Online banks have multiple benefits over traditional banks. For most users, it is more convenient to use an online bank. Traditional banks are commonly open for limited periods. Bank hours often clash with work hours, so the only way you can get to the bank is skipping lunch or frantically rushing to the nearest office after work. In comparison, online banking is available at all hours as long as you have access to an internet connection. It becomes even easier to use an online bank thanks to apps, which make tasks like depositing a check take a few seconds.
Another benefit of online banks is lower fees. Physical banks have more upkeep for rent and utilities, forcing the banks to charge more to cover overhead costs. This is normally done through convenience fees, like charging you a small amount each month to maintain your account. Online banks are also much quicker than physical banks. Many banks allow you to immediately transfer funds to friends and family members, without paying any fees.
Charles Schwab Bank
Charles Schwab Bank is one of the simplest online banking options. It does not have as many perks as other online banks, but it offers low prices and excellent customer service. If you are on the fence about opening an online account, Charles Schwab is a good starting bank. It is also an excellent bank if you want to open up a secondary bank account. There are no minimum balance requirements for either the checking or savings account. Neither account has any monthly fees. If you constantly travel, you benefit from the lack of foreign transaction fee.
Discover offers some of the top benefits of an online bank, but it also has some of the steepest requirements to open an account. You can open a checking, savings or money market account without any monthly fees. One of Discover’s most popular options is the Cashback Debit account. This is one of the only online checking accounts that provides a cash-back reward. Every month, you get 1 percent cash back on all your purchases, up to a maximum of $3,000. To qualify for this account, you must make a minimum deposit of $2,500 when you sign up. A money market account also has the same requirement. Discover customers also highlight the intuitive, easy to use website and account options.
If you want the online bank with the lowest fees, it is hard to beat Axos. In addition to having some of the lowest minimal deposit amounts, Axos also has nearly 100,000 ATMs throughout the United States. This allows you to cut down on fees for using an ATM outside of the network. Axos also boasts one of the most dedicated customer service teams. Customer service is available 24/7, even during major holidays. This applies for both the online and phone options. Axos bank has five separate checking accounts available, on top of a savings and money market account. Most of the checking accounts have a $50 minimum deposit, while the savings account has $250 and the money market $1,000.
Capital One provides unique benefits compared to other online banks. It does not have as many checking accounts as other banks, but both checking and savings account have no monthly fees or minimal deposits. What makes Capital One a unique branch is the option for parents to open a special account for their children. To qualify, your child must be at least 8 years old. Both the parents and child have access to the account. It is especially popular among children who attend college out of state. One downside of Capital One is it has lower interest rates compared to other online banks.
If you want the best interest rates, Varo is a top online bank. With a savings account, you earn a minimum of .40% APY. If you meet all the additional requirements, you can increase the APY to a maximum of 2.80%. Varo has also earned multiple accolades for having the quickest direct deposit options out of any online bank. Varo has a large network of ATMs, but it has a higher-than-average fee whenever you use an out of network ATM. Neither the savings or checking accounts have a minimum deposit to open. However, you must make at least five purchases using a debt card, or deposit a total of $1,000 every month to avoid fees. Varo does not charge any overdraft penalties, up to $50.
Finding the Best Offers on Online Banks
Many banks offer promotional deals throughout the years, offering even more benefits. These benefits greatly vary depending on the bank. For example, some banks offer free money if you open both a checking and savings account and maintain a minimum balance for a set period of time. Other banks will waive penalties for the first year, or offer better interest rates.
These benefits often change from month to month. The best way to keep up with what benefits are available is to follow financing websites. Nerdwallet, Bankrate and Moneycrashers each provide monthly articles on the latest bonuses for opening a new account. Keep in mind, even if a bank has a generous promotional signup, you still want to research the bank and make sure their base rates and account options are worthwhile.