If you are looking for new ways to make your money stretch further, an online bank account is a great option. An online bank account can offer higher APYs, lower (often zero) fees, and additional benefits unavailable from physical-only banking institutions.
Another great advantage of having an online bank account is that they often have no minimum balance requirements. That gives you the flexibility to save as much or little as you like without worrying about charges or missing out on benefits.
These days over 65% of Americans use online banking functions regularly and this number is only set to increase. If the majority of us prefer the convenience of banking online anyway, it makes sense that we take full advantage of the benefits on offer. Plus, as many of these banks have been founded from the outset as primarily online businesses, you can be sure their apps, websites, and customer service are top-notch.
There are a lot of options to choose from and some are definitely more enticing than others. You want to ensure you do your research first because choosing the wrong online bank account could result in:
To help you get the most out of your savings, we are on hand with everything you need to know. We have also researched and highlighted our three favorite online bank accounts for 2024 right here.
Online banking (also referred to as internet banking) is using your computer or smartphone to manage your banking transactions. That can include everything from checking your savings, setting up direct debits, making one-off payments, and even managing your investments.
Established brick-and-mortar banking institutions have been offering online banking options for well over a decade now. A majority of Americans now use banking apps and websites to manage their daily finances. More recently, several online-only banks have been founded to capitalize on this trend. As they do not have to pay for physical buildings they can often pass on greater savings to their customers.
Whether you wish to join a more traditional bank or an online-only institution for your banking is ultimately a personal decision. However, to help you decide, here are some of the key factors you need to consider:
APY - This stands for Annual Percentage Yield and it is the amount of interest you will earn on your savings. Some of the largest banks actually offer some of the lowest returns with as little as 0.01% APY. Conversely, online banks offer some of the highest rates with 2+% not being uncommon. In addition, many don’t even require you to have a minimum account balance to take advantage of their top rates. Monthly Fees - Another huge advantage online bank accounts have over traditional banks is that many charge zero monthly fees, even if you infrequently use the account. No monthly fees could save you over $100 every year.ATM Fees - If you intend to use a checking account for regular withdrawals make sure to check the ATM fees. Look for accounts with the lowest fees or ones that offer reimbursements on fees every month.Customer Service - If you plan on using online banking only it is important to choose an institution with a reputable customer service model. Look for institutions that have 24/7 support, high Trustpilot reviews, and international coverage (if you intend to travel).Sign-up Bonus - With competition being fierce amongst banking institutions some are willing to offer generous sign-up bonuses to win your business. These bonuses typically come with criteria you need to meet such as how much money you initially deposit but it can be a great way to earn a little extra cash. Some offer sign-up bonuses as high as $500!Now that we know what an online bank account is and the benefits we should be expecting, let's take a look at our three favorite online banking options for 2024:
To ensure your funds are protected, only use banks that are backed by the Federal Deposit Insurance Corp. (FDIC) bank or a National Credit Union Administration (NCUA) credit union. This guarantees that your money is insured and the institution is reputable. However, scammers and bad actors are always a risk and it’s important you stay safe online. Never provide your password or other identifying details to anyone and check your statements regularly for any suspicious activity.
Like setting up a standard bank account, you will need your social security number and typically an official form of identification. You will also need an email address for your account and a contact number. Once you receive your debit card you will need to activate it by entering the details into your online banking account.
If you are opening a checking account then the vast majority of online-only banks will provide a debit card. This card will allow you to make purchases and withdrawals as you would expect. It will usually be sent to you via post and you can expect to receive it within a week (depending on the company). You do not need to worry about security while in transit as the card can only be activated by you. If you are opening a savings-only account you may not be provided a debit card as standard.