Best Online Banks of 2018

Going with an online bank means giving up in-person services in exchange for fewer fees and higher interest rates. Many people still find great value in banking through tellers and local bankers, but if you're more concerned about reducing fees and maximizing your earnings, one of the following online banks may be right for you.

Best Online Bank for Checking: Ally Bank

Consider this if if you're interested in an online bank that offers a full range of checking and savings accounts.

Monthly Fee $0.00
Balance to Waive Fee $0
Opening Deposit $0.00

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 banks, 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 $15,000.00. Moreover, Ally's Savings account earns a strong 1.90% APY, making it possible to keep a high rate if you open both types of accounts 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.

Best Online Bank for Savings: CIT Bank

Consider this if you want to maximize your savings and CD interest rates.

APY 2.15%
Minimum Balance to Earn APY $0.00
Monthly Fee $0.00

CIT Bank wins out as the strongest choice for online savings based on its rate of 2.15% APY, which is among the highest available for a savings account. The bank also requires no monthly minimum balance or activity requirements for that rate. If you're looking for a more long-term option, CIT Bank also offers a range of certificates of deposits (CDs) that let you make penalty-free early withdrawals or adjust your rate before the end of your CD term.

One drawback at CIT is the lack of a checking account option, which can be an inconvenience if you're used to keeping all your balances in one bank. To address this issue, CIT's online platform lets you perform free transfers between CIT and linked accounts at other banks. While this method can take longer to process your transactions, it's a relatively small inconvenience to deal with if you're interested in maximizing your savings rate.

Best Online Introductory Rate: MemoryBank

Consider this if you're interested in a strong introductory rate for your checking account.

Monthly Fee $0.00
Balance to Waive Fee $0
Opening Deposit $50.00

The MemoryBank EarnMore Account provides the highest temporary rate we found for any online checking account, yielding 1.60% for the first twelve months after you open the account. However, you do need to qualify for rate each month with at least five debit card transactions and one direct deposit. Missing any of these activity requirements will reduce the interest to 0.05%. While most people won't find these requirements hard to meet, there are simpler interest-earning options for people who don't get direct deposits.

After the bonus period, the interest rate decreases to a permanent 0.05% APY. Memorybank is relatively low-cost, with just $50.00 required to open an account, and it charges no monthly maintenance fee or non-network ATM fees. However, it's slightly unusual among online banks for its high $36 overdraft fee, similar to traditional banks.

Best Online Banking Features: Simple Bank

Consider this if you want an online banking experience that's fee-free and delivers extra mobile features.

Monthly Fee $0.00
Balance to Waive Fee $0
Opening Deposit $0.00

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.

Best Online Bank for Small Business: Capital One

Consider this if you want to take your small business banking online.

Monthly Fee $15.00
Balance to Waive Fee $2,000.00
Free Monthly Transactions unlimited
Excess Transaction Fee $0.00 per transaction
Free Cash Deposit Limit $5,000.00
Excess Cash Deposit Fee $1.00 per $1000 deposited

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.

map of Capital One branches in the US, by county

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

Monthly Fees$0
Free Transactionsunlimited
Promotional Savings APY1.00% for first 12 months
Standard Savings APY0.40%

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 NameMax APYFeatures
Online CheckingAlly Bank0.60%Online checking, savings and CDs
Online SavingsCIT Bank2.15%No account activity requirements
Highest Intro APYMemoryBank1.60%Standard 0.05% APY after 12 months
Online Banking FeaturesSimple0.01%Savings goals and budget tracking tools
Online Business BankingCapital One1.00%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.

Chris Moon

Chris is a Senior Research Analyst at ValuePenguin who has covered deposit accounts and home loans since 2016. He has contributed insights and opinions to the New York Times and many other publications.

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