Why Open an Online Banking Account?
Online bank accounts offer all the security of bank accounts from traditional financial institutions but with added benefits, like the option to access your money from anywhere via a mobile app. You no longer have to visit a branch office to do your banking. Make deposits, trigger bank-to-bank transfers, schedule bill payments, and more – all from your phone or laptop.
Traditional banks tend to have more overhead as they manage physical locations. Meanwhile, companies that specialize in online banking don’t have this expense, so they can extend those savings to you. The best online bank accounts have low or no fees, including fees for maintenance, minimum balances, ATM use, and overdrafts. If you’re getting an online bank account for saving, you can find a variety of high-yield savings accounts to choose from.
Online banking makes it easy to keep track of your money. You can review your checking account, savings account, and even credit cards all in one place, as well as filter transactions and review purchases with a few clicks. The best online banking accounts also offer added features, like:
- Goal trackers
- Budgeting tools
- Mobile wallet integration
- Person-to-person payments
- Financial calculators
Plus, online banking is secure. Most websites and apps use encryption and multi-factor authentication to ensure that you are a legitimate account holder before letting you access sensitive information.
How to Get the Best Bank Interest Rates
To get the highest interest rate, you’ll need to find a high-yield savings account. These accounts have a higher-than-average APY, or annual percentage yield. Your APY represents the total interest your savings will incur annually.
Choosing an online banking account is key to getting the best bank interest rates. Traditional banks with standard savings accounts typically offer APYs under 0.5%. That figure is generous – most traditional banks offer even less interest. In comparison, high-yield savings accounts can sometimes offer APYs over 4%.
To put that into context, let’s say you keep $5,000 in your savings account for an entire year. In a standard account with a 0.5% APY. You’d earn $25 in interest over the course of the year. Meanwhile, if you kept that money in a high-yield savings account with a 4% APY, you’d earn $200.
Not all online savings accounts offer the best bank interest rates. Consider shopping around and comparing options to get the highest APY possible. Be sure to review minimums, as well. Some financial institutions and companies require you to carry a minimum balance or make a minimum deposit in exchange for a high-interest rate, while others have no requirements.
How to Choose the Right Online Banking Account For You
While online bank accounts might all seem the same at first glance, each has its own fee structure, customer service channels, and added features. As you’re shopping around for the best online banking, be sure to consider the following factors.
Fees
Many bank accounts have monthly maintenance fees. These fees are usually no more than $10 but can be as high as $50. Most include the option to waive the fee if you keep your account balance above a minimum amount. Still, others have no fees. If you don’t plan to keep much cash in the account, be sure to look for one of these.
Financial institutions and companies charge additional fees for a variety of reasons. Some charge low account balance fees, fees for exceeding withdrawal limits, and international transfer fees. It’s important to consider these fees and how they’ll affect you before signing up.
Account Type
There are a number of different types of bank accounts, each with pros and cons. For example, you might choose between a basic checking account and a hybrid bank account, like a Money Market Account (MMA) that has the high interest rate of a savings account and the accessibility of a checking account. Make sure you do your research to ensure your chosen account has the functionality you need.
Account Minimums
Some bank accounts have minimum requirements, whether that’s a minimum balance or a minimum deposit requirement. These requirements can range from $1,000 to $10,000.
Some of the best online banking accounts, like Chime accounts, have no account minimums. Be sure to consider how often you’ll make deposits and withdrawals to determine if you can maintain these minimums and avoid unnecessary fees.
Withdrawals
In some cases, banks will set limits on the number of withdrawals or transfers you can make each month. The best online banking options do not – be sure to look for an account without limits if this is a concern for you.
Debit and Credit Cards
Your online checking account should include a free debit card. If you’re in a hurry to have access to your funds, you might check how quickly the bank can issue the debit card.
The best online banking services also offer credit cards, each of which can provide different benefits and features. If you’re looking to keep your finances all in one easy-to-manage place, this could be a good option.
Loans
Online banking services often offer loans in addition to bank accounts. That includes everything from mortgages to personal loans. Since everything is digital, you can usually get a faster approval decision and lower fees.
Plus, some companies are more likely to approve you if you have an existing history with them. Even if you don’t need a loan now, choosing a service provider with loans may help you in the future.
Customer Service
Each online banking service has different customer service hours and channels. Some offer 24/7 support, while others have more minimal hours. Likewise, some have text and chat support, while others only offer phone and email. If you think you’ll need assistance at odd hours because of your job, for example, you might want to choose a bank with 24/7 support.
Physical Locations
Despite their name, online banking services sometimes have brick-and-mortar offices that you can visit. If you prefer the experience of visiting a physical location, you might choose a service provider with an office near you.
What Services to Expect with an Online Banking Account
If you’re making the switch from a traditional bank account, it can be hard to know what to expect with online banking. With the best online bank account, you’ll typically get the following:
- User-friendly mobile app and website to manage your accounts from anywhere.
- Bill payment services so that you never miss an important payment.
- Easy online money transfer between accounts.
- Simple account integration.
- Digital check deposits, completed by scanning a check with your phone through the app.
- ATM access via an ATM network, plus reimbursement from third-party ATM withdrawals.
- Free fraud monitoring and text alerts of any suspicious activity.
- FDIC insurance of at least $250,000.
How to Open an Online Bank Account
Online banking is easy to set up. Most have a few requirements you must meet, including being 18 years or older and maintaining US citizenship or residency.
Applying usually takes about 15 minutes. When you apply, you’ll need to provide the following:
- Name
- Contact details (phone number, email address, physical address)
- Social Security number
- Date of birth
Your bank may ask you to confirm your identity, like with a driver’s license number. With most online banking, you’ll get instant approval once you complete the application. As soon as you get approved, you can start funding your account and using the online banking tools.
FAQ
How does an online bank account work?
You can manage your online bank account with the bank’s mobile app or website. There, you can scan checks to make deposits and transfer money from accounts.
How do you get cash out from an online bank account?
Most online banking services offer a broad network of surcharge-free ATMs. You can find an ATM by using the ATM locator on your bank’s app or website.
Can you open an online bank account for free?
Yes. Many online banking services offer checking and savings accounts with no monthly maintenance fees.
Is online banking safe and secure?
Yes. Online banking uses multifactor authentication and encryption to protect sensitive information. Many companies are also insured by the FDIC (Federal Deposit Insurance Corporation), meaning that they guarantee your money up to a certain limit – usually $250,000 per depositor, per institution, and per ownership category.
Disclosures:
Chime Disclosure:Bask Bank Disclosure:
“The annual percentage yield is effective as of September 8, 2024. Annual Percentage Yields (APY) and Interest Rates shown are offered on accounts accepted by Bask Bank and effective per the dates shown above, unless otherwise noted. Annual Percentage Yield is variable and subject to change at any time. No minimum balance requirement and no monthly account fees. Must be fund within 15 business days of account opening.
Texas Capital Bank d/b/a Texas Capital is a member of FDIC. Bask Bank is a division of Texas Capital Bank. The sum of your total deposits with Bask Bank and Texas Capital Bank is insured up to $250,000 per depositor for each account ownership category”
Sofi Disclosure:
* SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.Only SoFi members with direct deposits are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 08/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/
Synchrony Disclosure:
Annual Percentage Yield (APY) is subject to change at any time without notice. Offer applies to personal accounts only. Fees may reduce earnings. For High Yield Savings accounts, the rate may change after the account is opened. Visit synchronybank.com for current rates, terms and account requirements. Member FDIC.
HSBC Disclosure:
1. New Customer must meet each of the following requirements to qualify for the Cash Bonus:
• Open a new HSBC Premier checking account (“New Account”) during the Offer Period; AND
• Meet a Qualifying Balance of $100,000 or more of New Money in deposit and/or eligible investment accounts within 20 calendar days of opening the New Account; AND
• Maintain the required Qualifying Balance for 3 full consecutive calendar months following the New Account opening month.
2. Investment and annuity products are offered by HSBC Securities (USA) Inc. (HSI), member NYSE/FINRA/SIPC. HSI is an affiliate of HSBC Bank USA, N.A.
Deposit products are offered in the U.S. by HSBC Bank USA, N.A. Member FDIC.
* Investment, annuities, and variable life insurance products are offered by HSBC Securities (USA) Inc. (HSI), member NYSE/FINRA/SIPC. In California, HSI conducts insurance business as HSBC Securities Insurance Services. License #: OE67746. HSI is an affiliate of HSBC Bank USA, N.A. Whole life, universal life, term life, and other types of insurance are offered by HSBC Insurance Agency (USA) Inc., a wholly owned subsidiary of HSBC Bank USA, N.A. Products and services may vary by state and are not available in all states. California license #: OD36843.
Investments, Annuity and Insurance Products: Are not a deposit or other obligation of the bank or any of its affiliates; Not FDIC insured or insured by any federal government agency; Not guaranteed by the bank or any of its affiliates; and subject to investment risk, including possible loss of principal invested.
All decisions regarding the tax implications of your investment(s) should be made in connection with your independent tax advisor.