How to choose an online bank


  • Finding a good online bank is essential for managing money in the digital age.
  • Online banking can offer all the services of traditional banking, sometimes with even more perks, such as higher interest rates for checking and savings.
  • This does not mean that online banking is perfect or that all online banks are the same. You will need to watch out for fees for maintaining a minimum balance or using out-of-network ATMs.

Most of the traditional banks we use today tend to offer robust online services, but

online banks

did it first: they are only accessible online.

Because they don’t have the high overhead of brick-and-mortar banks, they also tend to offer low- or no-fee services with smooth apps and websites.

But what should you look for when choosing an online bank? There are a few things:

  • Basic security measuresincluding a secure website, FDIC insurance and a high rating
  • Convenienceincluding a simple interface, robust account offerings and helpful customer service
  • Minimal feesincluding an extensive ATM network or cashback program to reduce out-of-network fees

And hey: if you find a traditional bank that offers all of the following, it might still be the best fit for you.

Basic security and protection

First of all: You want your bank to be FDIC insured. The FDIC is a government agency that insures US banks in the event of a problem and the failure of the bank. At an FDIC-insured bank, each customer’s assets are insured up to $250,000. This is the norm in traditional banks, and just as necessary for online banks.

Read more: Robo-advisor Wealthfront now offers a new high-yield savings account with a $1 minimum deposit – here’s how it stacks up

You might also be interested in the bank rating by Bauer Financial when comparing your options. Bauer Star Ratings are the financial industry standard for evaluating a bank’s policies, skills and security. The banks and

credit unions

are rated on a scale of 1 to 5 (you’ll want to look for a 4 or 5 star score). Some financial institutions may not have ratings, such as banking startups that don’t have enough data to be rated. You can purchase more comprehensive reports from BauerFinancial, but getting a snapshot just from the star rating should be enough for most consumers.

And while it might seem obvious, take a moment to make sure your online banking URL starts with HTTPS instead of HTTP. The “S” at the end stands for Secure, which means that all communication transferred between your browser and the website is encrypted. A secure site will also have a locked padlock icon in or near the address bar.

Savings account offers from our partners:

As a general rule, don’t submit confidential information to a website that doesn’t have HTTPS, especially financial information, and don’t make a habit of banking over public wireless connections.

Convenience, both online and on your mobile device

According to a study conducted by CitiBank, almost a third of Americans use their

mobile banking

app more than any other app on their smartphone. And support for banking through mobile apps has only increased over the past few years. The same study indicates that the use of mobile banking applications increased by almost 50% in 2018 alone.

Although online banks almost always have websites that are optimized for mobile browsers, let’s be honest: you probably want to access your banking from your phone. Read app reviews on the Apple or Google Play stores, and think about the services you’ll need on the go, whether it’s as simple as checking your account balance or setting up bill payment from your smartphone.

Although traditional checking and savings accounts offer no interest, it is not uncommon to find high-yield chequing and savings account options among online banks – and it has the potential to save you money. Ally is probably the best-known option for high-yield online accounts, while some smaller online banks and personal finance tools like Chime and Digit also offer features to help automate your savings and maintain a flow. constant money in your accounts. .

And finally, there are times when you’ll need to talk to an actual human, not just be sent through all the automated systems. Look at what banks advertise for different levels of customer service. If the bank does not have a 24/7 phone line or guaranteed online chat for emergencies, you may want to consider other options.

Convenience such as the ability to temporarily lock your card or report it as missing may seem small, but can also make a significant difference to fraudulent charges or other abuses, which often happen within minutes. following the theft of your card.

Low fees, including a strong network of ATMs

Look for an online bank that offers a high monthly ATM fee refund or has a large network of fee-free ATMs.

Ally, for example, charges no fees for ATMs in the Allpoint network and will reimburse up to $10 for out-of-network fees each month. TIAA Bank will refund all ATM fees for accounts that maintain a minimum of $5,000, and up to $15 per month for out-of-network ATMs otherwise. You can also use the site’s ATM locator to find fee-free ATMs.

While on high alert for fees, keep an eye out for additional costs such as minimum monthly (or quarterly) deposit requirements, paper check ordering fees, membership fees, in addition to their policies. overdraft on your account or having a payment bounce.

You want your online banking to be secure, convenient and profitable – and if you find a bank that ticks all three boxes, you might have found the bank for you.

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