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By Leslie Cook
Updated: December 8, 2020 3:37 PM ET | Originally published: October 20, 2020

Online banking has been gaining popularity for years — and that was before COVID shutdowns made accessing your accounts from home essential.

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But 24/7 convenience isn’t the only benefit online banks offer. Since they don’t maintain brick-and-mortar bank branches, online banks tend to have much lower overhead costs compared with traditional banks.

This often translates into lower fees, or even no account fees, along with higher interest rates compared to traditional banks.

To pick the Best Online Bank we reviewed account terms at more than 20 of the leading online banks, including:

  • annual percentage yields on savings and checking account balances
  • minimum balance requirements
  • minimum deposit requirements
  • monthly service fees.

We also considered the size of each bank’s ATM network, since even the most digitally-inclined among us need cash sometimes, and other factors like banks’ mobile apps and online tools.

Naturally, all our choices are FDIC insured up to the limits allowed by law. (Credit unions offer NCUA insurance.)

12 Best Online Banks of 2020

Here are our top picks for the best online banks you can use right now:

  1. Ally Bank: Best Overall
  2. Axos Bank
  3. American Express
  4. Discover Bank
  5. Capital One 360
  6. Barclays
  7. CIT Bank
  8. Synchrony Bank
  9. TIAA
  10. Marcus by Goldman Sachs
  11. Charles Schwab
  12. Chime
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Ally Bank: Best Overall Online Bank

Why it Wins: Ally Bank consistently offers some of the highest APYs available on both its checking and savings accounts. This bank charges no monthly maintenance fees, has no minimum opening balances on its deposit accounts and offers a variety of useful tools that make saving money for specific goals easier.

Solid Savings Rates

If growing your savings is your primary goal, Ally’s Online Savings Account paid a (comparatively) generous 0.60% APY on all balance amounts as of October 7.

Online banks’ interest rates respond to market conditions so Ally’s savings rate has dropped several times this year. Its rate still dwarfs the national average of 0.05% APY.

Perks Include Nice Savings Tools

Along with its competitive rates, Ally also offers some nice tools. For example, you can open up to 10 different “buckets” or categories within the savings account to set aside money for specific needs such as college expenses, wedding plans, or retirement without having to open multiple savings accounts.

You can specify how much money goes into each bucket, and you’ll earn interest on the total amount of money in the account, regardless of how many buckets you create.

Checking Account Pays Interest

Ally’s Interest Checking account is tiered, offering 0.1% interest on balances up to $15,000, and 0.25% above that, both rates being higher than what most banks offer, online or otherwise.

Unlike many online checking accounts, Ally still allows paper checks. Of course, you can also deposit checks using mobile check deposit.

You can’t deposit cash directly into your accounts but you could link your Ally account to another financial institution that accepts cash deposits and then transfer the money into your Ally account.

Finding Savings For You

Then there are also useful perks like Ally’s Surprise Savings. This tool analyzes your linked spending account to identify money not being used to pay monthly expenses and that can be safely transferred to your savings account.

You can set it up to make the transfers automatically, or you can decide to make the transfer yourself each month.

ATM Access and Fees

In terms of accessing your money, Ally gives you fee-free ATM access to over 43,000 Allpoint ATMs around the country. If you do use an out-of-network ATM, Ally pays up to $10 per statement cycle in ATM fee reimbursements.

For most banks’ ATMs, $10 would cover about three uses, so account holders should limit their use of other banks’ and credit union’s ATMs by getting cash back on debit card purchases at grocery stores.

Opening an Account

Opening an account with Ally can be done online in a matter of minutes, and you can contact customer service in a number of ways, including by phone, email, online chat, text, or even through Amazon’s Alexa.

You can link your Ally account to any other traditional bank or credit union and start depositing. Or you can use the mobile app to deposit a paper check.

Now you can also link your account to an Ally Invest account which offers self-directed and managed portfolios, including retirement accounts like IRAs.

One Caveat

Ally Bank’s interest rate on savings account deposits is consistently among the highest for online banks, but at any given point in time it’s not necessarily the highest rate.

If maxing out APY is your top priority, it pays to shop around. Some online banks even offer only savings accounts which means their savings rates tend to be higher.

Several of our best online bank runners up, below, can usually beat Ally’s savings rate while also falling short in some other areas.

Ally has a lot to offer but these other banks may match up better with your specific needs. These financial institutions checked out well in our analysis. A few excel with a specific niche.

Axos Bank

You could earn 0.81% interest as of Dec. 7 by opening a high-yield savings account — one of the highest interest rates you’ll find online.

The account requires a minimum opening balance of $250 but doesn’t charge a monthly service fee.

Axos Bank also allows you to earn up to 1.25% in interest on its Rewards Checking Account but in order to get that rate, you have to receive monthly direct deposits totaling $1,000 or more and make at least 15 debit card transactions per month.

American Express

With American Express’s high-yield savings account you could earn 0.60% interest as of Dec. 7, with no minimum balance and no monthly service fees.

You don’t need to have an American Express credit card to open a savings account.

You can link your savings account to other accounts and transfer funds between them without paying fees.

However, unlike Ally, Amex doesn’t offer a checking account or an ATM card.

American Express Bank does offer personal loans.

Discover Bank

This well-known credit card issuer also offers online banking services which include a 0.60% APY on savings accounts as of Dec. 7.

Like Ally, Discover pays the same APY across all savings balances.

But Discover stands out because it offers 1% cash back on all debit card purchases along with no fees — a nice combination if you use your debit card for everyday purchases.

Capital One 360

If you live in Texas or the northeast you’ve seen Capital One 360 Bank’s physical branches.

The credit card giant also has a full-service online bank with low fees and high-yield savings and money market accounts.

Serious savers will want to know the savings rate at Capital One tends to be lower than Ally Bank’s rates. On Dec. 7 Capital One offered 0.4% APY.

However, the bank’s mobile app has high ratings, and its physical locations in several major markets make the bank more attractive as a hybrid financial institution: a bank with a physical presence and competitive rates and low fees for all account holders.

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Barclays

This British bank traces its history to 1690. In the United States, Barclays specializes in high-yield online savings accounts.

If you’re looking for a simple, high-yield savings account to link up to your existing bank and use only for saving, Barclays should make your short list.

Currently, on Dec. 7, the bank pays 0.50% APY on all savings balances.

Barclay’s does not charge monthly maintenance fees and there’s no minimum balance requirement.

CIT Bank

CIT Bank offers a full array of banking services online, including a money market account that pays 0.50% APY on all balances, as of Dec. 7.

CIT also pays 0.10% APY on checking account balances below $25,000 and will pay up to $30 a month in other banks’ ATM fees since it has no ATM network of its own.

Synchrony Bank

Synchrony Bank’s high-yield savings account currently pays 0.60% APY which is among the highest rates.

The account charges no fees and requires no minimum balance to open an account or earn interest.

However, Synchrony does not offer checking accounts or other banking products you’d need to make an online bank your primary bank.

You’d need to use Synchrony only for saving in the bank’s savings account or certificates of deposit.

TIAA

We’re listing TIAA Bank (formerly known as EverBank) because of its super competitive rates.

As of Dec. 7, the bank pays 0.65% APY on all savings account balances.

The bank will also pay 0.40% on your checking account balance during the first year. (The APY decreases to 0.15% after the first year unless you have $25,000 or more in the account.)

TIAA charges a monthly maintenance fee of $5 unless you keep a balance of $25 which most account holders routinely do.

You’d also need a $100 minimum balance to open a checking account.

Marcus by Goldman Sachs

Serious savers tend to like Marcus by Goldman Sachs, an online-only bank whose savings rate is 0.50% APY as of Dec. 7.

Like Barclays and Synchrony, Marcus by Goldman Sachs won’t function as a primary bank. Marcus does not even issue ATM cards.

Account-holders can access their money only by transferring from a linked account.

This bank charges no fees and enforces no minimum balance requirements.

Charles Schwab

Charles Schwab, the well-known brokerage house, now has an online bank. Its savings rates can be easily topped.

Even some national banks that operate physical branches can beat Schwab’s savings rate.

But account holders who travel globally appreciate Schwab’s mobile banking with no foreign transaction fees and free access to any bank’s ATM network, free of charge.

(Schwab offers unlimited ATM fee rebates each statement cycle.)

Chime

Chime has grown in popularity over the past few years by offering a sleek platform for online banking designed to appeal to account holders who want a simpler personal finance life.

Checking account holders on a tight budget like Chime’s ability to post automatic direct deposits two days sooner than most other banks. If you get paid on Thursdays you could access your funds as early as Tuesday.

Chime is part of the MoneyPass and Visa Plus Alliance ATM network which means you should be able to find a fee-free ATM in your area.

Chime is designed to provide savings and checking accounts. You’d have to open both accounts to become an account holder.

And, Chime still pays 1.0% APY on savings, according to its Web site which was last updated in June of 2020.

To produce this year’s Best Bank rankings, Money reviewed account information for over 30 of the nation’s largest online banks. The account information included account minimums and qualifications, interest rates, monthly service fees, ATM fees, overdraft fees, overdraft protection fees, insufficient funds fees, debit card replacement fees, domestic wire transfer fees, and online banking capabilities. When selecting finalists, priority was given to checking and savings accounts with no or easily waived monthly fees, free ATMs, and higher interest rates. In naming free accounts, we assumed customers would be okay with receiving e-statements to avoid a monthly fee. Money’s editorial team fact-checked information in December 2020.

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