Deciding to open an online bank account is just a first step. Next is picking the right online bank for you. The one thing all online banks have in common is that they all offer banking services exclusively online, with no need to ever go into a physical branch. That’s perfect for the 72% of Gen Z banking consumers who prefer online-only banks. That aside, each online bank is unique in terms of things like features, fees, and customer support.
How do you sort through the options and find the right online bank for you? Read on for our top 8 things to look out for when choosing an online bank.
1. Account Types
Before doing anything else, be sure what type of account you’re looking for. Do you need a checking account? A savings account or certificate of deposit? A combination of the 2? The good news is, there are online banks for all these things. Some online banks offer all the same types of accounts you’ll find at a regular bank. Others specialize in one area, like Marcus by Goldman Sachs , which lets customers move money from their regular bank account into its high-yield savings accounts and CDs.
2. Loans and Mortgages
Staying on the theme of account types, some online banks offer more than just standard bank accounts. Many top online banks offer personal loans, and some have other products, such as home loans and commercial loans. Some online banks offer customers access to broader services from a parent company. For example, SoFi Money banking customers get access to discounted rates on other SoFI products, including: mortgage refinancing, student loan refinancing, and medical/dental student loans.
3. Fees
One of the greatest benefits of going with an online bank is the lower fees. By not having physical branches, online banks save on overhead costs. As you would expect, they forward some of these savings on to consumers in the form of reduced banking fees. Some online banks, such as NBKC, charge zero monthly fees and virtually no other fees aside from wire transfers. Others, such as NASB, do charge a monthly fee, but this encompasses a range of additional benefits (see “Other Benefits” below). Many banks, including NASB, waive your monthly fee if you keep your account above a minimum balance.
4. Mobile Support
Online banks are all about convenience, and mobile banking apps go one step further by literally putting your bank account in your hands. According to a PwC survey, 15% of Americans prefer banking on their smartphones over all other options, up from 10% the year before. Most good online banks offer a mobile app for iPhone or Android. The top mobile apps not only offer much the same functionality as the desktop version; they go even further. One feature to watch out for is check scanning, which lets you scan and deposit checks straight from your phone. It really doesn’t get any more convenient than that.
Explore Leading Online Banks
American Express
With one of the highest APYs around, American Express savings gives you an incredible edge over traditional banks. Plus, you’ll get the award-winning customer support, convenient online accessibility, and rock-solid security features that come from an industry leader like American Express.
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Chime
The cutting edge financial technology company Chime is part of a new generation of online banking applications that aim to be sleeker and more user-friendly than traditional banks. This no fees, completely digital alternative to a brick and mortar bank is well worth considering for digitally savvy customers who wish to maximise their checking accounts' savings possibilities.
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Citi®
Citi offers entirely online checking accounts. Users can apply to open a savings account or certificate of deposit online, as well as: view bank statements, monitor activity, pay bills, see checks, or transfer funds.
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5. Security
Whether you entrust your money with an online bank or regular bank, your financial security is critical. One thing to check before opening an account is that your bank insures depositors with the Federal Deposit Insurance Corporation. To find out if an online bank is insured, simply scroll to the bottom of its home page and look for the “FDIC Member” logo. When it comes to online banking, your online security is critical too. Good online banks have a “Security” page on their website that details exactly how they protect you. Your bank should have extra-strong SSL encryption for banking (such as EV SSL). It should also enable multi-factor authentication, a login process which requires the customer to verify their identity using more than just a basic username and password.
6. Customer Support
Online banks let you do everything online, saving you the hassle of standing in line to speak with a teller. With that said, online banks should still offer customer service—and the top ones offer exceptional service. Remember, you’re the customer, and you are entrusting your online bank to safeguard your money. As a banking customer, you have the right to get assistance when you need it. Unfortunately, most online banks don’t offer 24/7 service, although the good ones offer support during extended business hours, like Discover. At a minimum, your bank should offer support via a toll-free phone number and live chat. A good online banking website is one that is easy to navigate and that contains an extensive FAQ page with answers to frequently asked questions.
7. Wire Transfers
Even in 2024, some banks still make customers come into the branch to make an international wire transfer. If you’re opening an online checking account for day-to-day banking, simple wire transfers are a must. If you’re opening an online savings account, the bank should make it easy to send funds into your account. When comparing online banks, look for information on how the wire transfer process works, how long it takes to send and receive funds, and how much the banks charge for transfers. Fees for international transfers are unavoidable, but some banks are cheaper than others. Unfortunately, even some online banks charge for sending a wire transfer within the USA. Again, if you’re planning on making regular wire transfers, compare a few online banks to find the one that charges the lowest fees.
8. Other Benefits
You might only want an online bank account for basic things, like safeguarding your money and making the occasional wire transfer. If so, that’s fine. But it’s a good thing to know that some online banks offer more than just a banking service. Take NASB, for example. It charges a monthly fee of $6-$8 for each account, but throws in multiple benefits. These include discounts from partnering retailers, cell phone protection, identity theft insurance, and emergency roadside assistance. Are the benefits worth the fixed monthly cost? That’s for you to decide. But it’s good to know the option exists.
Compare Online Banks to Find the Right Fit for You
As this article shows, no two online banks are the same. Where one might have more favorable fees, another might be better for features, and another bank altogether might have the top mobile support. Once you know what you’re looking for, always compare a few online banks to find the right one for your needs and tastes. Best online banking companies offer diverse options and benefits that can cater to your specific requirements, making it crucial to conduct thorough research before making your decision.
Still can't decide? Check out a full list of top online bank reviews here.
