Put simply, going with an online bank means giving up in-person services in exchange for fewer fees and higher interest rates on your account. Many people still find great value in banking through tellers and dealing with local bankers, but if you're more concerned about reducing maintenance costs and maximizing your earnings, one of the following online banks may be right for you.
- Best Online Bank for Checking
- Best Online Bank for Savings
- Best Online Introductory Rate
- Best Online Banking Features
- Best Online Bank for Small Business
Best Online Bank for Checking: Ally Bank
Ally Bank's combination of favorable rates, diverse products and quality customer service makes it our first choice among banks with online checking accounts. Ally Interest Checking comes with robust online and mobile banking features on par with other web-based fintech companies, but it goes a step farther than most of its competitors, earning recognition for its consumer-friendly policy on overdrafts, contract language and dispute resolution. The rate of 0.10% APY on Ally Interest Checking isn't particularly impressive, but this improves to 0.60% if your balance is at least $15,000. Moreover, Ally's Savings account earns a strong 1.00% APY, making it possible to keep a high rate if you open both types at Ally.
Ally is also a great option if you prefer to have all your bank accounts in one location, since it offers savings accounts, CDs and money market accounts to expand your interest options. Consolidating your deposit accounts can reduce the amount of time you spend on managing your finances, and with free incoming wire transfers and the ability to set up automatic transfers between your Ally accounts, moving funds won't be as difficult as it would be with the potential delays and fees that arise between accounts at different banks.
Ally Interest Checking – Key Figures
- Minimum to Open: $0
- APY: 0.10%-0.60%
- Minimum to Earn APY: $0-$15,000
- Monthly Fee: $0
Best Online Bank for Savings: Synchrony Bank
While we looked at several different features to determine the best place for online checking, Synchrony wins out as the strongest choice for online savings based on just two factors. Its 1.05% rate is among the highest possible for a savings account, and the bank requires no minimum balance or activity requirements to guarantee that rate every month. Unlike most savings accounts, Synchrony High-Yield Savings works with an ATM card for withdrawals, although you must specifically ask the bank to send you one.
One drawback is the lack of a checking account option, which can become a major inconvenience if you're used to transferring money back and forth between your balances. To address this issue, Synchrony's online platform lets you register up to ten external accounts, which can then be used to send and receive money from your Synchrony accounts at no cost. While this method of transfer can take up to 48 hours to process, it's a relatively small inconvenience to deal with if you're interested in Synchrony's high savings rate.
Synchrony High Yield Savings – Key Figures
- APY: 1.05%
- Balance to Earn APY: $0.01
- Minimum to Open: $0
- Monthly Fee: $0
Best Online Introductory Rate: MemoryBank
MemoryBank's EarnMore Account provides the highest temporary rate we found for any online checking account, yielding 1.50% for the first twelve months after you open the account. However, you do need to qualify for the rate each month with at least five debit card transactions and one direct deposit, and missing any of these activity requirements will reduce the interest to 0.05%. While most people won't find these rules hard to meet, there are simpler interest-earning options if you don't have direct deposits. After the bonus period, the interest rate decreases to a permanent 1.00% APY, which is still an above-average rate.
The EarnMore Account is relatively low-cost, with just $50 required to open, and it charges no monthly maintenance fee or non-network ATM fees. However, MemoryBank is slightly unusual among online banks for its high $36 overdraft fee, which matches overdraft fees at traditional banks. As the newly-formed online division of Kentucky-based Republic Bank & Trust Company, MemoryBank currently doesn't offer any savings accounts or other services beyond the EarnMore checking option.
MemoryBank EarnMore Account – Key Figures
- 12-month Introductory APY: 1.50%
- Standard APY: 1.00%
- Monthly APY Requirements: 1 direct deposit & 5 debit card purchases
- Minimum to Open: $50
Best Online Banking Features: Simple Bank
Simple is a company whose online checking account includes budget and savings features that can give users a more comprehensive financial experience than other choices. We chose Simple for the usefulness of its website and mobile app, which give members the option to set savings goals and track their spending histories. As the name suggests, Simple charges zero fees for monthly maintenance, ATM withdrawals and overdrafts, making it a good choice if you worry about complicated fee structures at more traditional banks.
People looking for high interest and a variety of features won't be quite as impressed with Simple, which only gives customers a nominal 0.01% APY on their checking deposit. This rate compares poorly to the high rates you can find at other online banks. In addition, Simple's lack of fees is unfortunately mirrored by a lack of alternative account options. The company only offers the one checking account, so you'll have to look elsewhere if you want to keep your savings and other bank accounts in one place with your checking.
Simple Account – Key Figures
- Monthly Fee: $0
- Minimum to Open: $0
- ATM Fees: $0
- APY: 0.01%
Best Online Bank for Small Business: Capital One
Getting an online-only account for your small business can be tricky, but Capital One may work if your business is cash-free. In addition, its Spark Business Checking Account comes with unlimited credit and debit transactions, a feature you won't find easily at other banks. In addition, the online savings option at Capital One —Spark Business Savings —comes with a strong 12-month promotional rate of 1.00% APY, which is on par with the highest consumer savings account rates online.
Besides its online offerings, Capital One also maintains a significant physical presence in the US. If you're located near one of its 705 branch locations, you'll have access to more in-depth accounts like Spark Business Unlimited Checking and Spark Business Basic Checking, both of which give you the additional option of making unlimited cash deposits.
Capital One Spark Business Accounts
|Promotional Savings APY||1.00% for first 12 months|
|Standard Savings APY||0.40%|
Summary of Best Online Banks
We've put together a quick reference of the online banks reviewed above, with a point-by-point comparison of some important figures.
|Best For…||Bank Name||Max APY||Features|
|Highest Intro APY||MemoryBank||1.50%||Standard 1.00% APY after 12 months|
|Online Banking Features||Simple||0.01%||Savings goals and budget tracking tools|
|Online Checking||Ally Bank||0.60%||Online checking, savings and CDs|
|Online Savings||Synchrony Bank||1.05%||No account activity requirements|
|Online Business Banking||Capital One||1.00%||Unlimited debit/credit transactions|
Finding Other Online Banking Options
Online banking is a growing field, with new competitors appearing fairly often. When you evaluate online accounts, you should begin by deciding whether you can manage your money without the usual brick-and-mortar service. While some people may visit the bank rarely or not at all, others can't do without a branch nearby. You might find yourself missing the ability to walk in and talk to a person in real-time when an incorrect charge appears or your deposit doesn't show up.
One possible solution is to have a checking account at a traditional bank and linking it to a high-yield online savings account. This will let you earn a better interest rate on money you don't need to handle regularly, while at the same time giving you access to branch locations and the convenience of a full-service checking account for your daily needs.