Online Banks: Our Top Picks
These are our favorite online banks this year, based on their rates and features.
- Capital One 360
- Synchrony Bank
- Marcus by Goldman Sachs
- CIT Bank
- Discover Bank
- FNBO Direct
- American Express Bank
- Ally Bank
- Barclays
Which institution is right for you and your money?
In recent years, online banking has grown more popular than ever. Just take one look at the interest rates and products offered by many of these web-based institutions, and it’s easy to see why.
Of course, some people are still skeptical when it comes to signing up with an online bank. Yes, it’s true that you lose the convenience and peace of mind that comes with having a branch down the street. However, when you bank online, you gain some of the best savings rates the market has to offer, the lowest fees, and an array of financial products to suit your needs. Plus they’re just as secure as the brick-and-mortar chains.
Here’s a look at our top online banks for 2021 as well as their most current interest rates offered. Immediately following this list you can read on to learn a bit more about what online banks are, how they work, what makes them safe, and the other sorts of financial products you can expect to find offered there.
By the end of this article you should not only be comfortable banking online but know exactly which institution is right for you and your money.
You may not have known this, but there are two sides to this big name bank brand. First, there’s Capital One, the brick-and-mortar bank that you have known and loved for decades. Then there’s Capital One 360, the online banking side that was introduced in early 2013.
The latter has quickly shot up in popularity offering excellent checking, savings, and Money Market account options. They even have CDs, IRAs and children’s bank accounts.
Capital One 360 accounts have some of the highest interest rates available right now. Their app makes mobile banking easy and convenient and they offer free access to Capital One ATMs around the country. Plus if you really need some face-to-face help, certain Capital One branches are able to assist 360 customers with specific online banking needs.
Benefits of banking with Capital One 360:
- No fees and no minimum balances on checking or savings accounts
- Access to over 39,000 free ATMs around the country
- Easy-to-use mobile app with mobile check deposit and 24/7 account access
- Streamline your life with online bill-pay
- Link your account for card-free payments with Apple Pay, Google Pay, and Samsung Pay
Downsides:
- Better rates can be found elsewhere, especially on savings accounts
- Local branches are only located in a few select states
One of the largest online-only banks around, Synchrony tends offer pretty competitive rates on CDs and MMAs. Their savings account rates, while well above average, aren’t the highest around but they don’t require a minimum balance to open.
CD terms are available from as few as 3 months to as many as 60; the minimum to open is $2,000, but you’re rewarded with a high APY. There is no minimum deposit on savings accounts and no monthly account fees, plus Synchrony will refund other bank’s ATM fees each month up to $5.
Benefits to banking with Synchrony Bank:
- No ATM fees for in-network machines; up to $5 refunded for other bank’s surcharges each month
- No minimum deposit or account maintenance fees on savings accounts and MMAs
- High MMA and CD rates
- CDs have a wide range of terms
Downsides:
- Savings account interest rates aren’t the highest around
- CD minimums are higher than some other banks, at $2,000
- No checking accounts
When Wall Street giant Goldman Sachs first launched their online savings bank in 2016, called GS Bank, people weren’t quite sure how it would fare.
Not only has the bank—now named Marcus—grown exponentially in popularity, it regularly offers market-topping interest rates to boot. In fact, their savings APY is four times the national average.
Benefits of banking with Marcus:
- Savings accounts, high-yield CDs, and personal loans offered at market-topping rates
- No monthly account fees, regardless of balance
- No transaction fees
- Fee-free loans (no late fees, origination fees, early repayment fees, etc.)
Downsides:
- No ATM access to funds
- No checking accounts offered (yet)
- No mobile deposit
Whether you’re looking for low-minimum CDs, MMAs, or savings accounts, CIT Bank offers competitive interest rates. They don’t charge any fees on their accounts, and they have a mobile app to make banking a little easier.Benefits of banking with CIT Bank:
- No monthly fees
- Good interest rates, especially for high-yield savings accounts and MMAs
- Relatively low minimum deposits
Downsides:
- Rates are above average, but not the highest around
- Minimum deposits are required for both CDs and savings products
- No checking accounts
When you think of Discover you probably think of credit cards. However, Discover Bank has been making waves in the world of online banking. They offer a number of products including checking accounts, savings accounts and CDs.
The bank offers attractive interest rates, though the minimums are higher on CDs than at some other banks. You’ll have access to plenty of ATMs around the country and there are no monthly service fees on accounts. Plus, you can even earn cash back on your debit card purchases with Cashback Debit.
Benefits of banking with Discover Bank:
- Earn up to 1% back on your debit card purchases
- Access to more than 60,000 ATMs
- No minimum balance requirement and no monthly account fees
- There are no more fees on deposit accounts (as of June 2019); this includes NSF fees, stop payment fees, and excessive withdrawal fees, among others
- Rates are some of the highest around
- Great mobile app that comes highly rated
Downsides:
- Only one physical branch to visit, in Delaware
- CD minimums are higher than average
Consistently offering some of the best interest rates on the market is FNBO Direct, whose parent company was founded in 1850. Like its younger online bank counterparts, it focuses on low (or no) fees and high interest rates for customers, making it a very popular option for your savings.
You’ll find both checking and savings account options with FNBO Direct as well as CDs ranging from 6 to 60 months.
Benefits to banking with FNBO Direct:
- $1 minimum deposit for checking and savings accounts
- $0.01 minimum balance to receive listed APY
- Low CD minimum of $500
- Free online bill-pay
- No monthly service fees
Downsides:
- Interest rates are well above average, but certainly not the highest you’ll find
Yet another name that probably brings “credit cards” to mind before “banking,” American Express Bank is an online institution worth considering.
While they lack in certain features (like a mobile app and checking accounts), their savings rates are excellent. There are no fees, no minimum deposits or balances required (even with CDs!) and you’ll have 24/7 access to customer service.
Benefits to banking with American Express Bank:
- No minimum deposit to open and no minimum balance
- No monthly maintenance fees
- High interest rates on savings products
Downsides:
- No checking accounts
- No mobile app
- Checks have to be mailed in for deposit
Known for their interest rates and customer service, Ally offers customers a number of ways to earn great interest on their money. You can open both checking and savings accounts as well as CDs, IRAs, and MMAs with very competitive APYs for each.
Checking and savings accounts have easy-to-meet minimums ($0 and $1 for APY, respectively) and there are no monthly maintenance fees. The CD minimum can be pretty steep if you want the highest interest rates available but they do offer deposit options for 12-month CDs and longer. So, you can deposit more (or less) and your interest rate earned will adjust accordingly.
Benefits to banking with Ally:
- Plenty of product options including checking, savings, CDs, MMAs, and IRAs
- No account fees or minimum balances for checking or savings
- Interest rates are great, especially with larger deposits on CDs
- Access to over 43,000 in-network (free) ATMs
- Up to $10 in ATM fees refunded per month
Downsides:
- If you want to score the highest interest rates on CDs be prepared to make a steep deposit of $25,000!
- There are no local branches and no way to deposit cash at Ally ATMs
Trusted around the world, Barclays offers competitive interest rates on savings products through its online banking services.Benefits to banking with Barclays:
- Low minimums, no fees
- Low ($5) NSF fee compared to the average $25-30 charged by other banks
Downsides:
- No ATMs or branch locations, so all transactions must be done online
- No checking accounts
Why Choose an Online Bank?
You may be wondering why someone would choose an online bank over the brick-and-mortar options in their own neighborhood. After all, banking online seems more restrictive… right?
Well that can be true in some cases. However, picking the right online bank can actually make your finances easier and more enjoyable to manage in many ways. The biggest reason to choose an online bank, though?
The interest rates.
Since online banks don’t have to worry about managing branches and the expenses involved with such, they offer interest rates that are often 300-400% the national average. Not only that but they are typically fee-free regardless of the balance held or the initial deposit made.
Are Online Banks Safe?
There’s something comforting about being able to walk into a local branch and speak to a bank representative face-to-face. Online banks don’t offer customers that luxury, so it seems only natural to hesitate when giving them your money for safekeeping.
There’s no need to fear though. Today’s best online banks are not only backed by decades of quality customer service and exceptional financial products, they are also FDIC insured. In fact, all of the banks listed here are FDIC insured, meaning that your money is protected up to $250,000.
How Is Money Exchanged?
If you can’t walk into a local branch or drive through to make a deposit, how can you actually fund your online account? And if you don’t have an ATM card (as some online banks don’t provide them), how do you get your money when you need it?
Online banking can have its limitations. With the right planning and by choosing a bank that best suits your needs, you won’t even notice the difference (plus your money will be earning considerably more than it is now).
Deposits can be made via ACH transfer; cash deposits at ATMs or in select branches; check deposits via mobile app, at ATMs or in select branches; or via wire transfer. Your options depend on the online bank you choose.
Withdrawals can be made in similar ways. Online banks will offer a combination of options including ATM withdrawals, ACH transfers, wire transfers, provided checks or in-person withdrawals at select branch locations.
If you’re a hands-off saver, you may not care how your money is accessed at your online bank. If you tend to move your cash around however, be sure to pick the online bank that best meets your specific needs.
Should I Go With an Online Bank?
There are many online banks to choose from today, almost all offering interest rates well beyond average and an array of other financial products to boot. Choosing the right online bank for your money will not only make its management easier but it will net you more earnings each and every month.
Some banking customers need the comfort and security of a local branch (though, of course, there are some “online” banks that offer access to limited brick-and-mortar locations). For everyone else, banking online can be an easy way to keep your money tucked away and earning the highest yield possible.
