A CFPs take on if you should pick an online bank

best online bank

With the advent of new and fast-developing technology, online banks are becoming a bit of the norm these days. At least for the near future, there will always be the big, brick and mortar banks with names that you’re familiar with and drive by on a daily basis.

However, online banks are armed with perks that many big banks don’t offer. Ones like unlimited ATM fee reimbursement, more significant interest-bearing checking accounts, and the freedom to track your spending robustly from your smartphone.

Before you sign on the dotted line for a new online bank account and say bye-bye to your big bank forever, it’s worth checking out some of the most popular online bank options to determine which might be the right fit for you. We’re featuring five online banks that we think you should know about when you’re considering making the switch.

Must-have checklist for your next bank account

Online banks come in many different shapes and sizes, and the number available seems to grow by the minute. With any money decision, it’s important to look at a few different options to figure out which one aligns with your financial goals and is going to meet your needs.

Think about your current bank – what do you like and what do you dislike about their options?

Ask yourself:

  • Do I want an account that requires a minimum balance?
  • Am I looking to open a new checking account?
  • Do I want access to a high yield savings account?
  • Do I want my bank to offer budgeting and goal-saving services?
  • How much flexibility do I want with ATM withdrawals?
  • Do I want to earn interest in my checking account?

Answering these question will help you find your favorite online bank that works for you.

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Security of online banks

Now before we dive into the details, there’s still a bit of a myth around the security of online banks vs. brick and mortar banks. Data breaches can seem like daily headlines in the news leaving many people feeling nervous about making the switch.

However, most online banks use the highest level of security and require multi-factor authentication to log in, which means they take security pretty seriously.  With that said, there are some general rules to consider when you’re online banking:

  • Make sure you’re using good anti-virus software on your computer
  • Never access your account on free Wi-fi networks that aren’t protected
  • Make sure the bank uses industry-standard security (i.e., high standards for security)
  • Don’t ever leave your login and password somewhere visible to strangers
  • Always log out

Now that we’ve got that out of the way let’s dive into some popular online banks.

Ally Bank

Ally Bank is one of the OGs when it comes to online banks. They are consistently one of the top online banks mentioned in articles and blog posts around the web and continue to turn out all sorts of interest-bearing accounts, including their Online Interest Checking Account.

ATM withdrawal fees: There are no fees if you take money out from any AllPoint ATM in the U.S. For other domestic ATMs, you’ll get reimbursed a maximum of $10 per statement cycle. Find out how many AllPoint ATMs are in your area.

Accounts offered: Online interest checking account, online savings, IRAs, and CDs

A highlight of Ally bank offerings

  • You can earn .10% interest on bank accounts with balances under $15,000 and .60% on balances over $15,000.
  • There are no monthly bank account fees, and you can transfer funds between your Ally Interest Checking Account and any other bank account for free, or you can use Zelle to pay friends or family.
  • Depositing checks is easy with Ally’s eCheck Deposit where you snap a picture of your check to deposit or with an ACH transfer.
  • There are no minimum balance requirements to set up your account.

Aspiration

Aspiration earned the mark of “best checking account in America” from Money Magazine in 2017, and they’re working hard to uphold that title. One of their top features in their Summit Checking Account is the ability to access any ATM, either here in the U.S. or abroad, without paying a fee. On top of that, Aspiration’s mission is to do good, and they donate a dime of every dollar to charities.

ATM withdrawal fees: No ATM fees regardless of the ATM you access. At the ATMs where you are charged an upfront fee for making withdrawals, you will be fully reimbursed for any fees incurred at those machines on the Summit statement date, which is approximately the 10th of every month.

Accounts offered: Summit checking, Redwood, and Flagship Fund investing, Redwood and Flagship IRA

A highlight of Aspiration offerings

  • You can earn .25% on bank account balances under $2,500 and a whopping 1% on balances over $2,500.
  • Summit Checking offers $0 in monthly maintenance charges and $0 ATM fees around the world
  • Right now, Aspiration provides three ways to deposit checks – electronic transfer from another account, mail in checks, or deposit cash or checks at NYCE Shared Deposit ATM locations.
  • There are no minimums to sign up for an account as well as no monthly minimum account balance.

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Chime

Chime is a robust online bank account that offers heaps of features with many 5-star reviews from users. Think of Chime Banking as an all-in-one – you’ve got your checking account, a Chime Visa Debit Card, mobile banking app to track your spending, and an automatic savings feature to grow your savings account seamlessly.

ATM withdrawal fees: Use of over 30,000 fee-free MoneyPass ATMs and more than 30,000+ cash back locations

Accounts offered: Chime banking accounts that can be designated for spending or savings

A highlight of Chime offerings

  • Chime Banking does not currently provide any interest-bearing accounts.
  • Chime prides itself on not charging any unnecessary banking fees, which means $0 overdraft, maintenance, and minimum balance fees.
  • You can easily deposit checks through the Chime app by snapping a quick picture. Another cool feature Chime Banking offers is the ability to send a check to someone directly through the app, for free of course.
  • There are no minimums to sign up for Chime Banking.
  • Get your paycheck early – those enrolled in direct deposit can receive their paycheck up to two days earlier

Simple

Simple offers a Mobile Checking account that acts a lot like your financial accountability partner. And, like Chime, boasts many positive reviews in the app store. Simple understands the importance of setting and achieving financial goals, and they’ve built their app to help you do just that. You can quickly set savings goals in the app and Simple works to help you achieve those goals by tracking your progress month-to-month. Another feature is Simple’s “Safe-To-Spend” tracker which offers up-to-date cash flow accountability so you always know the answer to the question, “Can I afford this?”

ATM withdrawal fees: Use of AllPoint ATMs for free, use of other ATMs include no fees from Simple but might include a fee from the ATM operator

Accounts offered: Simple mobile checking account

A highlight of Simple offerings

    • Simple’s Checking does not currently offer any interest-bearing accounts; however, their website notes that you can earn nominal interest with some of their bank partners.
    • Simple offers streamlined online banking with sophisticated built-in budgeting and goal savings tools
    • Simple is genuinely free banking – no minimum balance, no overdraft fees, and no monthly account fees.
    • You can direct deposit checks, transfer funds from existing accounts, or deposit a check by taking a picture from the Simple app.
    • There are no minimum amounts necessary to sign up for a Simple account.

Beam

If you’re interested in a bank account that earns mega interest – you’ll want to check out Beam. Beam is a brand spanking new online bank account that as of the date of this article is still yet to launch. You can sign up online for a beta invitation if you’re an iPhone user with Android coming soon. Beam’s promise is that bank account users will earn between 2-4% APY on your account which is currently the highest interest-bearing checking account.

ATM withdrawal fees: this information is currently not available on Beam’s website

Accounts offered: Beam bank account

A highlight of Beam offerings

  • Beam offers 2-4% interest on its bank account – 2% is the minimum, and you can earn up to 4% or more through collecting free APY “boosts.” Most of the details are still a bit fuzzy until they launch, but they have a good FAQ section to help you understand their APY range.
  • Beam will also offer zero fees with their bank account.
  • Currently, there isn’t a lot of information about how you can deposit a check with your Beam account.
  • There aren’t any minimums to sign up for a Beam account.

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Marcus

Marcus doesn’t offer an online bank account, but we’re giving them an honorable mention for their high-yield online savings account. A subsidiary of Goldman Sachs, this super robust savings account offers up to four times the national average APY, at a whopping 1.70%, according to Marcus’ site. The online savings account would be a great place to stash your emergency savings fund, save for taxes as a freelancer, or build up savings toward your dream vacation.

ATM withdrawal fees: while you can’t access your funds at ATM locations, you can initiate an ACH transfer from your savings account to an internal or external checking or savings account

Accounts offered: High-yield savings, CDs, and personal loans

A highlight of Marcus offerings

  • Marcus high-yield savings offers up to 1.70% APY with a minimum deposit of $1.00
  • Marcus will also offer zero fees with their high-yield savings account.
  • You can deposit money into your high-yield savings account through wire transfer or by transferring funds between internal or external bank accounts.
  • There is a $1.00 minimum balance

Gone are the days of having to accept high monthly maintenance fees and limited perks that many of the big brick and mortar banks offer. As you can see, there are a plethora of options for online bank accounts that are robust and full of appetizing perks. Your first order of business is to figure out what features are most important to you in an online service based on your lifestyle and financial goals. From there, you’ll be able to make an educated decision and find the online bank that’s just right for you.

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Shannah Compton Game is a CERTIFIED FINANCIAL PLANNER®  professional with an MBA and is the host of the award-winning podcast, Millennial Money, where she shares totally relatable and easy to understand financial advice that will actually make you want to talk about money.

The opinions expressed in this article are the author’s own. Haven Life Insurance Agency offers this as educational information only. Haven Life does not endorse or offer the products, services and/or strategies discussed here.

Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.

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