Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
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By
Jason Steele
Jason Steele
Contributor
Jason is a freelance writer and an nationally recognized expert in credit cards and award travel. As a contributor to Newsweek’s personal finance team, he brings is knowledge and experience in credit cards and personal finance, along with his passion for award travel. Since 2008, Jason written for over one hundred different outlets and has been widely quoted in mainstream media. Jason is a graduate of the University of Delaware, and he lives in Denver, Colorado.
Read Jason Steele's full bio
Reviewed By
Kristy Snyder
Kristy Snyder
Banking Expert
Kristy is a freelance contributor to Newsweek’s personal finance team. As an editor, Kristy has worked with sites like Bankrate, JPMorgan Chase and NextAdvisor to craft and hone content on banking, credit cards and loans. She’s also written for publications such as Forbes Advisor and U.S. News and World. In her spare time, Kristy loves traveling, hitting up rail trails and reading.
Read Kristy Snyder's full bio
In the past, banking required you to travel to a branch location and interact with a banker. The invention of automated teller machines (ATMs) took the banker out of many transactions, but in the last 25 years, online banking has taken things even further. Now, you can skip in-person banking entirely with digital banks.
With their lower cost structure, the best online banks offer very high interest rates on checking and savings accounts as well as some of the personal services you enjoy from in-person banks.
Our Methodology
Newsweek Vault’s banking experts have done hundreds of hours of research to present you with all the latest information about your banking options. Whether you’re interested in opening a new checking account or savings account, our research spans all the top online banks, credit unions and brick-and-mortar branches.
We assessed the following five key factors to help you choose the best account for your personal finance needs.
- Associated fees
- ATM access
- Balance requirements
- Customer service
- Interest-earning potential
Our Picks
- Best Overall: Ally Bank
- Best for Competitive APYs: Quontic
- Best for Personal Service: First Internet Bank
- Best for Combined Checking and Savings: SoFi
- Best for Regular APY Adjustments: EverBank
- Best for Earning Frequent Flyer Miles: Bask Bank
- Best for Early Direct Deposit: Varo
- Best for High-Yield Checking Accounts: All America Bank
- Best for Earning Cash Back With a Debit Card: Discover
- Best for ATM Use: Charles Schwab Bank
The Best Online Banks of 2024
Best Overall
Ally Bank
Vault Verified
Why We Chose It
If you bank with Ally, you won’t have to worry about overdraft fees, monthly maintenance fees or low daily balance fees. If you withdraw cash from an ATM outside of Ally’s network, Ally will also reimburse you for surcharges up to $10 each month. Read our Ally Bank review.
Pros
- No overdraft, monthly maintenance, or low daily balance fees
- ATM fee reimbursem*nt for up to $10 per month
- Competitive APY on high-yield savings account across all balance tiers
Cons
- No way to deposit cash
- May find a better APY from another bank
- Customer service not available by phone on Sundays
Best for Competitive APYs
Quontic
Vault Verified
Why We Chose It
Quontic offers competitive APYs on its checking and savings accounts, as well as a cash rewards checking account that earns 1% back on eligible debit card purchases. This online bank also offers a unique Quontic Pay Ring if you want to try wearing your debit card. Read our Quontic review.
Pros
- Competitive APYs on checking and savings accounts
- No monthly fees or overdraft fees
- Network of more than 90,000 fee-free ATMs
Cons
- Bank accounts require minimum opening deposit of $100
- Customer service doesn’t offer 24/7 availability
- No reimbursem*nt for out-of-network ATM fees
Best for Personal Service
First Internet Bank
Vault Verified
Why We Chose It
If you want to do your banking online, but you still need a personal touch, consider First Internet Bank. Founded in 1999, it’s one of the oldest online-only banks, and you’re still able to connect with individual relationship managers.
Pros
- Competitive CD rates and terms
- ATM fee refunds offered on some accounts
- Free checking accounts available
Cons
- No ATM fee refunds on free checking accounts
- Uncompetitive checking and savings rates
- Minimum balances required to avoid fees
Best for Combined Checking and Savings
SoFi
Vault Verified
Why We Chose It
SoFi offers a checking and savings account with no minimum deposit or monthly account fees. If you open a checking account with SoFi, you’ll also get a savings account along with it. You could earn a welcome bonus and competitive APY, but keep an eye on the fine print, particularly about qualifying direct deposits. Read our SoFi review.
Pros
- $50 to $300 welcome bonus for opening a new account and setting up direct deposits of at least $1,000
- Can get paid up to two days early with early direct deposit
- No monthly service or minimum balance fees
Cons
- Does not reimburse out-of-network ATM fees
- Must set up direct deposit or deposit at least $5,000 every 30 days to unlock highest savings APY
- Overdraft protection only available if you make at least $1,000 in monthly direct deposits
Best for Regular APY Adjustments
EverBank
Vault Verified
Why We Chose It
EverBank offers a Yield Pledge Checking, Yield Pledge Money Market and Performance Savings account. As part of its Yield Pledge, EverBank assesses competitor rates on a monthly basis to ensure that its bank account yield remains in the top 5% of all accounts.
Pros
- Yield Pledge ensures that your bank account yield remains competitive
- Reimburses fees charged by out-of-network ATMs
- No monthly maintenance fees
Cons
- Minimum opening deposit of $100 for Yield Pledge checking account
- Customer service only available over the phone (no email or web chat)
- No cash deposits
Best for Earning Frequent Flyer Miles
Bask Bank
Vault Verified
Why We Chose It
Banking is very competitive, and it can be attractive to earn frequent flyer miles instead of other rewards. The Bask Mileage Savings Account offers 2.5 American Airlines AAdvantage miles for every dollar saved annually. Read our Bask Bank review.
Pros
- Can redeem miles for award travel
- No monthly account fees or minimum balance
- High annual percentage yield (APY) on Bask Interest Savings Account
Cons
- Only four certificate of deposit (CD) term options
- No checking or money market account options
- No ATM access
Best for Early Direct Deposit
Varo
Vault Verified
Why We Chose It
Online bank Varo doesn’t have minimum balance requirements or charge monthly or overdraft fees. Qualifying customers can access their direct deposits up to two days early, as well as request cash advances for up to $500.
Pros
- No overdraft fees, monthly maintenance fees, or minimum balance requirements
- Direct deposit available up to two days early
- Accepts cash deposits made at Green Dot retailers
Cons
- Checking account doesn’t earn interest
- Highest APY on savings account only applies to first $5,000
- Green Dot may charge fees for cash deposits
Best for High-Yield Checking Accounts
All America Bank
Vault Verified
Why We Chose It
If you’re looking for the flexibility of a checking account and the high interest rate of a savings account, All America Bank has a solution for you. Its Ultimate Rewards Checking account offers up to a 5.30% APY, but there are debit card use requirements.
Pros
- Industry-leading APY for a checking account
- Competitive CD and IRA rates
- Includes business and personal banking accounts
Cons
- You can find better savings APYs
- Many requirements to get a high APY on checking
- High minimum opening deposits
Best for Earning Cash Back With a Debit Card
Discover
Vault Verified
Why We Chose It
Although Discover is mostly known as a credit card issuer, its Discover Cashback Debit account offers 1% cash back on up to $3,000 in debit card transactions each month—a rarity for checking accounts. Its online savings and CD accounts also offer good APYs.
Pros
- No monthly, insufficient or overdraft fees
- Over 60,000 no-fee ATMs
- Get access to your paycheck up to two days early
Cons
- Cash back from your debit card limited to $30 per month
- No reimbursem*nt for out-of-network ATM fees
- CDs require $2,500 minimum deposit
Best for ATM Use
Charles Schwab Bank
Vault Verified
Why We Chose It
Charles Schwab is known primarily for investments, but it also offers checking and savings accounts. Charles Schwab Bank offers unlimited worldwide ATM fee rebates, which is ideal for those who need to access cash at home or abroad.
Pros
- Unlimited ATM fee rebates worldwide
- No monthly fees or minimum balance requirements
- No foreign transaction fees
Cons
- Savings APY isn’t competitive
- No banking services offered at branches
- Schwab Bank Investor Checking™ account requires a Schwab One® Brokerage account
What Is Online Banking?
Online banking is a form of digital banking that primarily takes place on a computer or another mobile device. While nearly all traditional banks now offer digital banking, the term “online bank” typically refers to a bank that has very few—or no—physical branches.
How Do Online Banks Work?
An online-only bank allows you to perform most banking transactions electronically. For example, you can open an account or apply for a loan online. Online accounts also offer electronic funds transfers and bill pay features. You can still order checks for your online account, and most offer ATM/debit cards so you can access cash in the real world.
Who Are Online Banks Best For?
Digital banks are great for cost-conscious customers. They can offer better interest rates and lower fees because they don’t have to put money into running physical locations. Digital banking is also best for those who are comfortable performing transactions with websites and mobile apps and don’t need in-person customer service.
Online Banks vs. Traditional Banks
A traditional bank is best for those who are looking for in-person advice and service. This might include meeting with an investment advisor or getting help choosing an account that meets your needs.
Those who need to make larger or more frequent cash transactions will also prefer a traditional bank over an online bank. An example might be a businessperson who must deposit cash and change regularly. Likewise, anyone who needs cashier’s checks or notary services will need to visit a bank branch.
Online banks are best for those who can conduct their banking on a computer, mobile app or ATM machine. For many people, services like direct deposit and online bill payment have eliminated the need to visit a traditional bank branch.
How To Choose an Online Bank
Deciding what bank to open an online bank account with can be tricky. Just like when choosing any financial product, focus on the factors that are most important to you, such as interest rates, fees and customer service.
APYs and Interest Rates
If you’re looking for a checking or savings account that earns interest, then pay close attention to the APY. This is the total amount of interest you’ll earn after one year. It takes into account how your interest compounds over time, which is why it’s usually higher than the interest rate. Interest rates describe the rate your initial deposit will earn in one year without considering compounding interest.
Fees
Consider any fees the bank may charge, such as monthly fees, ATM fees and overdraft fees. You will also need to consider any minimum balance or direct deposits required to waive these fees.
Customer Service
When you need help with your account, how hard is it to reach someone who can assist you? Some online banks have online chat and secured messaging features. And you always want to be able to reach a human over the phone when necessary.
How To Open an Online Bank Account
Opening an online bank account isn’t hard. Just follow these steps:
- Choose a bank and a type of account. Use the factors we mentioned above to choose an account that’s right for you.
- Fill out the bank’s online application process. It’s normal for banks to ask you for your Social Security number, driver’s license, address and other personal information.
- Make your first deposit. Once approved, you’ll make your first deposit, typically by electronic transfer. This is usually the final step in creating your new account.
Pros and Cons of Using an Online Bank Account
Even the best online banks have some pros and cons. Many of these pros and cons are subjective and depend on your preferred experience. To help you decide whether online banking is right for you, consider its advantages and drawbacks.
Pros of an Online Bank Account
- Potential for higher interest rates. Without physical branches, online banks have lower operating costs, and they often pass these savings on to customers.
- Lower fees. The low-cost structure of online banks can also mean lower fees.
- Better use of technology. Online banks often have cutting-edge features that traditional banks don’t, such as expense categorization, account alerts and cleared check images.
Cons of an Online Bank Account
- Lack of personal customer service. You probably won’t be able to work with an individual to handle your customer service needs.
- No in-person banking services. Traditional banks can offer services that can only be done in person, like notarizing documents or printing cashier’s checks.
- Inability to make large deposits and withdrawals. Customers of online banks can use ATMs for cash deposits and withdrawals, but these have limits. Only a bank branch can facilitate larger cash transactions.
Frequently Asked Questions
How Long Does It Take To Open an Online Bank Account?
It only takes five to 10 minutes to fill out the forms to open an online bank account. It can take a few days for an electronic transfer to fund your account.
Are Online Banks As Safe and Secure As Traditional Banks?
An online bank that’s insured by the Federal Deposit Insurance Corporation (FDIC) is backed by the full faith and credit of the United States. Funds deposited in an FDIC-insured online bank are just as secure as funds in a traditional bank.
Will I Have To Pay Fees To Use an ATM for an Online Bank?
Online banks usually don’t charge fees to use an ATM machine in their network. Many charge fees for using an out-of-network ATM, and the ATM owner may also charge fees. Thankfully, there are some online banks that don’t charge out-of-network fees and reimburse customers for third-party fees.
Newsweek writer Rebecca Safier contributed to this post.
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
Jason Steele
Contributor
Jason is a freelance writer and an nationally recognized expert in credit cards and award travel. As a contributor to Newsweek’s personal finance team, he brings is knowledge and experience in credit cards and personal finance, along with his passion for award travel. Since 2008, Jason written for over one hundred different outlets and has been widely quoted in mainstream media. Jason is a graduate of the University of Delaware, and he lives in Denver, Colorado.
Read more articles by Jason Steele
