How to Choose an Online Bank

When it comes to choosing an online bank, there are a few things to consider:

Skip the fees. Choose a bank account that will charge you no monthly fees. This might depend on your behavior—maintaining a minimum balance, for instance, or linking the account to another account—but you can often avoid fees with the right bank.

Read the fine print. There are a variety of fees banks charge other than monthly fees, so make sure you understand what those are. Just because it’s an online-only bank doesn’t mean there aren’t rules to be followed.

Earn some interest. Online banks tend to pay higher rates, so do some comparison shopping to get the best rate you can. The top online savings accounts currently are paying 1.05% to 1.36% APY, compared to a national average savings account rate of 0.06% as of June 15, 2020.

Check out the website and app. With an online bank, your primary interactions will take place via the bank’s website and its mobile app. Make sure you understand the available account management features. Both the App Store and Google Play provide reviews of the mobile apps for more insights.

Make sure you’re protected. Be certain that the bank is FDIC insured, which means that your deposits are insured, in the event of a bank failure, for up to $250,000 per account holder, for each account ownership category.

Here are a few of the best online banking options available today (note that the rates and fees listed below are subject to change):

Ally Bank traces its history back to 1919. It started out as GMAC, a division of General Motors, focused on auto financing. GMAC Bank formed in 2000 and become Ally Bank in 2009.

Today Ally Bank offers a range of financial products, including deposit accounts. auto loans, a credit card, and home financing. Through Ally Invest, it offers online brokerage services.

Banking products it offers: Interest checking, savings, money market, CDs, and a cash back credit card.

Rates (APY): 0.10% on checking (0.50% with $15,000 minimum balance), 1.10% on all tiers of savings, 1.00% on a 12-month CD, 0.50% on money market accounts.

Fees: No monthly fees for savings, $25 overdraft, $10 excessive transaction fee; no fees for CDs.

Website: ally.com

App: 4.8 stars on App Store, 4.1 stars on Google Play.

Access: 43,000 Allpoint ATMs.

American Express began as an express mail service in 1850 in Buffalo, New York. It entered the financial services industry in 1857 by launching a money order service to compete with the U.S. Post Office.

Today, American Express is best known for its credit cards that offer cash back, airline miles, hotel points and Membership Rewards. American Express also offers savings accounts, CDs, personal loans, foreign exchange and other banking services.

Banking products it offers: High-yield savings accounts and CDs.

Rates (APY): 1.15% on all tiers of savings, 0.50% on an 18-month CD.

Fees: No monthly fees and no minimum balance requirements.

Website: americanexpress.com/personalsavings

App: No apps are available for savings or CD accounts.

Access: No ATM access.

The online banking division of Barclays is located in Wilmington, Delaware. Barclays originally started trading as goldsmith bankers in 1690 on Lombard Street in London, England. In 1736, James Barclay joined the bank and it eventually was renamed in his honor. Barclays introduced the world’s first ATM machine in June 1967 in Enfield, north London.

In the U.S., Barclays is primarily known for its consumer and small business credit cards with household names like JetBlue and Hawaiian Airlines. The Barclays U.S. banking division also offers online savings accounts and CDs.

Banking products it offers: Online savings accounts and CDs.

Rates (APY): 1.00% on all tiers of savings, 0.85% on a 12-month CD with no minimum balances.

Fees: No monthly fees.

Website: banking.barclaysus.com

App: 3.8 stars on App Store, 1.8 stars on Google Play.

Access: No ATM access.

In 2012 Capital One finalized its purchase of ING Direct, one of the first internet-only banks in the United States. Initially rebranded as Capital One 360, the online banking operations have now been folded into Capital One. The 360 brand, however, remains in the names of its online banking products, such as its 360 Checking account.

Banking products it offers: Checking, savings, CDs.

Rates (APY): 0.10% on checking, 1.00% on savings, 0.50% on 12-month CD.

Fees: No monthly fees.

Website: capitalone.com/bank

App: 4.8 stars on App Store, 4.7 stars on Google Play.

Access: 39,000 ATMs.

Charles Schwab is a full-service financial services firm that offers investment products, retirement accounts, banking and home loans. The firm manages $3.85 trillion in client assets and 1.4 million open banking accounts.

The Schwab checking account has been popular with travelers for years. Schwab does not charge fees for using other banks’ ATMs and it also reimburses ATM fees charged by those banks.

Banking products it offers: High Yield Investor Checking®, High Yield Investor Savings®, home loans, Pledged Asset Line.

Rates (APY): 0.03% on checking, 0.05% on savings.

Fees: No monthly fees.

Website: schwab.com

App: 4.8 stars on App Store, 4.4 stars on Google Play.

Access: Unlimited ATM fee rebates worldwide.