High APYs, cheap fees, and manageable minimum criteria are all included in the finest online banks’ product offerings. These banks also often provide a user-friendly online and mobile banking experience, as well as responsive and accessible customer care, while frequently having no branches or a small number of physical facilities.
Forbes Advisor examined the offerings of 60 online banks, including a variety of big and small online banks and nonbanks, to compile this ranking. In the areas of product offers, APY, fees, ATM network, customer experience, digital experience, and minimum requirements, we evaluated each bank using 12 different data points.
Here’s the weighting assigned to each category:
- Product offerings: 20%
- APY: 20%
- Fees: 20%
- ATM network: 10%
- Customer experience: 10%
- Digital experience: 10%
- Minimums: 10%
Online banks with the highest APYs and lowest fees throughout their product lines, as well as those with minimal minimum deposit and balance restrictions and a big ATM network, shot to the top of the list. Scores were better for banks that offered easy-to-use online banking and excellent customer satisfaction. The bank must be an online bank with nationwide accessibility in order to be included on this list.
Online banking: What Is It?
Online banking, which may be done via a website or a mobile app, is virtual banking. You may handle your finances using your laptop or smartphone rather than visiting to a branch or ATM.
The majority of conventional banks and credit unions provide their clients with internet banking services. The services offered often don’t vary all that much from those offered by the top online banks. The distinction is that branch visits are an option with conventional banking. You don’t with online-only banking.
How Does Online Banking Work?
Online bank customers may start transactions online, using a mobile app, over the phone, or by mail. They may also connect their online bank accounts to those they already have at conventional banks, credit unions, or other online financial institutions.
Institutions provide different online banking products and services. Online banks often allow customers to create accounts, pay bills, transfer money, deposit checks, examine statements, and do other standard banking operations. Many additionally provide access to ATM networks with no additional fees.
What Advantages Does Online Banking Offer?
Numerous advantages of online banking make managing your finances considerably simpler. Here are some of the most important benefits to take into account if you’re looking for the finest online bank but aren’t sure whether internet banking is ideal for you.
Accessing your accounts from almost anywhere is one of the main advantages of internet banking. You may check your balances, pay bills, or transfer funds between accounts as long as you can log in to internet banking or mobile banking.
Without going to a bank, you may also remotely deposit checks and set up notifications or alerts. You may be able to connect into your mobile app in case your debit card is stolen or misplaced and deactivate it to prevent further payments. You may complete these actions by pressing a small number of buttons.
While some online banks lack physical locations, many of them provide access to ATMs in case you need to withdraw money. In conclusion, internet banking allows you to manage your finances whether you’re at home, out to dinner, or on a long journey.
You may carry out a variety of tasks using online and mobile banking. However, you can get more than just standard account management.
Some of the best online bank accounts include features such as:
- Goal trackers
- Automated savings
- Financial calculators
- Budgeting tools
- Person-to-person payments
- Integration with mobile wallet apps
All of those features might give you a better sense of control over how your money is being spent. If you’ve been having trouble starting a regular savings habit, having built-in trackers or automatic contributions may assist.
Banks that exclusively operate online don’t have the same overhead expenses as conventional banks. If you’re fed up with paying exorbitant fees, that may be a major gain.
Many of the best banks online charge no:
- Monthly maintenance fees
- Minimum balance fees
- Person-to-person transfer fees
- Incoming wire transfer fees
- Foreign transaction fees
- Overdraft fees
- ATM fees
Some of the top online banks may even reimburse you for certain international and local ATM costs once a billing cycle. More of your hard-earned money is yours to retain the more fees you pay.
If you put the money you save on fees into a high-yield savings account, online banking may pay off differently. Due to their decreased overhead expenses, online banks may provide rates that are far more affordable than traditional brick-and-mortar banks.
Keeping of Records
For the purpose of developing and adhering to a realistic budget, keeping track of costs is essential. By allowing you to quickly monitor credit and debit transactions, online banking makes that work easier.
Your account information may be readily filtered so that you can seek for certain transactions or evaluate purchases made over a set time frame. As was previously said, a few of the top online bank accounts have digital features that enable you to classify spending for simpler planning.
Additional Advantages of Online Banking
Online banking has a lot of benefits. Here are a few advantages of internet banking that you should know about:
- Without visiting a bank, accounts may be opened quickly.
- Paying your bills automatically saves you time and postage.
- No need to stand in line to see a teller.
- There are no charges for bill payment.
- Your money may increase quicker if you set up automatic savings deposits.
- Online banking may combine with budgeting software.
- Anywhere allows you to keep an eye out for fraud on your account.
Managing your accounts more easily and without as much effort is possible with online banking. Additionally, it is a safe way to handle your money.
Online banks may provide stronger security measures like multifactor authentication and the same degree of encryption as physical banks. These procedures may keep your account information secure and out of the hands of hackers, coupled with basic precautions to safeguard your online banking security.
Choosing an Online Bank
The expenses connected with conventional brick-and-mortar banks are not present with online banking. As a result, they often offer consumers fewer fees, greater rates, and user-friendly digital banking products as a way of returning those savings. However, not all online banks are created equal, and some provide superior services and goods.
Here are some other things to consider when choosing an online bank:
Fees. Pesky fees may easily deplete your bank account. Look for an online bank that has little costs of any kind. This covers monthly charges, overdraft charges, and ATM charges. Even better would be if the bank paid for third-party ATM fees. Examine your banking habits to determine which costs are the most important. With the appropriate bank, fees are often avoidable.
APYs. Find a bank that offers financial solutions with a competitive APY if you want to get the most for your money. Do some price comparison shopping to get the lowest rates possible since online banks often pay higher charges?
Minimums. It is often simpler to maintain an account with lower minimum deposit and balance restrictions. Find an online bank that meets your financial comfort level and has the minimal standards.
Products. Your choice of online bank is significantly influenced by the items you need. A few online banks provide a complete range of financial services, including checking, savings, money market, CD, and other accounts. Others restrict what they give.
ATM system. Look for an online bank that has a sizable surcharge-free ATM network if having access to cash is crucial. To find out whether there are ATMs nearby or in the places you frequent the most, visit the bank’s website.
Customer encounter. Online banks seldom provide branch access, and when they do, it’s often limited. Because of this, it’s crucial to consider customer assistance while looking for an online bank. Choose a bank that provides online chat options or quickly reachable customer support personnel.
Banking online experience. The world of digital banking is one where convenience is essential. Your main interactions with an online bank take place on its website and mobile application. The top online banks provide user-friendly mobile applications and a straightforward internet interface for banking on the move. View the mobile app’s ratings and reviews on Google Play and the App Store.
Safety. In the case of a bank collapse, look for a bank that is guaranteed by the Federal Deposit Protection Corporation (FDIC), which offers up to $250,000 in insurance per depositor, per bank, for each type of account ownership. Make that the account is insured by the National Credit Union Administration at credit unions (NCUA).
How to Open a Bank Account Online
Through the website or mobile app of your preferred bank or credit union, you may establish a bank account online. From there, you’ll typically proceed in the same manner as if you were opening a bank account in person. A typical step-by-step procedure for creating an online bank account is shown below:
- Open the banks or credit union’s mobile app or website.
- Determine the kind of bank account you wish to start, then complete an application.
- Provide any necessary information, such as your address, phone number, and email, after confirming your identification.
- If necessary, make a minimal deposit.
- Hold off until your deposit clears, which might take several days. Start using your new account after that.
What Distinguishes an Online Bank From a Retail Bank?
Online banks operate exclusively online and frequently don’t keep branches open. Neobanks, also known as fintech startups, fall under the umbrella of online banking.
Consumers may open checking and savings accounts with retail banks, as well as borrow money. They are distinct from commercial banks, which prioritise serving business clients.
Retail banks make up the majority of internet banks. Retail banks may, however, also be conventional brick-and-mortar establishments, therefore not all retail banks are online banks.
Are there ATMs at online banks?
The majority of online banks include ATM access, which is fantastic news if you sometimes need to withdraw money. Depending on your banking relationship, the ATM network size may vary. More than 36,000 ATMs are available countrywide via some of the top online banks, while more than 90,000 are available through other institutions.
The size of the network is an essential factor to take into account if you’re especially interested in selecting an online bank account based on ATM availability. However, it’s also a smart idea to pay attention to if the account offers any refunds for ATM fees. Knowing whether any of the out-of-network ATM costs may be covered is important since they may mount up rapidly.
To sum up
Making the transition to an online bank may seem a bit intimidating if you are accustomed to conventional banking. But if you can save costs on fees, receive a higher return on savings accounts, and benefit from the extra convenience of being able to bank from anywhere, it can be worthwhile. The greatest online bank for you will ultimately be the one that provides the ideal ratio of features and costs to satisfy your requirements.
Frequently Asked Questions (FAQs)
Which bank accounts are free to open?
There is no such thing as a bank account that is totally free. All bank accounts have some kind of cost associated with them. There are, however, checking and savings accounts available without a monthly maintenance cost.
What is necessary to start an online bank account?
The conditions for opening a new bank account differ depending on the financial institution. A minimum initial deposit, your Social Security number or Individual Taxpayer Identification Number (ITIN), and a government-issued picture ID are often required. You may also need to fill out an application for a new account.
How do you fund an online bank account?
Cash deposits are not supported by the majority of online banks, however certain banks do allow cash deposits at specific merchants. However, be prepared to pay a charge of up to $5 or more if you decide to deposit cash via a merchant.