5 Best Online Only Banking Options

5 Best Online Only Banking Options
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Online banking has boomed in the millennium as technology has become more and more cutting edge, enabling consumers to take care of all manner of financial details when they’re on the go. Add a pandemic into the mix with all its social distancing requirements and business closures, and the option of online banking is looking even more attractive to many.

But there are online banks, and then there are online banks. Virtually every brick-and-mortar traditional bank offers online services these days, but online-only banks are a step apart because they have no access options other than websites and mobile apps. The first online-only bank launched in 1995 with limited banking options. Fast forward to 2020, and you have several online-only banks to choose from.

These are five of those that are mentioned most often for good reason, along with a comparison of where they stand with regard to some important options and features.

What Is an Online Bank?

Not all online banks without physical locations offer a full range of banking services. In fact, many don’t. Some might offer only savings accounts or only checking accounts. Others also offer certificates of deposit and money market accounts, and still more branch out into investment products and loans.

You’ll find that online-only banks tend to pay more attractive interest rates than their brick-and-mortar counterparts because they don’t have to maintain all that costly brick and mortar. Online-only accounts also typically charge less in the way of monthly fees and service charges for this reason.

The websites and mobile apps for online-only banks tend to be top-notch and easy to use. You don’t have to be a tech genius to master them. Cash deposits are obviously limited, if not impossible, but depositing that check someone wrote you can be done by simply taking a picture of it on your smartphone and submitting it to the app.

You can forget about face-to-face hand-holding if you find yourself in a financial predicament, but many of these online-only banks do provide support via email, through online chat options and by telephone.

Things to Look for in an Online Bank

Narrowing down the growing list of online-only banks to find the best one for you isn’t any different than zeroing in on a decision regarding any other product. It comes down to the options, offerings and capabilities that are most important to you.

Maybe you’ve had enough of paying those maintenance fees to your brick-and-mortar bank, or you want to nail down a higher interest rate on your savings. You might want easy, painless access to your money. We’ve compared these banks based on these and other factors.

Consider a few other issues as well. Always make sure that any bank you’re considering is fully FDIC insured. If you chose one that’s insured, the federal government would guarantee or protect your money up to $250,000 in the event the bank folds. Credit unions enjoy the same type of protection through the National Credit Union Administration.

Check to make sure that the online institution you’re considering hasn’t experienced any major internet security breaches. Look into ATM fees if you’re a heavy debit card user because online-only banks rarely have their own ATMs. Fees can depend on whether they have an agreement with one or more ATM providers. Check whether or not you'll have easy ATM access. And definitely ask how the bank handles cash deposits in cyberspace.

1. Ally Bank

Ally Bank is online-only, but it’s not really a new name in banking. It started out as GMAC Financing in 2000, offering auto loans, and then it morphed into Ally Bank in 2009. It’s earned some applause for its customer service, but it’s one of the few online banks that actually charges an excessive transaction fee. That’s right – using the account too much will cost you $10.

  • Available products: Ally offers checking accounts, savings accounts, money market accounts, certificates of deposit, a cash-back credit card, auto loans, home loans, auto leasing, IRAs, and online brokerage services.
  • Interest paid on checking accounts: 0.10% APY. The rate increases with a $15,000 minimal balance.
  • Interest paid on savings accounts: 0.80%.
  • Monthly maintenance fees: None.
  • Minimum balance requirement: None.
  • Minimum opening balance requirement: None.
  • Overdraft fee: $25. Ding!
  • ATM fees: Ally scores big here. It has more than 43,000 in-network ATMs with no fees, and it reimburses some other out-of-network ATM transactions up to $10 per statement cycle. Ally’s mobile app has a search tool to help you find in-network ATMs in your area.
  • Mobile check deposit: Yes.
  • Cash deposits: No capability reported.
  • Online money transfers: Ally has partnered with Zelle for money transfers.
  • Remote customer support: 24/7 telephone support.

2. Discover Bank

Discover Bank is something of a household name, at least if you’re thinking credit cards. Discover cards have been around since 1985, and 2019 was another landmark year when the bank officially waived all “deposit account” maintenance fees. This refers to savings, checking or basically any other account in which you can deposit money.

  • Available products: Discover offers checking accounts, savings accounts, money market accounts, certificates of deposit, IRAs, IRA certificates of deposit, credit cards, student loans, and home equity loans.
  • Interest paid on checking accounts: None, but Discover does pay 1% cash back on up to $3,000 in debit card purchases monthly.
  • Interest paid on savings accounts: 0.70%.
  • Monthly maintenance fees: None.
  • Minimum balance requirement: None.
  • Minimum opening balance requirement: None on checking or savings; $2,500 for money markets or CDs.
  • Overdraft fee: Yes, but Discover does offer you a little wiggle room here. Only one fee is ever charged, even if the same check is presented a second or third time for payment.
  • ATM fees: Discover is affiliated with about 60,000 no-fee in-network ATMs, but fees do apply to out-of-network ATMs.
  • Mobile check deposit: Yes.
  • Cash deposits: No capability reported.
  • Online money transfers: Has partnered with Zelle.
  • Remote customer support: Available 24/7.

3. Radius Bank

Radius Bank launched in 1987, then morphed into online-only banking. Its downside is that it tends to be more generous to consumers who maintain higher monthly balances, as they’re about the only ones who can routinely dodge fees. Still, this can be a good option for heavy ATM users, and it offers at least one cash deposit option, which most online-only banks don’t.

  • Available products: Radius offers checking accounts, savings accounts, hybrid checking accounts with a combination of savings and checking features, certificates of deposit, personal loans, mortgages, and cash management services.
  • Interest paid on checking accounts: 0.10% to 1%. It can increase if you meet minimum balance requirements. Radius also offers 1% cash back on debit card purchases if you maintain a $2,500 minimum monthly balance, or if you receive $2,500 or more a month in direct deposits.
  • Interest paid on savings accounts: 0.05%, but this increases incrementally to 0.25% for maintained balances of $25,000 or more.
  • Monthly maintenance fees: None, with one exception. There’s a $9 per month maintenance fee for the Essential Checking product, which is essentially a “second chance” rehabilitative product for those with poor banking records.
  • Minimum balance requirement: $100 for savings accounts.
  • Minimum opening balance requirement: $100 for checking accounts.
  • Overdraft fee: $5 a day, but only if your account remains overdrawn for more than five days.
  • ATM fees: You can use your Radius debit card at ATMs for free worldwide. This bank offers unlimited ATM rebates for out-of-network use.
  • Mobile check deposit: Yes.
  • Cash deposits: Yes. This is an exceptional perk, but it’s limited. You can only deposit cash through NYCE ATMs.
  • Online money transfers: Radius is not affiliated with Zelle.
  • Remote customer support: Available by phone or chat, but with some hourly limitations. These limitations are not prohibitive, however. You just can’t reach out for help at 1 a.m. or on weekends after 8 p.m. Eastern time. Radius is also available via social media until 8 p.m. Monday through Friday.

4. Chime

Chime is actually a mobile banking app, not a bona fide banking institution, and it comes with its share of pros and cons. It’s nonetheless very popular, particularly among millennials. The app itself is awesome, but you can’t open a joint account with anyone else, and you can forget about writing paper checks.

A big plus with Chime is that it will clear your direct deposit paychecks up to two days more quickly than other online banks. And the app features a tool that automatically rounds up debit card transactions to the nearest dollar, then moves your spare change into a savings account for you. Talk about savings made easy.

  • Available products: Checking accounts and savings accounts, but they’re linked to each other, so you have to commit to both. Chime doesn’t offer loans or credit cards.
  • Interest paid on checking accounts: None.
  • Interest paid on savings accounts: 1%.
  • Monthly maintenance fees: None.
  • Minimum balance requirement: None.
  • Minimum opening balance requirement: None, and Chime will actually give you $5 for opening an account with them.  
  • Overdraft fee: None, at least unless you overdraw by up to $100 or more.
  • ATM fees: You can use your debit card for free at more than 38,000 MoneyPass and Visa Plus Alliance ATMs, as well as at about 38,000 ATMs that are available at various merchants. Otherwise, there’s a $2.50 fee per transaction at non-participating ATMs.  
  • Mobile check deposit: Yes, but only if you have direct deposits of your paychecks amounting to more than $200 per month.
  • Cash deposits: Yes, at more than 60,000 Green Dot locations.
  • Online money transfers: Only to and from other Chime accounts. Chime is not partnered with Zelle.
  • Remote customer support: Chime is available 24/7 through its app and by email. You can also reach out by phone from 7 a.m. to 7 p.m. Central time Monday through Saturday, and from 9 a.m. to 5 p.m. on Sundays.

5. Capital One

Capital One jumped into online banking with both feet in 2012 when it purchased ING Direct. We’re giving it an honorable mention here only because it’s technically no longer an online-only bank. It’s established Capital One Cafes all over the country. Yes, cafes. You can get a cup of coffee here and free Wi-Fi, and you can chat with a real live person for banking advice as well. It makes our list anyway because you don’t have to go to a café if you don’t want to, and technically, a café isn’t a “branch location.”

  • Available products: Checking accounts, savings accounts, certificates of deposit, brokerage accounts, IRAs, and mortgages.
  • Interest paid on checking accounts: 0.10%.
  • Interest paid on savings accounts: 0.65%.
  • Monthly maintenance fees: None.
  • Minimum balance requirement: None with Capital One 360 checking.
  • Minimum opening balance requirement: None with 360 Checking.
  • Overdraft fee: $9 for 360 Checking.
  • ATM fees: Capitol One’s debit card is accepted at more than 39,000 ATMs at no charge.
  • Mobile check deposit: Yes.
  • Cash deposits: No capability reported.
  • Online money transfers: Has partnered with Zelle.  
  • Customer support: In-person support available at Capital One Cafes, but telephone support isn’t available.