The best online banks in July 2024
Online banking might seem like a 21st-century invention, but its seeds were planted decades ago. The Bank of Scotland in 1985 became the first bank to provide electronic home banking services to clients and the first website for banking services was launched by Stanford Credit Union in 1994.
Now, online banks are widespread and often come with better rates and lower fees than traditional banks, in part because of their lower overhead costs. If you’re searching for an online-only bank, you now have numerous choices. Here are our picks for the best online banks and what makes them great.
Methodology
Our team of experts at CNN Underscored Money analyzed dozens of financial institutions to determine the rankings for the best online banks. We heavily emphasized APY, product offerings and fees to find the best all-around banks for customers. You can read more about our methodology below.
Discover Bank
Best for cashback checking account
Why we picked it
Discover Online Banking offers a checking account, savings account, certificates of deposit, money market accounts and retirement accounts, so there’s plenty to choose from. The checking account doesn’t pay interest but it does offer 1% cash back on up to $3,000 in monthly debit card purchases (see website for details). There are no monthly fees or minimum balance requirement, and customers can get access to their paychecks up to two days early with direct deposit.
The online savings account has a 4.25% annual percentage yield (APY), while the CD has an APY of 4.25% for 9-month terms and 4.70% for 12-month terms. The money market account pays an APY of 4.00% for balances under $100,000 and 4.05% for balances of $100,000 and higher.
Pros
- No monthly service fees
- Competitive APYs
- No minimum balance on checking account
Cons
- APY lower for longer term CDs
- Need at least $100,000 to get the highest money market APY
- Checking account doesn’t pay interest
Who should use it
Discover has a broad lineup of accounts for an online bank, so it’s a good fit for customers who want a full banking experience with no fees and better savings rates than you’ll find at most traditional banks. It also has the backing of an established financial company that has been around for nearly four decades.
Quontic Bank
Best for variety of products and services
Why we picked it
Quontic is a digital bank that got its start in 2009, so it’s a fairly young player compared to some of the other banks on this list. It offers several checking and savings options to customers as well as certificates of deposits and a wide selection of mortgage loan options.
Highlights include the High Interest Checking (1.10% APY), Money Market (5.00% APY) and CD accounts (high of 5.05% APY for a 6-month term).
Quontic’s range of products, large ATM network and banking accounts that generally all have above-average APY combined with below-average fees and minimums make this an excellent online bank.
Pros
- High APYs
- No monthly fees
- Wearable Pay Ring lets you make contactless purchases
Cons
- $100 minimum deposit to open certain accounts
- Must meet debit card purchase requirements to get the highest APY on interest checking
- Lower APY for longer-term CDs
Who should use it
Quontic puts a big focus on its mortgage products, which include traditional and non-traditional mortgages, VA loans, FHA loans and refinancing, so it’s a good choice if you need a mortgage loan and also want a solid lineup of bank accounts to choose from.
Current
Why we picked it
Current is a tech-centric financial platform that takes a novel approach to banking. Rather than offering a checking account, its Spend product is a secured credit card designed to help customers build credit. The card does have some traditional checking account features, such as direct deposit that lets you get your paycheck up to two days faster. You can also use the card to withdraw money from an ATM. Card customers get fee-free overdrafts as well. The Spend account doesn’t have the option for checks or check-writing capabilities.
Current’s one savings product is a “Savings Pod” that lets you earn 4.00% APY when you set up and maintain a monthly direct deposit of $200 or more. Otherwise, you earn the 0.25% APY base rate. Current also has an investment product that lets customers buy and sell cryptocurrency without trading fees.
Pros
- Fee-free overdrafts on secured card
- No monthly service fees
- Decent APY on Savings Pod if you maintain direct deposit
Cons
- Limited account choices
- No standard checking account option
- Must meet deposit criteria to get the highest savings APY
Who should use it
Current targets people who are fairly new to banking, comfortable with technology and need to build credit, so it’s best for younger consumers. It’s not a good option if you want a full suite of banking products.
SoFi
Best for combined checking and savings
Why we picked it
Since its founding in 2011, SoFi has become a major player in digital finance with more than 6.9 million members and over $73 billion in funded loans. It’s best known for its lineup of student, personal and mortgage loans, though it also offers banking, investment, credit card and insurance products.
Its banking products include a single high-yield checking account and a single savings account that are combined into the SoFi Checking & Savings Account. If you sign up for a savings account, you get a checking account and vice versa. You’ll earn a 0.50% APY on checking balances, with no account fees or balance minimums, and a 4.60% APY on savings balances, with no account fees.
SoFi aims to simplify the banking experience with this account and customers seem to enjoy using it since SoFi has the highest Trustpilot rating of any bank we analyzed for this list.
Pros
- Wide lineup of loan products
- Decent APY on savings account
- No monthly fees
Cons
- Limited banking products
- No CD options
- You can find a higher APY for a high-yield checking account
Who should use it
SoFi works best for consumers in need of loan products who also want the simplicity of a combined savings and checking account.
Bread Financial
Why we picked it
Bread Financial describes itself as a “tech-forward” financial services company that aims to provide simple and personalized payment, lending and saving solutions. Those solutions come in the form of credit cards, personal loans and two savings options: a high-yield savings account and CDs.
The high-yield savings account pays a 5.15% APY that is accrued and compounded daily. You’ll need to make a minimum $100 opening deposit to earn the APY. Bread Financial offers five CD terms: 1-year, 2-year, 3-year, 4-year and 5-year. The highest APY is 5.25% for the 1-year CD, while the lowest is 4.15% for the 4- and 5-year CDs.
You’ll need to be comfortable banking entirely online with Bread because the bank doesn’t have branches or ATM access.
Pros
- High APYs
- No monthly service fees
- Strong app ratings
Cons
- No ATM access
- No checking account option
- Minimum opening deposit on savings account
Who should use it
The biggest draw at Bread Financial is the high APYs you can earn on its savings account and CDs, so it works best for consumers who want a second bank to grow their money and are comfortable banking with branch or ATM access.
Capital One
Why we picked it
We selected Capital One as one of the best online banks because it’s a combination of an online bank (high APYs and low fees) and a brick-and-mortar bank (hundreds of branch locations). It is a major force in the financial world, ranking as one of the 10 largest banks in the U.S. and one of the 100 biggest companies regardless of industry.
Its online banking options cover a full suite of checking accounts, savings accounts, credit cards, loans and business/commercial products. None of its banking products have a minimum required deposit or balance, making them very accessible.
Capital One also has options for younger bankers with the MONEY Teen Checking and Kids Savings accounts.
Pros
- Strong APYs outside of checking
- Physical locations in some states
- No monthly fees or minimums
Cons
- Low APY on checking accounts
- Low Trustpilot ratings
- No money market account
Who should use it
Capital One offers a full-service banking experience backed by a major financial company, so it’s a good fit for consumers who are more comfortable with traditional banking. You can also earn very good APYs on certain products.
Synchrony Bank
Why we picked it
Synchrony is another financial services company that packs a lot of muscle. In terms of online banking products, the company focuses solely on savings accounts, offering standard savings, CDs, money market accounts and IRAs, offering accounts that generally have no or below-average fees.
Its High Yield Savings account pays an APY of 4.75% with no monthly fees and no minimum deposit or balance requirements. CDs come in terms of three months to 60 months and offer APYs ranging from 0.25% for a 3-month CD to 5.15% for a 13-month CD. Longer-term CDs of 48 months and 60 months pay APYs of 4.00%. Customers also have access to 24-month bump-up CDs (3.60% APY) and 11-month no-penalty CDs (0.25%).
Synchrony’s Money Market accounts pay an APY of 2.25% with no monthly fees and no minimum deposit or balance requirements.
Pros
- Wide range of CD options
- High APYs
- No monthly fees or minimums
Cons
- No checking account option
- Money market APY is low compared to some rivals
- CD rates are lower for longer terms
Who should use it
Synchrony’s biggest attraction is its wide range of savings and CD options, which give you a lot of choices and pay very good interest rates. But it’s not a great option if you want a full banking experience that includes checking accounts.
Bank5 Connect
Best for high savings balances
Why we picked it
Bank5 Connect is an online bank created in 2013, but its parent company, BankFive, has been around since 1855, so there’s a lot of banking experience here. The online bank offers deposit accounts and credit cards to customers.
Like most online banks, Bank5 Connect has attractive APYs across its accounts. The High-Interest Checking Account pays an APY of 2.70% with no monthly maintenance fees and offers cash-back rewards with your debit card.
Three savings options are available: High-Interest Savings, Jumbo Savings and CDs. Jumbo Savings pays a 5.10% APY on balances of $25,000 and up.
Pros
- Good APY on High-Interest Checking
- No monthly maintenance fees
- High APY with Jumbo Savings
Cons
- Minimum balances apply on all deposit accounts
- Low APY on High-Interest Savings compared with other banks
- High deposit requirement for Jumbo Savings
Who should use it
Bank5 Connect is best for customers who want a good APY on their checking account or have enough money to earn the Jumbo Savings rate.
Ally Bank
Best for variety of CD types
Why we picked it
Ally Bank is one of the top brands in online banking and offers a broad lineup of bank accounts, credit cards, loans and investment and retirement products, making it a good match for customers who like a full-service banking experience. None of its deposit accounts charge monthly maintenance fees or have minimum balance requirements.
Customers at Ally can choose from three types of CDs: High-Yield, Raise Your Rate and No Penalty. The High-Yield CD comes in terms of three months to five years, with APYs ranging from a high of 4.50% for the 12-month CD to a low of 3.00% for the 3-month CD. With the Raise Your Rate CD, you can raise your rate once for the 2-year term or twice for the 4-year term. The No Penalty CD offers a 4.00% APY for an 11-month term.
Pros
- Wide product lineup
- No monthly fees or minimum balance requirements
- Competitive APYs on most accounts
Cons
- Checking account APY lower than some rivals
- CD rates move lower with longer terms
- Only one checking option
Who should use it
Ally Bank has a little something for everyone, with no fees, no minimums, competitive rates and a wide choice of products. Customers who like banking at full-service banks will find Ally a good fit.
EverBank
Best for introductory APY
Why we picked it
EverBank is an online bank that specializes in high-yield deposit accounts and also offers investment, business and commercial products and services.
Its Yield Pledge Checking account has a $100 minimum to open and pays a 0.40% APY with no monthly maintenance fee. Its Performance Savings account pays a 5.05% APY with no minimum balance to earn the interest and no monthly maintenance fee.
EverBank’s Yield Pledge Money Market account pays a 4.05% APY, with no minimum to open and no monthly maintenance fees. EverBank reviews the APYs being offered by competitors and will adjust its rates, as needed, to make sure they are among the top 5%.
EverBank CDs come in terms of three months to five years and have APYs ranging from a high of 5.05% (9-month) to a low of 3.95% (3-month).
Pros
- No monthly maintenance fees
- No minimums on savings accounts
- Competitive APYs
Cons
- $100 minimum to open checking account
- Only one checking option
- CD rates go down on longer terms
Who should use it
EverBank is a good choice if you want to earn a high rate of return on savings accounts while also having access to investment and business products. It’s also a strong choice if you’ve never had a money market account with EverBank and can take advantage of the one-year fixed APY offer.
What is an online bank?
An online bank is typically a financial institution that only operates digitally, with no physical locations.
With an online bank, you do your banking online through a secure website or app instead of visiting a local branch to make deposits or handle other tasks.
Most online banks carry FDIC insurance, and many have a wide network of ATMs that customers can use without paying fees. Because they have lower overhead costs than traditional brick-and-mortar banks, online banks can typically offer better interest rates and charge low or no fees.
Some online-only banks are owned by large corporations with millions of customers, hundreds of billions in assets and a full suite of products. Others are small fintechs or virtual banks that offer only one type of account.
How does online banking work?
Online banking simply refers to banking activities that are completed using a financial institution’s website or mobile app. With online-only banks, customers must conduct all of their banking online, while traditional banks and credit unions typically offer customers the choice of banking online or in person.
Many people use online banking for at least some of their banking needs. This could include monitoring account balances and transactions, transferring funds between accounts, paying bills and making debit card purchases.
Pros and cons of online banks
Online banks aren’t for everyone. You need to be comfortable handling all of your banking needs on a laptop, tablet or smartphone. Also, you won’t have access to in-person service. If that’s a priority, you might be better off sticking with a traditional bank.
Even if you’re comfortable with digital banking, you’ll find things you like about an online-only bank and some things you don’t like. Here’s a look at some of the pros and cons of online banking.
Pros:
- Convenient transactions: With online banks, you can bank anywhere you can access the internet and at any time of day.
- High APYs: Online banks offer some of the highest savings account rates.
- Streamlined experience: You can usually open an online bank account in minutes and often in just a few clicks. The best online banks also easily handle various functions quickly and simply.
- Innovative features: Some mobile apps can help you manage almost every aspect of your account from almost anywhere.
Cons:
- No physical branches: The most obvious downside of an online bank is that you don’t have access to in-person service.
- Customer service: Some online banks have limited customer service departments. This means you will often have to deal with automated phone lines and chatbots rather than humans.
- Limited account options: Some online banks offer a few accounts.
- ATM fees: Because most online banks have a smaller network of ATMs than traditional banks, you could face fees when using an ATM.
What to consider when choosing an online bank
Choosing an online bank is not the same as choosing a traditional bank because location is not a key consideration. However, there are many factors that you should consider when comparing online banks.
- ATM fees and networks: Ideally, you want to find an account with access to a large network of ATMs. Some will also reimburse you for out-of-network ATM fees.
- Bonuses and other perks: Some online accounts offer sign-up bonuses, cash-back rewards, shopping discounts and other perks. Just make sure you can meet the requirements to receive those benefits.
- Mobile bank features: The best online bank accounts offer user-friendly mobile apps that let you pay bills, make deposits, review your transactions and handle other banking tasks.
- Overdraft protection options: Many banks charge fees for overdrawing your account. If this is a concern for you, look for an online account that provides overdraft protection and charges low or no fees.
- APY: Many online bank accounts pay interest on your balances, which is always preferable to those that don’t. In fact, some online banks offer high-yield savings accounts with APYs of 5.00% or higher.
- Safety/security features: Online bank accounts should provide security measures to protect your money and identity, including encryption, multifactor authentication and fraud monitoring.
- Customer service options: Another important consideration is access to reliable customer service and support. Check when live customer service is available either over the phone, via email or through live chat. You should also read online reviews and customer testimonials.
- Make sure it’s federally insured: Most online banks are federally insured through the FDIC, and most online credit unions are insured through the NCUA. However, you’ll want to confirm that the institution you’re opening an account with has that protection.
Opening an account with an online bank
Opening an account with an online bank is similar to opening one with any other financial institution, except you don’t have the option to do it in person at a branch. The process usually takes just a few minutes, and the website or app will provide step-by-step instructions. Most banks require you to be at least 18 years old to open an account. Non-citizens might need to provide a permanent resident card or other types of documentation.
Different banks will have different requirements to open an online bank account, but the basic process involves many of the same steps.
Step 1: Compare banks to find the best fit
Since online banks are highly competitive, you’ll want to shop around and compare institutions and all they have to offer. This means looking at their interest rates, bonus offers (if they apply) and any fees that could come into play.
Financial advisor Michael Collins of WinCap Financial said that besides comparing banks based on obvious benefits like interest rates on offer, you’ll want to research the bank’s background, reputation and security features as well.
“Look up reviews and ratings from reliable sources to get an idea of the bank’s customer satisfaction and financial stability,” he said. “Also look into the bank’s security protocols, such as encryption, firewalls and multi-factor authentication, to ensure that your information is kept safe.”
Step 2: Gather the necessary documentation
Next, you’ll want to gather the necessary documents and information to open your new online account. For example, you’ll need to have the following ready:
- Full name and address
- Date of birth
- Phone number
- Driver’s license or other ID to provide proof of age and address
- Social Security number or tax identification number
- Bank account information (to fund your new account)
Step 3: Complete an online application
Once you have your information ready, head to the website for the online bank you choose and find where to open a new account. This is where you’ll provide personal information such as your name, address, contact information and Social Security number. You might also be asked to set up a username and password and create security questions to help protect your account.
Step 4: Wait to be approved
Many online banks let you know right away if you’re approved for the account, though in some cases the bank might take a day or longer to respond.
Step 5: Transfer funds to your new account
Once your new account is approved and you have a username and password set up, you can use the bank account information you entered during sign-up to transfer funds to your new account. You may also be able to add a new account to use for this transfer as well.
Remember that some banks require you to have a minimum amount on deposit to earn a certain amount in interest or avoid account fees. Knowing these details about your new account ahead of time can help you meet any applicable requirements.
Are online banks safe?
Online banks are just as safe as brick-and-mortar financial institutions, provided they have the same federal protections. Most of them do, but you’ll still want to confirm this before you open an account.
“Make sure the online bank is FDIC insured, which means that in the event of bank failure, your money is protected up to $250,000,” said Collins.
Opening an account with a credit union instead of a bank? Check for NCUA insurance instead, which works similarly and offers the same level of coverage for credit union accounts.
Because you’ll be doing all of your banking digitally, it’s important to choose an online bank with plenty of security measures in place. The safest online banks and credit unions use the latest technology to protect your money and identify and prevent unauthorized access to your accounts.
Among the standard security measures used by online banks are antivirus protection, firewalls, fraud monitoring, website encryption and multi-factor authentication. Before opening an account, check the bank’s website to see what security tools it has in place.
In the case of a neobank that isn’t chartered (a neobank is a tech company offering a banking product), check to see that it partners with an FDIC-backed bank to protect your deposits against bank failure.
Finally, you’ll want to make sure you understand all of your bank’s fine print and account limitations and that you know the institution’s policy on fraud.
“Make sure to read and understand the bank’s terms and conditions, including their policies on fees, fraud protection and liability in case of unauthorized account access or transactions,” said Collins.
Online banks vs. traditional banking
The main difference between online and traditional banks is that the latter have physical branch locations. Nearly all traditional banks also offer online and mobile banking options, so even if you prefer banking online you can still do so at traditional banks.
You’ll likely get lower fees and higher interest rates at online banks because they aren’t saddled with the cost of building, maintaining and staffing branches.
Both types of banks have their strengths and weaknesses. You may also find that some traditional banks outperform online banks in areas where online banks typically excel, and vice versa.
For example, a traditional bank may offer an account with a high APY, no fees and a cutting-edge mobile app. And you may discover an online bank with every financial product you need and an expansive ATM network. However, here’s a look at where each type of bank typically shines.
Managing your finances with online banks
One of the advantages of online banking is that you can manage your finances from anywhere and at any time, 365 days a year. This is true whether you do your online banking with an online-only bank or a traditional bank. However, keeping up with your finances at an online bank is especially important because you can’t rely on visiting a branch to clear up any problems.
The best online banks offer a wide range of features that make it easy to manage your money. Here are some tips to get the best results:
- Learn your way around the website or app: To take full advantage of online banking, you need to build expertise in all of the tools available on the platform. Some online banks offer tutorials or guides that can help you learn how to navigate the site or app.
- View statements online: You can check your statements and activity online to stay current on your finances, track transactions and confirm that everything is accurate.
- Set up account alerts: These alerts, typically delivered by email, text message or push notification, can keep you posted on withdrawals and other charges. You can also use alerts to let you know when your balance is getting low and when a payment is due. Some banks send alerts about upcoming promotional offers.
- Enroll in automatic bill pay: This is a useful feature if you have numerous bills to pay and a hard time keeping up with them. With automatic bill pay, you can link your bills to your bank account to prevent late payments.
- Track your spending patterns: Online banks may help you track your spending either through your account statements or daily activity log. In some cases, you can create a chart that analyzes your spending habits and lets you know which areas you need to cut back on to stay on budget.
Methodology
Our team of experts at CNN Underscored Money analyzed dozens of financial institutions to determine the rankings for the best online banks. We ranked each account on 18 data points across seven categories.
Here are the categories we analyzed and how we weighted each:
APY (25%)
APY is a critical factor for online banks because this determines how quickly your deposit will grow.
Product offerings (20%)
One of the general downsides to online banks is fewer product offerings than traditional banks, so we rewarded banks that offer more products.
Fees (15%)
Fees are a critical factor to consider because they can eat away at any interest earnings, especially if an account has a high monthly maintenance fee.
Minimums (10%)
Minimum opening deposits determine how accessible accounts are, so we rewarded banks with accounts that more people can use. Low minimum balances to avoid fees are ideal so you have fees eating away at your balance.
Customer experience (10%)
It’s important to have a bank that’s trustworthy and easy to reach when you need help. We considered customer service availability and Trustpilot ratings in this category.
Digital experience (10%)
You’ll want a bank with a usable app and plenty of online features so that it’s easy to bank from anywhere.
ATM network (10%)
Since online banks typically don’t have branches, ATM access is very important.
UFB Direct High Yield Savings
Monthly maintenance fee
$0
Minimum deposit requirement
$0
On UFB’s Website
Frequently asked questions (FAQs)
The vast majority of online banks employ technology to keep your identity and money safe, including antivirus protection, firewalls, fraud monitoring, multifactor authentication and website encryption.
It depends on the bank. Some online banks might only offer a single savings account, usually with a high APY to lure customers. The biggest online banks have the same lineup of accounts and products as traditional banks. For example, Ally Bank offers a full range of checking and savings accounts, credit cards, investing and retirement options, and mortgage, auto and personal loans.
Online banks typically send you electronic versions of your monthly bank statement and may not have paper statement options. You can also check your balances and activity online at any time.
Many online banks are FDIC insured, meaning each customer is protected by up to $250,000 per bank, per account ownership type. You can confirm that you are working with a legitimate FDIC-insured bank by checking the FDIC’s online database, BankFind.
Many online banks partner with ATM networks and offer a way to easily locate ATMs via mobile app. Most online banks don’t charge ATM fees or offer reimbursement for them.
Additional reporting by Holly Johnson
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