require a minimum opening deposit or charge a fee if your balance falls below a certain amount.
- Salem 5 Direct (Member FDIC): This is a solid online bank, but its rates aren't quite as competitive as what you'll find at our top picks.
- HSBC Direct (Member FDIC): HSBC Direct pays competitive rates, but its mobile app has received negative reviews in the Apple and Google Play stores.
- Marcus by Goldman Sachs (Member FDIC): Even though Marcus by Goldman Sachs is a respectable online bank, it doesn't offer a checking account.
- E*TRADE Bank (Member FDIC): This online bank pays low rates on savings and checking accounts.
- Quontic Bank (Member FDIC): You have plenty of bank account options to choose from with Quontic Bank — but you need to make 15 debit card transactions per month to earn the competitive APY on its high-yield checking account, and its high-yield savings APY is lower than what you'll find with our top picks.
- TIAA Bank (Member FDIC): TIAA Bank offers respectable rates, but its checking and savings account rates drop a bit after the first year.
- Vio Bank (Member FDIC): This online bank pays one of the highest savings rates in the industry (which is always subject to change), but it doesn't offer a checking account.
- Chime (Member FDIC): Chime's app is beloved, and it doesn't charge foreign transaction fees; however, you must open a checking account to qualify for a savings account.
- CIT Bank (Member FDIC): This is a solid online bank, but you'll need between $100 and $1,000 to open bank accounts, and it doesn't provide 24/7 live customer service over the phone like Ally does.
- Synchrony (Member FDIC): This online bank pays a competitive rate with no minimum balance on savings accounts, but you can't open a checking account.
- NBKC Bank (Member FDIC): You'll earn a good rate on your checking account balance, but rather than offering a regular savings account, NBKC bank only has a money market account.
- Varo: Varo offers very competitive rates, but it charges a $2.50 fee for using out-of-network ATMs.
- FNBO Direct (Member FDIC): This is a respectable online account, but its savings account rate isn't as high as what you'll find with our top choices.
- MemoryBank (Member FDIC): This online bank only offers checking and money market accounts, and you'll pay a $15 fee if your checking account balance falls below $1,000.
- Brio Direct (Member FDIC): You'll find competitive savings rates at Brio Direct, but you can't open a checking account with this online bank.
- USAA Bank (Member FDIC): This could be a good online bank for military members and families, and new recruits can get paid a day early; however, USAA's rates are low.
- Charles Schwab (Member FDIC): Charles Schwab provides unlimited out-of-network ATM fee reimbursements and doesn't charge foreign transaction fees, but its rates are low.
Frequently asked questions
Why trust our recommendations?
Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY, for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to.
How did we choose the best online banks?
There are a lot of online banks out there. Through our research, we've found that the best online banks offer a wide range of products, high bank account rates, low fees, and effective customer service.
While interest rates are an important aspect of any online bank account, several offer the same annual percentage yields (APYs). To differentiate between them, we also considered minimum deposit and balance requirements, fees, ATM access and fee reimbursement, mobile apps, and other standout features. We also took customer service into account, because with an online bank, you don't have the option of walking into a branch to speak with a representative.
We reviewed over two dozen institutions to identify the strongest options. We also cross-referenced our list against popular comparison sites like Bankrate and NerdWallet to make sure we didn't miss a thing.
What is an online bank?
Many brick-and-mortar banks allow you to bank online — but an online bank has you bank primarily or exclusively online. Some online banks do have a couple physical locations, but they still operate digitally for the most part.
Why choose an online bank over a brick-and-mortar bank?
There are a few downsides to choosing an online bank over a brick-and-mortar bank. For example, you may miss being able to speak with a banker face-to-face. And if you need to deposit cash regularly, you're out of luck with an online bank.
However, because online banks don't have to pay for physical branch locations, they typically pay higher rates and charge fewer fees. This means you can earn more and spend less with your bank.
The experts' advice on choosing the best savings account for you
To learn more about what makes a good online bank and how to choose the best fit, four experts weighed in:
- Tania Brown, certified financial planner at SaverLife
- Roger Ma, certified financial planner with lifelaidout® and author of "Work Your Money, Not Your Life"
- Mykail James, MBA, certified financial education instructor, BoujieBudgets.com
- Laura Grace Tarpley, associate editor of banking, Personal Finance Insider
Here's what they had to say about banking online. (Some text may be lightly edited for clarity.)
How can someone determine whether a bank is the right fit for them?
Tania Brown, CFP:
"Obviously, you want to make sure it's FDIC insured. Also, your banking experience — do you like walking into a bank? Well, then you need someone local. Do you just not care if you ever see your bank? Then you're okay online. Do you write checks? Do you not write checks? So it's thinking through how your experience with it is going to be before you make that decision."
Laura Grace Tarpley, Personal Finance Insider:
"I would look for the bank that charges you the least in fees. This means either no monthly fees, or you qualify to waive the monthly fees. If you never overdraw from your account, then a bank's overdraft fees won't matter much to you. But if you occasionally overdraw, then I'd look at the fees or overdraft protection options."
What should someone look for in an online bank?
Tania Brown, CFP:
"With an online bank, absolutely online customer service, because you do not have the advantage of walking inside and talking to a human being. How often are you able to get them? What are their hours?"
Roger Ma, CFP:
"How onerous the transfer process is, transferring money in and transferring money out. Is it same day, next day? Is it pretty easy to sync a brick-and-mortar checking account to this particular high-yield savings account?"
Mykail James, CFEI:
"When it comes to online banks, you want to be a little bit more strict about what type of interest rates they're providing. That's the biggest thing, because online banks are supposed to have the higher interest rate because they don't have the overhead of the brick-and-mortar. You want to make sure that it's well above the national average. What type of securities do they provide? Do they have two-factor identification? If it's an online bank, they should definitely have — at the bare minimum — two-factor authentication in how easy it is to change your passwords and things like that, because you want to be a little more hypersensitive about the cyber security for a strictly online bank."
This post was last reviewed and updated on October 28, 2020.
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