Online banks are a solid choice for modern money mangaement, operating without the need for physical branches, (though many big-name banks use a hybrid of digital and physical banking).
They offer online tools designed for flexibility, convenience, and efficiency in managing everyday financial chores, often charging fewer fees than traditional banks thanks to lower overhead costs.
1. High Yield Accounts
Fewer physical services offered by online banks often means lower operational costs, allowing them to pass the extra savings to customers through higher interest rates on savings and checking accounts.
Many online banks offer up to 4% Annual Percentage Yield (APY) on savings, while the national average APY for savings accounts is only 0.06%.
View top online savings accounts ➜
2. User-Friendly Online and Mobile Banking
Digital services and mobile apps provides a user-friendly way to view accounts, review transactions, pay bills, transfer money, deposit checks, and so much more.
Consumers can set up alerts and notifications to monitor account activity and security. Plus, some online banks have virtual assistants that can help you with your banking needs.
3. Low or No Fees
Because online banks typically charge lower or no fees than traditional banks, you can often avoid monthly maintenance fees, minimum balance fees, overdraft fees, foreign transaction fees, and more that eat into account savings over time.
Many even offer fee-free overdraft protection up to $200 so you can enjoy more flexibility and control over your finances month-to-month.
4. Faster Access to Money
Process money transfers faster than traditional bank thanks to the strong electronic networks and systems that online banks utilize. Send and receive money instantly instead of waiting long periods of time.
Many banks have built-in digital wallets and peer-to-peer (P2P) payment services for a simpler exchange of money with friends and family.
5. Quicker Service
Eliminate the hassle and time of dealing with paperwork, waiting in line at the bank, or being put on hold on the phone. You can open an account, apply for a loan, or update your information all online, without having to visit a branch or mail in documents.
What's more, many companies offer round-the-clock, 24/7 customer service support, so you can speak to a customer service representative however you prefer: online, over the phone, or simply by chat.
6. Cutting-Edge Digital Tools
Online banks offer tools and features that can help you manage your finances more efficiently. Enjoy free access to digital spending and budgeting tools to set monthly or yearly spending targets and track money habits. You can also access your credit score and financial products, such as loans and lines of credit, to improve your overall credit health.
To help you reach your financial goals faster, some online banks even offer personalized advice tips, and mobile app features that can be tailored to your individual needs.
7. Security and Protection
In order to protect your financial and personal information, online banks utilize advanced encryption and authentication technologies. You can also find features such as fingerprint sign-in, card lock/unlock, and two-factor verification to enhance your account security.
Similar to traditional banking, reputable online financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC), which means your deposits are protected up to $250,000 per depositor, per institution, in case of bank failure.
8. Fee-Free ATM Networks
Select online banks may not have their own ATMs nationwide. When this is the case, the banks regularly partner with other companies and networks to provide access to thousands of surcharge-free ATMs all over the country.
Using your debit card or mobile app, you can withdraw cash, check your balance, or deposit money at these ATMs without paying an out-of-network fee.
9. Rewards and Perks
The competitive cash-back rewards and perks offered by online banks can save you time and money, significantly enhancing your overall banking experience.
Get cash-back on your purchases, discounts from merchants, and additional benefits, including: travel insurance, roadside assistance, and cell phone protection. These rewards are often applied at the end of your first year.
10. Innovation and Flexibility
Online banks are constantly innovating products and improving services to meet the changing needs and preferences of their customers.
When customers wanted simpler, seamless service, banks began offering cutting-edge digital features and functionalities, such as biometric authentication, voice banking, and robo-advisors, that can make banking easier and smarter.
Ready to Get Started?
Online financial services provide a convenient, cost-effective alternative for managing money on a daily basis. The features and benefits of online banking make it an excellent alternative to traditional banking, with added safety, security, greater financial control, and a potential for increased savings + lower fees.
View this year’s top online banking services to enjoy the latest competitive APY rates, account deals, newest online features, and more:
