Cons
The average APY for the online banks with checking accounts awarded in our 2021 list is roughly 0.27%; some accounts also offer cash back on debit card purchases. The average APY for our best online high-yield savings accounts is even higher: roughly 0.45%.
Cons
4 out of 5 stars
Best Online Banks of 2021
Pros
Why we like this online bank: Barclays offers a competitive 0.40% APY on its online savings account. While not super attractive, it is still far above the 0.01% you will earn at Chase. Its mobile app is highly rated.
1. Axos Bank
Yes, online banks are safe to use. Just make sure your bank is insured by the FDIC (or, if it’s an online credit union, by the NCUA). As with all websites, only input financial information if you see the HTTPS and a lock symbol. Don’t use the same password for any other accounts, and consider utilizing a password manager. Multi-factor authentication, as well as biometric screenings, are a great way to protect your account as well.
A note on lower rates: These APYs are significantly lower than we’ve seen in previous years. In 2019, the average checking APY on our list was 1.40%, and the average savings account was roughly 2.00%. The COVID-19 pandemic has led to lower interest rates across the industry. It is not clear how long these rates will stay so low.
Cons
- Receive monthly direct deposits of $1,000 or more;
- Use your Axos-provided Visa debit card for at least 10 transactions of at least $3; and
- Use it an additional five times (for at least $3 each time).
4 out of 5 stars
Cons
Editor’s note: APYs are accurate as of September 23, 2021.
Why we like this online bank: Charles Schwab is great for those who like to travel — it has no foreign transaction fees and offers unlimited ATM reimbursement worldwide.
Potential pitfalls: APYs are low: 0.05% for the savings account and 0.03% for the checking account.
Why we like this online bank: ATM access is almost always guaranteed when you bank with Alliant, as it has more than 80,000 ATMs in its network and offers in monthly ATM reimbursement for out-of-network usage. Alliant also operates one of the highest-rated apps for both checking and savings accounts and has physical locations in the Chicago area.
Pros
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Unlimited ATM reimbursement
- High APY for checking and savings
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- No. 2 mobile app (J.D. Power)
- Access to Capital One and Allpoint ATMs
- No foreign transaction fees
- Unique Capital One Cafe locations
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Great mobile app
- Access to Allpoint ATMS (and limited out-of-network ATM reimbursement)
- No overdraft fees
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Fee-free access to ATMs
- Cash back rewards on the checking account
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Great mobile app
- Access to 80,000+ fee-free ATMs (and limited out-of-network ATM reimbursement)
- Decent APYs
- New policy discontinuing overdraft fees
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Unique account combines checking and savings
- Access to Moneypass fee-free ATMs
- Limited ATM reimbursement
- No foreign transaction and overdraft fees
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Convenience card for access to ATMs (nice touch for a savings-only account)
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Encourages first-time savers to be better with finances with Automatic Savings Account
- Access to paycheck before actual deposit
- Access to 60,000+ ATMs nationwide
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Great mobile app
- Great ATM reimbursement plan
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Great mobile app
- Access to 60,000+ fee-free ATMs
- No foreign transaction fees
- Cash back rewards
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Great mobile app
Other hallmarks of Ally’s online banking include its lack of monthly fees (a true free checking account) and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
- Great mobile app
- Unlimited ATM reimbursement worldwide
- No foreign transaction fees
If you want check-writing capabilities, you can open a money market account — but the APY is lower (0.35%) than that of its savings account. Synchrony also lacks home and auto loans among its products and services.
- Overdraft fees if funds aren’t available in linked account
- Built more for investing, not spending and saving
Why We Picked These Banks
Note: These APYs only apply to an introductory period. They then drop slightly.
To determine the online banks and credit unions for this list, we reviewed nearly 40 of the most popular financial institutions. We chose the 12 banks on our list because of their combination of high APYs, low minimum balances and low or no fees. Customer service, easy (and free) access to ATMs, mobile/online experience and ease of funds transfers were also important considerations.
Name | Rating Out of 5 Stars | Savings Account APY | Checking Account APY | Mortgage and Auto Loans |
---|---|---|---|---|
Axos Bank | 5 stars | 0.61% APY | 1.00% APY | Both |
Capital One 360 | 4.5 stars | 0.40% APY | 0.15% APY | Auto loans, but no mortgage loans |
Ally Bank | 4.5 stars | 0.50% APY | Up to 0.25% APY | Both |
LendingClub Bank | 4 stars | Up to 0.60% APY | 0.15% APY, plus 1.00% to 1.50% cash back | Mortgage loans and yacht loans |
Alliant Credit Union | 4 stars | 0.55% APY | 0.25% APY | Both |
nbkc | 4 stars | 0.15% APY | 0.15% APY | Only lending to those in Kansas City, Missouri, area |
Synchrony | 4 stars | 0.50% APY | N/A | None |
Chime | 4 stars | 0.50% APY | 0.00% APY | None |
CIT Bank | 4 stars | Up to 0.40% APY | Up to 0.25% | Mortgage loans, but no auto loans |
Discover Bank | 3.5 stars | Up to 0.50% APY | 1% cash back on up to $3,000 in monthly purchases | Mortgage loans, but no auto loans |
Barclays | 3 stars | 0.40% APY | N/A | None |
Charles Schwab | 3 stars | 0.05% APY | 0.03% APY | Mortgage loans, but no auto loans |
If you bank with a traditional brick-and-mortar bank, it might have been a while — and that’s not surprising.
The biggest allure of online banking is the high annual percentage yield (APY). APY is the interest (including compound interest) that you’ll earn on your money in a year.
Pros
Pros
If you just achieve one of the three criteria, the APY is 0.40%; if you achieve two, it doubles; and when you achieve all three, you get the full 1.00%.
Why we like this online bank: Synchrony has a healthy 0.50% APY for the savings account, which also includes a convenience card for ATM access.
- Low (or no) fees, including monthly maintenance fees (sometimes called monthly service fees or simply monthly fees), overdraft fees, foreign transaction fees and ATM fees. Some online banks even offer reimbursement for out-of-network ATM fees.
- Low or no minimum balance requirements.
- Strong online and mobile banking experiences, including apps and two-factor authentication.
- FDIC and NCUA insurance up to $250,000.
- Accessible customer service online or by phone.
5 out of 5 stars
Drawbacks of Online Banks
Potential pitfalls: Alliant is a credit union, not a bank. Credit unions can be more challenging to join, and Alliant is no different. Alliant currently does not participate in shared branching, a system that allows you to conduct your banking business at other credit unions in the same network throughout the country. This is often a hallmark of other credit unions.
Online checking accounts generally make it easy to access your money with debit cards that work at thousands of ATMs. Some also offer checkbooks, no matter how archaic they may seem.
Limited Options for Cash Deposits
LendingClub Bank’s online checking comes with several perks, but ATM usage is one of the best. When you bank with LendingCLub, you can visit any ATM at any time; LendingClub will reimburse you for all ATM fees.
Potential pitfalls: Synchrony doesn’t offer a checking account, meaning you’ll need to rely on an external account or direct deposit to fund your account.
Challenges With Transferring Funds
If you’re looking to save, you will want to open a Chime Savings Account (only possible if you have a Chime Spending Account). The savings account has an APY of .50%.
More importantly, it can be set up to automatically transfer a percentage of any direct deposit into the linked savings account and/or to automatically round up to the nearest dollar on all purchases, depositing the extra change into the savings account. You might also have access to your paycheck up to two days early with direct deposit.
No Face-to-Face Support
Pros
Depositing cash is the biggest challenge of online banks because they lack physical locations. Even online banks that have partnerships with brick-and-mortar banks for in-network ATMs often cannot accept cash deposits via ATM.
How to Choose an Online Bank
Here are some things to consider:
Cons
- Which bank has the highest APY? If earning the most in interest is what’s most important to you, your task is easy. Do note, however, the APYs can fluctuate. So if two of your top banks are neck and neck, but the bank with the slightly lower APY has better customer service and easier access to brick-and-mortar, it might actually be wiser to go with that one. In a few months, the interest rate may be higher than the current leading bank.
- Are there other rewards? APYs are only one piece of the puzzle. Certain checking accounts offer cash back rewards, and some accounts — savings, checking and money market accounts — even come with sign-up bonuses.
- How often do you use an ATM? If ATM usage is a part of your weekly routine, consider only online banks that have free access to a large network of ATMs. Otherwise, fees will add up.
- What are the fees? The beauty of most online banks is the lack of monthly fees. However, this can vary. If you travel to foreign countries regularly, for instance, and plan to use your bank’s debit card, look for a bank that doesn’t charge foreign transaction fees.
- Are you a mobile power user? If you live in your financial institution’s app, chances are good you will want one with an intuitive user interface and lightning speed. Check out reviews of mobile apps before committing to a specific bank.
- How often will you need to talk to an employee? Online banks are known for a lot of things, but stellar customer service is not typically one of them. If you need to chat with someone regularly about your money or tend to ask a lot of questions, look for an online bank with a good reputation for customer service.
- What about money market accounts? For our list of the best online banks, we primarily considered personal checking and savings accounts. Money markets are quite similar to savings, but not every bank offers them.
Online Banking FAQs
Online banks offer incredible customer service online and over the phone, but you can only get comforting in-person help for your accounts at a brick-and-mortar traditional bank.
Which Is the Best Online Bank in the U.S.?
3.5 out of 5 stars
Are Online Banks Safe to Use?
Discover’s savings account stands at 0.40% APY. Like CIT, this is a stark drop from previous years, but no online bank has been immune to the effects of COVID-19.
Which Is the Most Secure Online Bank?
4 out of 5 stars
In addition, Capital One’s accounts include zero monthly fees and offer easy bank account integration. With the checking account, you have access to more than 70,000 fee-free ATMs, and unlike some online banks, Capital One does have physical branches — and Capital One Cafés, where you can enjoy Peet’s Coffee, take advantage of a shared work space, get one-on-one money coaching, attend workshops and even host events for nonprofits. You can also get your paycheck two days early.
All financial institutions on this list are FDIC-insured (Federal Deposit Insurance Corporation) or NCUA-insured (National Credit Union Administration) and have no monthly fees (or offer a way to waive them).