Online banking has become one of the most used means of transaction due to the grow in technology each and every year. People intent to make their lives easy and avoid bank queues hence alot of people choose online banking.
Online banks are financial institutions that operate primarily (or solely) online, and this typically allows them to provide more affordable accounts that are easy to access online or through mobile apps. Customers can save money on fees and earn more on savings when choosing the best online banks.
The best online banks charge minimal fees, and some don’t charge any at all—even if you keep your balance at zero. You should also get generous rates on savings accounts, a variety of different products, and secure online banking and mobile apps that are easy to use and include helpful extras like budgeting and savings tools.
Best Online Banks of 2022
Best Overall: 1) Ally Bank
Best for Savings: 2) Synchrony Bank
Best for Students: 3) Capital One
Best for Checking: 4) Discover
Best for Travelers: 5) Charles Schwab
Best for Couples: 6) Axos Bank
How to Choose the Best Online Bank
Choosing the best online bank is all about finding the right features for your needs. Here are some considerations:
Rates: If you’re looking at checking, savings, CD, or money market accounts, getting the highest rate possible will help you make the most out of your money. Opt for banks that offer a high APY compared to competitors.
Monthly fees: Monthly maintenance fees are the most common, and they add up quickly. Now that there are so many free bank accounts, there’s no reason to go with one that charges a monthly fee.
ATM fees: If you’re getting an account that comes with an ATM card, make sure it doesn’t charge ATM fees. You might still be charged ATM fees by other institutions when using out-of-network ATMs, but the best online banks now offer ATM fee rebates as well.
Other fees: Overdraft fees and foreign transaction fees are two other big ones to avoid. Several of the best online banks don’t charge overdraft fees. You can also find checking accounts with no foreign transaction fees, which is important if you travel internationally.
Minimum balance requirements: Some bank accounts require a minimum monthly balance to keep your account open, while others require one to avoid fees. The best online banks have no minimum balance requirements—that way, you never have to worry about keeping your balance at a certain number.
Types of accounts: If you want to do all your banking in one spot, you need a bank that offers it all. While it can be a little less convenient, holding different accounts at different online banks can help you get the best deals. For example, you could open a checking account with the best online bank for checking and a savings account with the best online bank for savings.
Online Banks vs. Traditional Banks
Traditional banks are the big mainstays that operate primarily out of brick-and-mortar locations, like Bank of America, Wells Fargo, Chase, and U.S. Bank. Online banks operate primarily, or exclusively, online. Some may have a handful of branch locations while others may not offer physical locations at all.
Because online banks don’t have the overhead costs of operating physical branches, online banks tend to charge fewer and lower fees (the best online banks charge no fees) and offer higher rates on your savings. That said, you won’t always get the whole suite of financial services—such as mortgages, personal loans, and retirement—that you can at traditional banks.
Are Online Banks Safe to Use?
Online banks are just as safe as traditional banks. Accounts at the best online banks are FDIC-insured on up to $250,000, which is standard for traditional banks as well. These accounts also have the same, if not more advanced, security features for online banking as other banks.
Does the FDIC Insure Online Banks?
The FDIC does insure online banks, and most accounts at online banks are FDIC-insured on up to $250,000. This is standard for all types of banks.
Do You Pay More Fees with Online Banks?
You typically pay fewer and lower fees with online banks. It’s cheaper for online banks to operate online, so you get some of that savings in the form of no monthly maintenance fees, no ATM fees, and sometimes even no overdraft or foreign transaction fees.
Methodology
To select the best online banks, we surveyed over 25 online banks, looking at rates, fees, rewards, minimum balance requirements, customer service, mobile app, and types of accounts offered. These are the most important features when it comes to online banking if you want to minimize your cost, maximize your earnings, and enjoy a convenient and easy banking experience.
We ruled out any online banks that charge monthly maintenance fees on checking and savings accounts because there are so many that don’t. We also didn’t include any banks that require high minimum opening deposits or high minimum monthly balances. A high APY wasn’t a strict requirement if the bank stood out in other ways, such as cutting out all fees. Likewise, banks with a minimum opening deposit requirement were considered, as long as it was low and the bank offered something in return, such as a high APY.
SOURCE: investopedia.com
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