Visiting traditional banks with physical branches can be time-consuming and inconvenient for many users. Fortunately, that’s not your only option anymore. The top online banks in the U.S. work just like brick-and-mortar banks, except you have an online bank account that lets you make transactions through a mobile app from the comfort of your couch.
Whether you want to check your account balance on the go or make wire transfers from your home, here are the top online banks in the U.S. and the best perks account holders can get. We’ll also introduce you to two popular banking alternatives.
5 of the top online banks
If you want to manage your finances without visiting a branch location, an account with an online bank might be right for you. With an online bank, you can usually choose from an array of financial products—from savings and checking accounts to certificates of deposits—with competitive interest rates, or annual percentage yields (APYs).
Here are five online banks you might want to consider.
1. Ally Bank
Ally Bank is one of the top picks of the best online banks in the United States. It used to be the financial arm of General Motors before it evolved into one of the largest banks in the country by assets. This top online bank offers a full range of banking products and services like savings, checking, money market accounts, and certificates of deposit (CDs).
Why you might like Ally Bank
- No minimum balance and no monthly fees
- No overdraft fee
- Attractive annual percentage yield rate, which sits at 3.30% on its savings account and 0.25% on its interest checking account as of December 18, 2022
- 24/7 phone support for an easy banking experience
- Wide range of online tools, including a brokerage bank account with a DIY option for investors
What are the drawbacks of Ally Bank?
- You can’t do cash deposits.
Is Ally Bank the right online bank for you?
Ally Bank is a good fit if you:
- Want to open a high-yield savings account
- Are beginning to invest and want more options to grow your money
- Primarily use online banking with a mobile app
2. Axos Bank
Formerly known as Bank of Internet USA, this full-service online-only bank changed its name to Axos Bank in 2018. Aside from the usual range of banking products and services for individual account holders, it also offers banking solutions to business entities.
Why you might like Axos Bank
- No minimum balance and no monthly fees
- Very attractive APY rate for its high-yield savings account at 0.61% as of December 18, 2022
- Small business and commercial banking solutions, which include merchant services, business checking accounts, commercial lending, and lines of credit
- A wide range of checking accounts, with rewards that cater to different demographics
- Unlimited domestic ATM fee reimbursement for many types of accounts
- No minimum deposit for CDs
What are the drawbacks of Axos Bank?
- Its CD APY rates may not be as competitive compared to other banks.
- You need to make a $250 initial deposit to open a high-yield savings account.
- Cashback checking accounts have an overdraft fee.
Is Axos Bank the right online bank for you?
Axos Bank could be a good choice for you if:
- You’re a business owner looking for financial products and solutions for your enterprise.
- You use ATMs regularly.
- You’re a frequent debit card user.
3. Capital One
Best known for its popular credit cards, Capital One also has an online banking division that offers a suite of products and services. From money markets, custodial accounts, IRAs on deposit accounts, to business banking services, this online bank has a product for many types of customers.
Why you might like Capital One
- No monthly fee or minimum balance
- Access to an extensive ATM network (over 70,000)
- Brick-and-mortar bank branches in select locations
- Competitive rates on savings accounts at 3.30% APY as of December 18, 2022
- No minimum balance to open a CD account
- Flexible interest payment plans on CDs
- Wide range of business account holder perks for sole proprietorships, partnerships, LLCs, corporations, and small organizations
- The ability to view your credit card rewards and Creditwise credit scores in the mobile app
What are the drawbacks of Capital One?
- Overdraft fee of $35 if you fail to pay the overdrawn amount the next day
- Stiff early penalty withdrawal on CDs, which is equivalent to up to six months of interest
Is Capital One the right online bank for you?
With its many physical branches and mobile banking offers, Capital One is perfect if:
- You want the middle ground between online-only banks and traditional banks.
- You want to start your kids’ financial journey with a joint, no-fee account.
- You’re a small business owner or sole proprietor.
- You have a Capital One credit card.
4. Discover Bank
The company that introduced Discover It credit cards also offers online banking services. A subsidiary of Discover Financial Services, Discover Bank offers a wide range of financial products, which includes checking, money market, retirement, and savings accounts.
Why you might like Discover Bank
- No minimum balance or monthly fees
- No insufficient balance and overdraft fees
- Discover offers 1% cash back on debit card purchases of up to $3,000
- Competitive rates on savings accounts, with a 3.00% APY as of December 18, 2022
- Allows you to grow your nest egg for retirement with an IRA certificate of deposit, which offers up to 4.25% APY as of December 18, 2022
- Offers student, home, and personal loans
- 24/7 customer service
- Robust mobile banking app with an iOS rating of 4.9 out of 5 and an Android rating of 4.6 out of 5
What are the drawbacks of Discover Bank?
- Early withdrawal penalty for certificates of deposit
- A minimum initial deposit of $2,500 on CDs
Is Discover Bank the right online bank for you?
Discover Bank is a good choice if:
- You prefer cash back to earning interest.
- You’re in the market for a personal loan.
- You want direct access to Discover credit cards with their generous cashback and rewards.
5. Varo Bank
Varo Bank is an online banking service with no hidden fees and a high-yield online savings account. Varo Bank’s banking and savings products do not have monthly fees, draft fees, or minimum balance requirements, which can help customers save money when they are opening deposit accounts.
Varo has a large fee-free ATM network. With more than 55,000 locations, you can withdraw money from Target, CVS, and Safeway across the country. Varo also provides automatic savings tools for account holders.
Why you might like Varo Bank
- No monthly fees
- A high APY on savings accounts, offering up to 5% as of December 18, 2022
- Early paycheck with direct deposit
- Up to $100 instant cash loan with the Varo Advance feature
- FDIC-insured deposits up to $250,000
- Large ATM network
- No required credit check
- Visa debit card
What are the drawbacks of Varo Bank?
- Limits and fees for cash deposits
- Cash deposits only available through third-party retailers that charge fees
- Must meet requirements to qualify for the highest savings rate
- External transfers limited to $10,000 per month
Is Varo Bank the right online bank for you?
Varo is one of the best banks for APY maximizers who are already comfortable with online-only banking, use direct deposit, and rarely need to deposit cash.
Top online bank alternative
Online-only banks aren’t the only way to receive financial services without a bank location. Here are two non-banking apps that offer convenient digital payments and money management solutions.
Chime is a relatively new financial technology company that’s designed for lower- and middle-income Americans. It’s not a bank. Rather, their banking services are provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC.
Why you might like Chime
- No fee checking account and high-yield savings account
- Special program for direct deposit that enables funds to arrive early
- Optional features that encourage saving (such as rounding transactions to the nearest dollar and adding the difference to your savings account)
- Secured “Credit Builder” card available without a credit check
- Free mobile payments to family and friends, even if they don’t use Chime
Drawbacks of Chime
- Limited financial services
- No physical locations (true for other banks of this type)
Is Chime a good fit for you?
Chime is a great option if:
- You don’t need a full suite of banking services.
- You’re early on your savings and credit journey.
- You mostly use cashless payments and services.
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