Physically visiting a bank to open an account is not the only option anymore. Many new online-only banks in the U.S. offer lower fees and higher interest rates than mainstream banks. All you have to do is download a mobile app to enjoy the bank’s full suite of services.

Below, we’ve listed some of the best-known online banks in the U.S. We’ve also added two alternatives that provide checking account functionality and other perks.

Online-Only Banks in the U.S. - a laptop

Ally Bank

Ally Bank is one of the forerunners of online-only 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 online bank offers a full range of banking products and services like savings, checking, money market accounts, and certificates of deposits. 

Why Might You Like Ally Bank?

  • No minimum balance and no monthly fees.
  • No overdraft fee.
  • Attractive annual percentage yield (APY) rate, which sits at 0.50%  on its savings account and 0.10% to 0.25% on its interest checking account as of December 6th, 2021.
  • 24/7 phone support for an easy banking experience.
  • No early withdrawal penalty on CDs so you can cash out after 6 days of funding your account.
  • Wide range of online tools including brokerage account with a DIY option for investors.

What are its Drawbacks?

  • You can’t do cash deposits.

Is Ally Bank the Right Online Bank for You?

Ally 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; and
  • Primarily bank online and on your mobile phone. 

Axos Bank

Formerly known as Bank of Internet USA, this full-service online bank changed its name to Axos Bank in 2018. Aside from the usual range of banking products and services for individual depositors, it also offers banking solutions to business entities.

Why Might You Like Axos Bank?

  • No minimum balance and no monthly fees.
  • Very attractive APY rate for high-yield savings account at 0.61% as of December 6th, 2021.
  • 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 its Drawbacks?

  • Its CD APY rates may not be as competitive compared to other banks;
  • You need to make a US$250 initial deposit to open a high-yield savings account; and
  • 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; or 
  • You’re a frequent debit card user.
Online-Only Banks in the U.S. - a person on their phone

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 Might You Like Capital One?

  • No monthly fee and minimum balance;
  • Access to extensive ATM network (over 70,000);
  • Brick-and-mortar branches in select locations;
  • Competitive rates on savings account at 0.40% APY as of December 6th, 2021;
  • No minimum balance to open a CD account;
  • Interest payment plans on CDs are flexible; 
  • Wide range of business instruments for sole proprietorships, partnerships, LLC, corporations, and small organizations; and
  • App allows you to view your credit card rewards and Creditwise credit scores.

What are its Drawbacks?

  • Overdraft fee of US$35 if you fail to pay the overdrawn amount the next day; and
  • Stiff early penalty withdrawal on CDs, which is equivalent to up to 6 months of interest.

Is Capital One the Right Online Bank For You?

With its many branches and digital banking offers, Capital One is perfect if:

  • You want the middle ground between online 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; or
  • You have a Capital One credit card.

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 Might You Like Discover?

  • No minimum balance and monthly fees;
  • No insufficient balance and overdraft fees;
  • Discover offers 1% cash back on debit card purchases of up to US$3,000;
  • Competitive rates on savings accounts as of December 6th, 2021; 
  • Allows you to grow your nest egg for retirement with an IRA certificate of deposits, which offers up to 0.65% APY as of December 6th, 2021;
  • Offers personal, student, and home loans;
  • 24/7 customer service; and
  • Robust mobile banking app with an iOS rating of 4.9/5 and Android rating of 4.6/5 as of November 15th, 2021.

What are its Drawbacks?

  • Early withdrawal penalty for certificates of deposits; and
  • A minimum initial deposit of US$2,500 on CDs.

Is Discover 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 private student loan; or
  • You want direct access to Discover credit cards with their generous cashback and rewards. 
Online-Only Banks in the U.S. - a woman using her phone

Varo Bank

Varo Bank is an online banking service with no hidden fees and high-yield online savings. Varo Bank’s banking and savings products do not have monthly fees, draft fees, or minimum balance requirements, which can help the customers save money on paying fees.

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.

Why Might You Like Varo?

  • No monthly fees.
  • Good annual percentage yield, or APY, on savings.
  • Early paycheck with direct deposit. (See below for more info from Varo.)
  • Up to US$100 instant cash loan with Varo Advance feature.
  • The deposits are FDIC insured up to US$250,000.
  • Large ATM network.
  • Credit check is not required
  • It offers Visa debit card.

What are its Drawbacks?

  • Limits and fees for cash deposits.
  • Cash deposits are only available through third-party retailers that charge fees.
  • Must meet requirements to qualify for the highest savings rate.
  • External transfers are limited to US$10,000 per month.

Is Varo the Right Online Bank For You?

Varo is best for APY maximizers who are already comfortable with online-only banking, use direct deposit, and rarely need to deposit cash. 

2 Popular Online Banking Alternatives

Online-Only Banks in the U.S. - a woman using her phone

Passbook by Remitly

Money transfer provider Remitly (that’s us!) now offers the Passbook app, which provides access to a free mobile account and Visa® debit card designed for immigrants living in the United States. No minimum deposits or fees, even when spending internationally. No SSN required, and no checks on credit history or immigration status.1

Why Might You Like Passbook?

  • No fees: No minimum balances or fees — not even for foreign transactions
  • Flexible deposits: Deposit cash to your Passbook account at 100K retail stores nationwide,2 including Walmart, 7-Eleven, Dollar General, Dollar Tree, CVS, Walgreens, Rite Aid, Kroger, and Safeway. Plus, deposit checks using your mobile phone 24/7.
  • Cash withdrawals: Get cash from 2 million ATMs worldwide, or cash back when spending at most major retailers, grocery stores, and drug stores.
  • Spend around the world: Personalize your Visa debit card with a country flag, and spend in the U.S. or internationally, with no foreign transaction fees. Use the app to disable your card whenever you want to avoid unwanted charges.
  • Send around the world: Get $2 cash back on Remitly international money transfers.3 Send to other U.S. Passbook account holders, in minutes and for free. 4
  • Early payday: Get your paycheck up to 2 days early when you set up direct deposit.5
  • Peace of mind: Sign up in minutes with a passport, Matrícula Consular, Individual Taxpayer Identification Number (ITIN) or SSN. Get worldwide access to funds and 24/7 customer support (Hablamos Español).

Limitations of Passbook

  • Limited to cashing 10 checks per month
  • Limit to card purchases of up to $10,000 USD each month
  • Currently offered only to U.S. customers (with a U.S. mailing address)

Is Passbook a Good Fit for You?

Passbook by Remitly is an ideal option if:

  • You live in the United States and need a way to sign up for an account without a Social Security Number;
  • You travel and want to spend internationally with no foreign transaction fees;
  • You send money internationally;
  • You need flexible ways to deposit and withdraw funds, by cash, check or direct deposit; and
  • You enjoy the convenience of managing your money from a digital mobile app

1 Approval if you meet identification criteria.
2 Retail service fee and limits apply.
3 When you pay with your Passbook Visa debit card. Terms apply.
4 Both sender and recipient must have a Passbook account.
5 Timing of direct deposit availability is dependent on certain conditions such as payer schedule.

The Passbook app is by Remitly, a financial technology company. Remitly is not a bank. Banking services are provided by Sunrise Banks N.A. The Passbook Visa® debit card is issued by Sunrise Banks N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. The card can be used everywhere Visa debit cards are accepted.

Chime 

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 Might You 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

  • Limited financial services
  • No in-person 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; and
  • You mostly use cashless payments and services.

About Remitly

Remitly makes international money transfers faster, easier, more transparent, and more affordable. Our reliable and easy-to-use mobile app is trusted by over 5 million people around the world. Visit the homepage or download our app to learn more.

This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant or otherwise guarantee that the content is accurate, complete or up to date.