When is the last time you checked to see how much your checking or savings account was earning you, just for having money in it?
If you bank with a traditional brick-and-mortar bank, it might have been a while — and that’s not surprising.
When financial institutions like Wells Fargo and Bank of America offer annual percentage yields (APYs) as low as 0.01% on their savings and checking accounts, it’s easy to become accustomed to your money being stagnant.
The Benefits of Online Banking
The biggest allure of online banking is the high annual percentage yield (APY). APY is the interest (including compound interest) that you’ll earn on your money in a year.
Because online banks rarely have physical locations and need fewer employees, they have low overhead and can pass those savings over to customers.
The average APY for the online banks with checking accounts awarded in our 2021 list is roughly 0.31%; some accounts also offer cash back on debit cards. The average APY for our best online savings accounts is even higher: roughly 0.60%.
In 2019, the average checking APY on our list was 1.40%; the average savings account was roughly 2.00%. It’s unclear how long these APYs will stay this low.
Remember, traditional banks offer interest rates as low as 0.01% for both checking accounts and savings accounts. (The national average for savings accounts is just 0.05%.)
But online bank accounts have many benefits outside of high interest rates. Here are just a few:
- Low (or no) fees, including monthly maintenance fees (sometimes called monthly service fees), overdraft fees, foreign transaction fees and ATM fees. Some online banks even offer reimbursement for out-of-network ATM fees.
- Low or no minimum balance requirements.
- Strong online and mobile banking experiences, including apps and two-factor authentication.
- FDIC and NCUA insurance up to $250,000.
- Accessible customer service online or by phone.
Check out our current list of bank promotions for a chance to gain a monetary bonus when signing up for a new bank account.
Best Online Banks of 2021, Ranked
These are the best online banks of 2021, starting with our top pick.
Editor’s note: APYs are accurate as of Dec. 8, 2020.
1. Ally Bank
Why we like this online bank: Hands down, Ally is the best online bank of 2021, offering both online checking and savings accounts.
APYs, though now lower because of the pandemic and federal adjustments, are still high, with a 0.60% APY for savings accounts and up to 0.25% APY for checking accounts.) You can also apply for loans through Ally, and ATM access is never a problem. That’s because Ally gets you access to more than 43,000 Allpoint ATMs nationwide and reimburses up to $10 in ATM fees each month.
Other hallmarks of Ally’s online banking include its lack of monthly fees and minimum balance requirements, and its top-rated mobile app with mobile check deposit.
Potential pitfalls: If you travel outside the country frequently, don’t use your Ally Bank debit card — it carries a 1% foreign transaction fee. Travel credit cards are a better option when traveling abroad.
In addition, don’t be fooled by the draw of a 0.25% APY for a checking account; you need at least $15,000 in the account, or else you’ll earn just 0.10%. However, if you have $15K to spare, you’d be better off storing that in a high-yield savings or money market account.
Why we like this online bank: nbkc (the National Bank of Kansas City) keeps things simple by combining checking and savings into one single account, called the Everything Account. You’ll earn an APY of 0.50% across the board with this account.
Even better: There are no fees to bank with nbkc. We’re not just talking monthly maintenance fees; you also don’t have to worry about minimum balance fees, foreign transaction fees or even overdraft fees.
This bank also offers an extensive ATM network (34,000 and counting) with $12 in monthly reimbursements when you use an out-of-network ATM. The mobile app is easy to use, includes Savings Goals for organizing your money, and offers a Pay Bills feature.
Potential pitfalls: Its savings APY (0.50%) is not the most competitive of the accounts listed here. Actual member locations are limited to Kansas City, Missouri. Finally, it costs $5 to open the account. That’s obviously not substantial, but most accounts on our list are free to open.
Why we like this online bank: Like Ally, Synchrony has a healthy 0.60% APY for the savings account, which also includes a convenience card for ATM access.
Though low by 2019’s standards, the fact that Synchrony still offers an APY that’s 60 times larger than Bank of America’s — even amid a pandemic — is quite impressive. Its lack of fees (even for withdrawals past the maximum six per month) is another highlight.
Also noteworthy: Synchrony has joined the ranks of other top banks by creating an app, called Synchrony Bank (not to be confused with MySynchrony, which is the bank’s retail portal).
Potential pitfalls: Synchrony doesn’t offer a checking account, meaning you’ll need to rely on an external account or direct deposit to fund your account.
If you want check-writing capabilities, you can open a money market account — but the APY is lower (0.50%) than that of its savings account. Synchrony also lacks home and auto loans.
4. Radius Bank
Why we like this online bank: Radius Bank may not compete with the current savings APYs found at some of the top contenders on this list, but it makes up for that with a unique checking account that offers 1.00% cash back on everyday purchases. That means for every $100 you spend, you earn $1.
Currently, Radius is also offering 1.50% cash back in certain categories, including food, health, entertainment and social good. Radius’ checking accounts also offer a 0.15% APY.
Radius Bank’s online checking comes with several perks, but ATM usage is one of the best. When you bank with Radius, you can visit any ATM at any time; Radius will reimburse you for all ATM fees.
Other advantages include payment up to two days earlier than your direct deposit, an innovative mobile app with location-based restrictions and spending caps, alerts when you or someone else uses your card and the ability to turn off lost or missing debit cards.
The Radius savings account offers either a 0.15% or 0.25% APY, depending on how much you have in the account.
Potential pitfalls: Radius requires a $100 minimum deposit for the checking account, and the 0.15% APY for the savings account doesn’t kick in until you have at least $2,500 saved up.
Something that’s likely to be more frustrating to those with imperfect financial pasts are the requirements put in place for the rewards checking account. Not everyone qualifies for the rewards portion of the checking account, meaning you may miss out on the cash back.
However, if you don’t qualify for the rewards checking account now, Radius makes it possible to eventually upgrade to that account through its Essentials Checking Account. That account, which doesn’t offer a cash back option, carries a $9 monthly service charge (all other banks on our list carry no monthly fees), and there are caps on daily deposits and debit card usage. However, if you exhibit 12 months of positive banking history, you may be able to upgrade to the Rewards Checking Account.
5. Capital One 360
Why we like this online bank: Capital One 360 doesn’t have the most attractive APYs for either its online checking or savings account (0.10% for checking and 0.40% for savings), but the online bank makes up for it with the industry’s second-highest-rated app according to J.D. Power, with users citing the app’s speed, easy-to-use interface and self-service options that are simple to use.
In addition, Capital One’s accounts include zero monthly fees and offer easy bank account integration. With the checking account, you have access to more than 40,000 fee-free ATMs, and unlike some online banks, Capital One does have physical branches — and Capital One Cafés, where you can enjoy Peet’s Coffee, take advantage of a shared work space, get one-on-one money coaching, attend workshops and even host events for nonprofits.
Potential pitfalls: The APY for the savings account is not the strongest on this list. It’s also not possible to categorize your savings into sub-accounts within the app, which makes tracking toward multiple goals challenging.
6. Axos Bank (formerly known as Bank of Internet)
Why we like this online bank: Axos gives consumers plenty of options when it comes to checking accounts:
The Rewards Checking account has the highest APY on our list at 1.25%, but earning that requires that you:
- Receive monthly direct deposits of $1,000 or more;
- Use your Axos-provided Visa debit card for at least 10 transactions of at least $3; and
- Use it an additional five times (for at least $3 each time).
If you just achieve one of the three criteria, the APY is 0.4166%; if you achieve two, it doubles; and when you achieve all three, you get the full 1.25%.
This account also offers unlimited domestic ATM fee reimbursements and promises no overdraft or non-sufficient funds fees.
The Essential Checking account is all about no fees: unlimited domestic ATM fee reimbursements, no monthly maintenance fees and no overdraft or non-sufficient fund fees. You can also get your paycheck up to two days early with direct deposit express.
The Cashback Checking account lets you earn up to 1.00% cash back on all transactions requiring a signature. As with the Essential Checking account, there are no monthly maintenance fees, and you’ll get unlimited domestic ATM fee reimbursement.
In addition, Axos offers specific checking accounts for teengers and senior citizens.
The Axos online high-yield savings account is also impressive, with a 0.61% APY.
Potential pitfalls: Axos offers a lot of options. Just determining the right checking account can be stressful. And once you choose a checking account, you’ve got to keep track of quite a bit to either earn the full APY or to ensure you’re spending enough to make the 1.00% cash back on purchases requiring a signature worth your while. The $250 minimum balance for opening the savings account is also steep.
7. Alliant Credit Union
Why we like this online bank: ATM access is almost always guaranteed when you bank with Alliant, as it has more than 80,000 ATMs in its network and offers $20 in monthly ATM reimbursement for out-of-network usage. Alliant also operates one of the highest-rated apps for both checking and savings accounts and has physical locations in the Chicago area.
Currently, Alliant’s checking account APY stands at 0.25%. The account has no monthly service fee or minimum balance requirements and comes with a free Visa contactless debit card.
The savings account is equally impressive with a 0.55% APY. Though the account requires a minimum initial deposit of $5, Alliant will pay it for you. (Hey, that’s a free $5!)
Potential pitfalls: Credit unions can be more challenging to join, and Alliant is no different. Overdrafting can get expensive, with high fees and no limit on daily charges.
Alliant currently does not participate in shared branching, a system that allows you to conduct your banking business at other credit unions in the same network throughout the country. This is often a hallmark of other credit unions.
Why we like this mobile bank: Chime is great for first-time savers and spenders. Chime has no monthly service fees, no overdraft fees (you can overdraw up to $100 on debit cards without incurring a fee), no-minimum balance requirements, no foreign-transaction fees and access to 38,000 fee-free ATMs nationwide.
More importantly, it can be set up to automatically transfer a percentage of any direct deposit into the linked savings account and/or to automatically round up to the nearest dollar on all purchases, depositing the extra change into the savings account. You might also have access to your paycheck up to two days early with direct deposit.
If you’re looking to save, you will want to open a Chime Savings Account (only possible if you have a Chime Spending Account). The savings account has an APY of .50%.
Potential pitfalls: Chime is a newer option and could face growing pains. There is no in-person service, and reviewers regularly complain of slow customer service.
Further, Chime is not a full suite bank (no loans, for example).
9. CIT Bank
Why we like this online bank: In previous years, CIT offered the highest interest rate for any savings account on our list, but following the fallout from the COVID-19 pandemic, rates have dropped dramatically, far below some of its competitors.
Right now, APYs are set at 0.29% or 0.45%, depending on your balance and/or monthly deposits. While not as high as they used to be, we still appreciate the APYs, especially compared to the national average (0.05%).
The eChecking account, a new addition to the portfolio, is attractive, with a 0.10% APY on balances under $25,000 and 0.25% on balances at or above $25,000 — but it rarely makes sense to keep so much in a checking account. The account does pay out $30 a month in ATM reimbursements, and CIT’s mobile app has great reviews on the App Store and Google Play. You can also get home loans through CIT.
Potential pitfalls: CIT’s dip in offered APYs for its savings account is one of the biggest we’ve seen. Further, the CIT Savings Builder account suffers from its lack of ATM access and a minimum balance requirement ($100).
10. Discover Bank
Why we like this online bank: Discover Bank features both savings and checking accounts. Discover’s checking account is a rewards account, meaning you earn cash back for debit card purchases instead of interest on the money in the bank account. Right now, you can earn 1% cash back on up to $3,000 in debit card purchases each month, for up to $30 a month and $360 a year. You’ll also have access to more than 60,000 fee-free ATMs, and you won’t have to worry about monthly maintenance fees.
Discover’s savings account stands at 0.50% APY. Like CIT, this is a stark drop from previous years, but no online bank has been immune to the effects of COVID-19.
Potential pitfalls: You cannot get an auto or home loan through Discover Bank. Cash back on checking accounts is helpful, but big spenders will earn more when using a credit card without a monthly limit on cash back.
11. Simple Banking
Why we like this online bank: The APY for the Simple Protected Goals Account is 0.50%, and the minimum balance to earn this APY is just $0.01. Simple does not charge any fees for overdrafts, monthly maintenance, incoming wire transfers, stop-payment requests or a dormant or closed account.
Some of these benefits, like no fees for incoming wire transfers and stop-payment requests, are highly unusual for comparable accounts. And unlike most savings accounts, you can make unlimited monthly withdrawals from the Simple Protected Goals Account, which is a high-yield checking account that operates similarly to a savings account.
Potential pitfalls: To earn the 0.50% APY, you’ll have to link your checking account to a Protected Goals Account. The Simple basic checking account does not have an APY.
Why we like this online bank: Barclays offers a competitive 0.45% APY on its online savings account. While not super attractive, it is still far above the 0.01% you will earn at Chase. Its mobile app is highly rated.
Potential pitfalls: You cannot open a checking account with Barclays, complicating access to funds.
13. Charles Schwab
Why we like this online bank: Charles Schwab is great for those who like to travel — it has no foreign transaction fees and offers unlimited ATM reimbursement worldwide.
Charles Schwab is, however, more ideally suited for investing than saving and spending, thanks to its wide range of investment options. As such, the checking account — called High Yield Investor — is built with investors in mind with a direct link to a customer’s brokerage account for easy funding.
Potential pitfalls: APYs are low: 0.05% for the savings account and 0.03% for the checking account.
Charles Schwab is great for investors looking for a brokerage account, but savers and spenders looking for basic, high-yield online savings and checking accounts should look elsewhere.
Why We Picked These Banks
To determine the online banks and credit unions for this list, we reviewed nearly 40 of the most popular banks. We chose the 13 banks on our list because of their combination of high APYs, low minimum balances, low or no fees, mobile/online experience and ease of funds transfers.
All banks on this list are FDIC-insured (Federal Deposit Insurance Corporation) or NCUA-insured (National Credit Union Administration) and have no monthly fees.
Drawbacks of Online Banks
Online banking isn’t without its issues, but customers generally find the high-yield returns, stellar mobile experiences and lack of fees more than make up for online banks’ pitfalls.
Below are some of the most common drawbacks of online banks:
Limited Options for Cash Deposits
Depositing cash is the biggest challenge of online banks because they lack physical locations. Even online banks that have partnerships with brick-and-mortar banks for in-network ATMs often cannot accept cash deposits via ATM.
If you intend to deposit cash regularly (like if you’re a server or hair stylist who depends on cash tips) but still want the benefits of an online account, open an account with a brick-and-mortar bank solely to deposit cash and electronically transfer it to your online account.
Challenges With Transferring Funds
Online checking accounts generally make it easy to access your money with debit cards that work at thousands of ATMs. Some also offer checkbooks, no matter how archaic they may seem.
Online savings accounts, on the other hand, can be more challenging to access in emergencies than savings accounts at brick-and-mortar banks, but thanks to improvements in the speed of electronic transfer (ACH deposits) and new solutions from online savings accounts (like convenience cards), this issue has been largely reduced.
No Face-to-Face Support
If you’re more old school about your money management and like the idea of walking into a branch and singing your sorrows to a bank teller who can help you figure out your financial problems, an online bank might not be for you.
Online banks offer incredible customer service online and over the phone, but you can only get comforting in-person help for your accounts at a brick-and-mortar traditional bank.
Timothy Moore is a market research editing and graphic design manager and a freelance writer covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications like The Penny Hoarder, Debt.com, Ladders, WDW Magazine, Glassdoor and The News Wheel. He lives in Ohio with his fiance and their dog, Goomba.