Online Only Banks Review

Why Do You Need an Online-Only Bank?

Online-only banks give you the ability to manage your finances using your computer or phone, which makes it easy for you to check your balance, review your transactions, pay bills and transfer money between accounts. The best online banks in our review – Ally, Nationwide Bank and Discover Bank – offer a full range of banking services, including loans, free and interest-earning checking accounts, and savings solutions. The savings options include high-yield savings accounts, money market accounts and certificates of deposit (CDs). To learn more about the advantages of online banking, you can find articles about online-only banks in our learning center.

Online-Only Banks: What to Look For

As we evaluated online-only banks for our reviews, we compared the range of services, interest rates, security, customer support and overall convenience. Here's more information about each of the factors we considered as we chose the top online banks:

Credit
A big convenience factor is the bank's ability to cater to all of your banking needs, including offering you the credit you need for everyday purchases and for large expenses, like cars and homes. For this reason, the best online banks in our review offer a variety of loans for mortgages, home equity and cars. They also offer credit cards, including rewards cards and student credit cards.

Interest Rates
Online-only banks don't have the expense of operating and staffing branches, so they can often offer you better interest rates for the money you deposit into checking and saving accounts. Because interest rates are so low at brick-and-mortar banks, this is a definite advantage of using internet-only banks. Here are a few things to look for:

• Checking accounts should be free from monthly service fees and should earn interest. Additionally, the initial deposit should be relatively low. Banks commonly offer ATM or debit cards that you can use to easily access the funds in your account, and many offer rewards checking accounts that grant you a higher interest rate on your account balance when you make a certain number of debit card transactions each month. Be aware that many online banks require you to maintain a certain minimum balance in order to avoid fees and earn interest on your account.

• Savings accounts should also be free from monthly service fees, earn interest and have low initial deposit amounts. Your money isn't as accessible in a savings account as it is in a checking account because you don't have checks or an ATM card. Also, the number of withdrawals you can make is limited to six per month. If you withdraw funds from your savings account more frequently than that, you are charged a fee for each additional withdrawal.

• Money market accounts are very similar to savings accounts, including the limit of six withdrawals per month. However, you often have more accessibility to your funds because you can write checks against it or withdraw funds using an ATM card. However, you may be charged a monthly fee if your balance drops below a certain dollar amount.

• Certificates of Deposit (CDs) often offer you the highest returns on your deposited money because you commit to leaving it in the bank for a set period of time, typically between three and sixty months. If you withdraw your funds before the end of the term, you will incur a penalty.

Security & Support
Online banks are subject to the same federal regulations as brick-and-mortar banks. Use the same discretion for selecting an online-only bank that you would for a neighborhood bank. Consider the following factors:

• FDIC/NCUA Insured means that if the bank or credit union fails, you will be able to recover your funds.

• Two-Factor Authentication indicates that the banks utilize enhanced security measures in order to verify that you are the authorized user of the account. Examples of this is the passcode that the bank sends to your phone after you enter your user name and password, and the security questions that you're required to answer when you set up the account.

• Notifications can be set up to alert you when certain activities occur on your account. For example, if your ID or password is changed or if a new account is opened. You can also set up alerts for overdrafts, statement availability and payment due dates.

Because you can't visit a branch, the customer service accessibility is an important consideration when you're selecting an internet-only bank. All of the online-only banks we evaluated have US-based customer service departments and are easiest to contact via phone; some are available 24/7 while others have extended customer service hours. You can also communicate with all of the banks via email, and many offer live chat.

Convenience
You want a bank that makes it easy for you to stay on top of your finances. With just a few clicks, you should be able to check your balances, review your latest transactions and pay your bills. Here are a few features to look for:

• Mobile Banking enables you to complete your most common banking tasks wherever you are, right on your phone.

• Online Features, such as statements and budgeting tools, help you manage your finances and set savings goals.

• ATM Access and Reimbursement are important factors to consider because this is your primary means of accessing your funds in cash. You want to make sure that you're not paying out more in fees than you're earning in interest.

The top online banks offer you a full range of banking services and protect your money with the same protocols as your neighborhood bank. They also make it easy to monitor your transactions and access your money. Using these guidelines, you can find an online-only bank that makes managing your finances convenient and provides you with better-than-average interest rates on your checking and savings accounts.

* Rates listed are current as of January 5, 2015.

 
 
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Rank #1#2#3#4#5#6#7#8#9#10
10-9  Excellent
8-6    Good
5-4    Average
3-2    Poor
1-0    Bad
Ally Bank Nationwide Bank Discover Bank Connexus Credit Union First Internet Bank of Indiana Bank of Internet USA Capital One 360 iGObanking Alliant Credit Union Bank5 Connect
Ally Bank Nationwide Bank Discover Bank Connexus Credit Union First Internet Bank of Indiana Bank of Internet USA Capital One 360 iGObanking Alliant Credit Union Bank5 Connect
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Ratings
9.20
9.07
9.05
9.00
8.77
8.40
8.35
8.23
8.00
7.88
10
9
8
7
6
5
4
3
2
1
2.50
10.00
10.00
9.75
10.00
8.38
9.13
9.75
8.75
9.25
10.00
7.88
10.00
9.00
9.38
8.25
7.50
9.75
9.38
7.13
5.00
7.88
9.13
9.88
9.38
6.88
9.75
8.88
0.00
9.38
9.13
8.75
8.75
5.63
9.75
9.75
0.00
8.50
9.38
8.50
 
Credit
Mortgages  
 
 
Home Equity  
Limited States  
 
Auto
 
 
 
 
Rewards Credit Cards  
  
 
 
Student Credit Cards  
  
   
Interest Rates
Basic Checking 0.10% 0.00% $0.10 on up to 100 transactions per month 0.20% 0.00% 0.00% 0.20% 0.25% 0.00% 0.76%
Premium Checking 0.60% 0.60% $0.10 on up to 100 transactions per month 1.75% 0.55% 1.25% 0.80% 0.25% 0.65% 0.76%
Savings 0.99% 0.35% 0.90% 0.25% 0.40-0.60% 0.61% 0.75% 1.00% 0.80% 0.90%
Money Market 0.85% 0.68% 0.75-0.80% 0.50-1.15% 0.80% 0.75%   0.90%   
Short-Term CD 0.30% 0.25% 0.35% 0.50% 0.45% 0.15% 0.40% 0.15% 0.90% 0.85%
Long-Term CD 2.00% 2.30% 2.10% 2.00% 2.10% 1.35% 0.90% 2.05% 2.10% 1.50%
Security and Support
FDIC or NCUA Insured
Two-Factor Authentication
Notifications
US-Based Customer Service
Email
Live Chat
 
    
Telephone 24/7
 
   
 
 
Convenience
Mobile Banking
Online Statements
Accepts Direct Deposits
Online Budgeting Tools
 
 
Free Transfers
 
 
Fund Availability 1-3 business days 1-2 business days 3-5 business days 1-4 business days 1-5 business days 1-2 business days 2-3 business days 1-3 business days 1-2 business days 1-3 business days
Free ATM Network   Allpoint, PNC Bank, Alliance One and MoneyPass Allpoint and MoneyPass     Allpoint Allpoint Alliant, Alliance One, Allpoint, Bank of the West, Co-op Network, Credit Union 24 CU Here, Publix Presto SUM
ATM Reimbursement Unlimited Up to 6 transactions per month   Up to $25 per month with rewards checking accounts Up to $10 per month with interest checking account Unlimited with rewards checking account    Up to $20 per month Up to $15 per statement cycle