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Personal Finance

The Best Online Banks of the Year: 7 Banks Ranked and Reviewed

By October 19, 2021 No Comments

By: Rita Cunha | October 19th, 2021

If you’re unhappy with your bank, switch to a different one. Nowadays, you don’t need to rely on expensive and ineffective traditional banks. There are dozens of online banks to choose from—the hard part is knowing which one to pick. This list makes that oh-so-important personal finance task easier. These are the best online banks you can do business with. Read on to learn all about them.

What Makes Online Banks Different?

Online banks are financial institutions that operate solely online. Unlike brick and mortar banks, they don’t have any physical branches. While you can’t walk into these banks to deposit cash, you can do most other things you would at a traditional bank—for example, opening a checking account or savings account.

Online banking is becoming more and more popular by the day. These banks typically charge lower monthly service fees, have easy-to-use apps, and perks such as cash-back rewards. For example, you can get “free” money from your Sam’s Club Black Friday purchases just because you used your Current card. Those aren’t things traditional banks offer, so customers (especially younger ones) are switching to this new way of banking.

All that said, online and brick-and-mortar banks have one thing in common: they’re both just as safe. Most accounts at online banks are FDIC insured, meaning customers will get their money back even if their bank goes under.

7 Best Online Banks to Consider Joining

Considering leaving your old bank behind? Then consider these online banks.

1. Current Bank

Current is the best online bank we reviewed for this list. It offers a modern, user-friendly, intuitive website and mobile app, available for both Android and iOS devices.

Opening a free checking account with Current is easy. Once you follow all the steps (it won’t take you more than 30 minutes), you can start enjoying all the perks that come with a Current bank account:

  • No minimum balance or minimum deposit requirements.
  • Cash-back on purchases made with a debit card at thousands of participating locations—a perk usually reserved for credit cards. For example, you can get “free” money from your Sam’s Club Black Friday purchases just because you used your Current card.
  • No ATM fees when you withdraw money from an in-network ATM (which includes over 40,000 ATMs nationwide).
  • Zero hidden fees—what you see is what you pay.

But that’s not all. If you sign up for a premium checking account, you will also get:

  • Faster direct deposits, meaning you can receive your salary up to 2 days earlier, without having to pay any fees.
  • Instantly refunded for all holding deposits at gas stations. 
  • No overdraft fees up to $100, meaning Current will cover your purchase but not send you an outrageous bill.
  • 3 individual saving pots, where you can send the change from all your purchases. If you have a hard time saving up, this could help you get a head start.

Where else can you find all that? The premium membership comes with a $4.99 monthly fee, a small price to pay for so many features and perks.

As if that weren’t enough, Current also has a checking account designed for teenagers. As a parent, you can teach your child about personal finance, give them more freedom and independence, but still keep control over their account. For $36 per year, you can block certain merchants, get notifications when your child makes a purchase, set up a direct deposit to their account, and more.

All in all, Current should be your go-to if you want a seamless transition to an online bank. Their customer support gets high ratings from their vast user base and you’ll get perks hard to find anywhere else.

2. Capital One

Alternatively, you could open a savings or checking account with Capital One.

While this bank doesn’t offer a variety of features and perks like Current, it does boast a 0.10% annual percentage yield (APY). In other words, you get paid just for leaving your money in your checking and online savings account. Additionally, you can withdraw cash for free at over 70,000 ATMs nationwide.

There is a minimum opening deposit of $50 when you sign up for a Capital One 360 Checking Account. And although there is no monthly fee, there are $35-overdraft and $9-non-sufficient funds penalties.

3. Discover

Discover is a good online bank to turn to if you want rewards. You can collect 1% cash-back on debit card purchases of up to $3.000 monthly. If you shop a lot, the savings can truly add up.

On top of that, Discover Bank lets you withdraw money for free from over 60,000 in-network ATM points. It also lets you accrue interest on your savings accounts, as well as open a money market account to invest.

4. Chime

Chime is another interesting fintech bank. The Chime Spending Account comes with no monthly fees, allows for direct deposits, and charges no overdraft fees. Thus, it’s a good option for anyone opening their first bank account and on a budget.

The Chime ATM network is rather expansive. It includes around 40,000 locations, but charges upwards of $2.50 in out-of-network ATM fees. Yet, the main downside of Chime’s checking account is its opaque cashback rewards system, which could use some improvement.

5. Ally Bank

The most interesting thing about this online bank is its high-yield savings account. Leave your money in an Ally Bank savings account and you will get 0.50% interest. Not too bad for an account that’s easy to set up, has no monthly maintenance fees, and has no minimum balance requirements.

Ally also offers interest checking accounts, though those aren’t as exciting. They give you domestic ATM fee reimbursements (up to $10 per month) and access to fee-free withdrawals.

6. Varo

Varo Bank is known for not having monthly fees or minimum deposit requirements. Their checking and savings accounts are pretty good for anyone just getting into the world of online banks.

While the perks offered aren’t much different from what other online banks offer, they’re still interesting. For instance, their customers can withdraw money from fee-free ATMs if they stick to the Allpoint network (otherwise each withdrawal costs upwards of $2.50). Plus, Varo does offer cash-back on select debit card purchases.

7. Schwab

Schwab is a great online bank for anyone who travels abroad often. If you have a checking account with the bank, you are charged no foreign transaction fees or outrageous currency conversion fees. Moreover, you will always get ATM fee reimbursements, no matter where you are in the world—a perk very few other banks offer.

The only downside of Schwab is its complicated layout and inner workings. Unless you want to open a money market account or a brokerage account for investments, this bank may be too complicated and uncatered to your lifestyle.

Take the Plunge and Start Online Banking Today

As you can see, online banks offer a ton of flexibility and rewards. Ready to make the switch? Then choose an online bank that is right for you. Decide what type of savings and checking accounts you need, how much you’re willing to pay as a monthly fee, and what perks are absolute must-haves for you. Go over our list, do your own independent research, and finally take the plunge—you won’t look back.

 

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