The 9 best online banks offering high interest rates and low fees

Publish date: 2024-08-25

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Online banking has become extremely popular in the past few years — and it’s easy to see why.

You can access your accounts anytime, anywhere, as long as you have an internet connection. Online banks have much lower overhead costs than banks with physical branches, which allows them to offer higher interest rates and lower fees.

The best online banks offer easy digital access, low (or no) fees, competitive interest rates, robust customer support, and access to ATMs. Here are some of the best online banks.

The 9 best online banks 

Here are the best online banks, including options from national banks, neobanks, and credit unions. All banks on this list have FDIC insurance up to $250,000 per person per account. 

  • Ally Bank 
  • SoFi
  • Capital One
  • Discover 
  • Chime
  • Varo Bank 
  • American Express National Bank 
  • Alliant Credit Union 
  • CIT Bank 

    • Ally Bank

    Ally Bank is one of the best-known online banks. It offers the services you’d get from a typical bank, including checking and savings accounts, money market accounts, and CDs. Plus, there’s no minimum balance or monthly fees for its checking or savings accounts.

    You can earn a solid interest rate on Ally’s savings account and even earn interest on your checking account funds if you meet a daily minimum balance. Remember that these rates are variable and may change after you open an account.

    Curious about high-interest checking accounts? Here’s what you need to know. 

    Unfortunately, Ally doesn’t accept cash deposits, but you can make a deposit via check, direct deposit, or online transfer. You can withdraw cash from any Allpoint ATM for free. Ally also reimburses $10 in out-of-network ATM fees per statement cycle.

    Pros

    Cons

    SoFi

    SoFi offers a combined savings and checking account. This account comes with competitive interest rates and higher-than-average FDIC insurance. There are also no fees and minimum balances to deal with. It’s one of the best banks that comes with a virtual debit card. 

    Like other online banks, SoFi offers overdraft protection, access to a vast fee-free ATM network, and early direct deposit. But what makes SoFi’s bank account unique is its enticing cash back program. You can earn up to 15% cash back by using your debit card for specific purchases. SoFi also offers an automatic round-up feature, allowing you to transfer spare change from your debit purchases to your savings account.

    You can withdraw cash from any ATM in the Allpoint network and deposit money via online transfer or direct deposit. If you want to deposit cash, you can do so at a Green Dot retail location for a fee.

    Pros

    Cons

    Capital One 360

    If you’re looking for the perks of an online bank with the convenience of physical branches, Capital One has the best of both worlds. Capital One 360 offers a variety of banking options, including savings, checking, and CDs. You won’t pay fees and can earn a competitive rate on your savings.

    Here are other savings accounts that are fee-free. 

    With Capital One, you’ll get access to an extensive ATM network, allowing you to access cash easily. Plus, you can visit a physical branch if you need in-person support.

    You can earn a solid interest rate with the Capital One 360 Performance Savings Account, in line with what other online banks offer. You may also earn interest on your checking account if you maintain a small minimum balance.

    Pros

    Cons

    Discover

    Discover offers checking accounts, savings accounts, money market accounts, and CDs. Like other online banks, you won’t pay any monthly fees or overdraft fees.

    Discover’s savings account earns an interest rate on par with many other online banks. One unique feature of Discover is the ability to earn cash back rewards on your checking account. You’ll earn 1% cash back on up to $3,000 in debit card purchases each month. You’ll also get access to Discover’s robust ATM network.

    Pros

    Cons

    Chime

    Chime is a popular online bank providing a simple and convenient banking experience.

    Their online checking account has numerous benefits: no monthly service fees, no minimum balance fees, and no overdraft fees. You can enjoy the convenience of overdraft protection and the possibility of receiving direct deposits up to two days early. Chime users can enjoy access to over 60,000 ATMs without incurring any fees. Plus, you can deposit cash at any Walgreens or Duane Reade. Otherwise, you’ll have to pay a fee.

    Chime’s savings account has an interest rate lower than most online banks. Like their checking account, you won’t pay any monthly fees and don’t need a minimum initial deposit. Like SoFi, you can round up your purchases to the next dollar and save the cash. To open a savings account, you must already have a Chime checking account.

    Pros:

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    Varo Bank 

    Varo Bank is a digital bank offering checking accounts, savings accounts, and CDs with no monthly fees or minimum balance requirements.

    Varo offers some of the highest interest rates on a savings account, but there are some rules. You’ll earn the highest interest rate on your first $5,000, and a lower interest rate on the rest. To qualify for the highest rate, you’ll need to receive direct deposits of $1,000 or more in one month and end that month with a positive balance.

    Like other online banks, Varo has an early direct deposit feature, allowing you to receive their paychecks up to two days early. You can also automatically round up your purchases and save.

    Pros:

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    American Express National Bank

    American Express is best known for its credit cards but offers a few basic banking services. You can open savings accounts, CDs, and checking accounts, all with no monthly fees. You can earn a solid interest rate with their high-yield savings account and CDs.

    You don’t need a minimum initial deposit to open a savings or checking account, and you’ll get access to an extensive ATM network.

    American Express checking account comes with some nice perks, including 1.00% APY in interest and rewards for some debit card purchases. But you’ll need an American Express card for at least three months to qualify. The checking account has no out-of-network ATM fee reimbursements or cash deposit options.

    Pros

    Cons

    Alliant Credit Union

    Alliant is an online credit union offering a full suite of banking services, including deposit accounts, lending, and investing services. You can also work with Alliant to buy homeowners, auto, and life insurance. Like all credit unions, Alliant has membership requirements, though they’re broader than other credit unions.

    Alliant’s savings account has slightly lower interest rates than comparable banks and comes with a $100 minimum balance required. There are no monthly fees if you sign up for electronic statements. Depending on the term length, you can earn some of the highest rates out there on Alliant’s CDs. 

    Alliant also offers a checking account that earns a small amount of interest with no minimum balance. You’ll also get up to $20 monthly in ATM fee rebates.

    Pros

    Cons

    CIT Bank

    CIT Bank offers interest checking, high-yield savings accounts, CDs, and home loans. 

    To open a savings account, you’ll need a minimum deposit of $100. Once your account is open, there’s no minimum balance requirement or monthly fee, but you’ll be incentivized to keep your balance high. You’ll earn over 5% APY if your balance is over $5,000 but only 0.25% APY if your balance is less than $5,000.

    CIT Bank’s checking account also offers interest, paying a higher rate (0.25% versus 0.10% APY) if you can maintain a $25,000 minimum balance. Checking customers also get up to $30 in ATM fee reimbursements monthly.

    Pros

    Cons

    The pros and cons of online banking

    Online banking can be an excellent choice for many people, but it isn’t perfect for everyone.

    Online banking allows you to manage your finances anytime and anywhere without the need to visit a physical branch. With a few clicks, you can check your account balance, transfer funds, pay bills, and even deposit checks using your phone. This convenience saves time and effort, making staying on top of your finances more manageable.

    “Many online banks can offer higher interest rates on savings accounts or lower interest rates on loans because they do not have to pay for the cost of a brick-and-mortar store,” says Jay Zigmont, certified financial planner and founder of Childfree Wealth. “You may want to keep a local bank account for depositing and taking out cash; otherwise, an online bank may be the best option.”

    Most online banks have no physical locations, so they work best for people who don’t need in-person help. They also tend to make it hard to deposit cash, so they’re a poor fit for people who need to withdraw or deposit cash regularly.

    Here are five reasons why you should consider switching banks.

    Is online banking safe?

    Yes, online banking is safe. Like any other bank in the United States, most online banks are subject to security regulations that help keep your money safe. They’re also members of the Federal Deposit Insurance Corporation, which offers up to $250,000 in insurance per person, per account.

    If you deposit money and your bank fails, the FDIC will reimburse you for up to $250,000 in losses.

    Make sure that you follow the best practices for staying safe online. Create a unique and complex password for your online account, and don’t share it with anyone. Also, be sure to be wary of phishing and other scams from people who might be trying to access your account.

    The bottom line

    Online banks tend to have much lower fees and higher interest rates than brick-and-mortar banks, making them appealing to many. If you already don’t use cash regularly and don’t visit a physical branch often, consider opening an account at an online bank.

    Opinions expressed are author’s alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.

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