Banking » Compare Banks » Best Online Banks of November 2022
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Best Online Banks of December 2022

While you don't have in person contact, online banks offer higher rates on savings and great digital experience. Here are our top picks:
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann’s areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann’s areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Bank/institution
APY Savings
Monthly Fee
Promotion
CIT-Bank-Logo
3.25%
$0
None

axos-bank-logo

Up to 0.61%
$0
$0
Chime banking logo
2.00%*
$0
None

discover bank logo

3.00%
3.00%
$150 / $200 Minimum deposit required: $15,000 or $25,000 within 30 days. [/sc]

Sofi bank logo

3.25%
$0
$50 – $250 Minimum deposit of $1,000 – $5,000
TIAA_Bank_logo
2.30%
0.10%
None
Marcus logo
3.00%
$0
None

How to Compare Online Banks?

Just like with traditional banks, there are a number of parameters that make it easier to compare. If you’re looking to compare online banks, there are several things you should consider. These include:

  • The Fees: Although online banks typically have far lower fees compared to their bricks and mortar counterparts, it is still an important point of comparison. Look at the fee structure for the types of products you are interested in. This includes monthly maintenance fees and overdraft fees for checking accounts, ATM fees, late payment fees and other penalties. While one online bank may look particularly attractive, the benefits can be easily offset if you need to pay a fee each month for operating the account.
  • The Variety of Products: Some online banks specialize in providing savings accounts and basic checking accounts, while others offer a full variety of banking services. While you may only be in the market for a checking account now, it is good to know that the online bank also offers loans, mortgages and other financial services. Once you have built up a relationship with your online bank, you will find it easier to access available services. So, think about your current and future banking needs.
  • Customer Support: The level of customer support can also vary from online bank to online bank. Remember that you may not have access to branch and teller services, so it is important that you can access help if you have a query or problem. Look for an online bank that offers phone, email and chat support. This will create multiple avenues if you need an urgent answer to something.
  • ATM Network: Following on from the last point, you also need to know whether an online bank has access to a wide ATM network. It is all very well having a local ATM, but what about if you are in a different town, state or even country, Will your ATM needs be met? Remember that if you use an ATM outside your bank’s network, you will incur a fee. Even a paltry fee of $2 or $3 can quickly add up if you need to perform multiple transactions on a non network ATM.
  • Safety: Finally, and most importantly, you need to compare the safety protocols of the online banks. Do they use two stage verification? Are they FDIC insured? How is your data protected? These are all important questions to answer to ensure that your money and financial details are safe.

CIT Bank Savings Connect

CIT-Bank-Logo
CIT-Bank-Logo
On CIT Secure Website

CIT Bank

APY Savings

3.25%

Fees

$0

Current Promotion

None

Minimum Deposit

$100
On CIT Secure Website

CIT Bank is an online-only bank,  a division of First Citizens Bank. It offers a decent online banking experience. All deposit accounts can be opened online without contacting a customer service representative. A good choice of savings account is the CIT Bank Savings Connect. It doesn't impose monthly service fees and offers a low-interest rate.

CIT Bank checking account called "eChecking . This account can be started with as little as $100 and has no monthly fees. Despite the fact that CIT Bank does not have any ATMs, consumers can get up to $15 in monthly ATM fees from other banks reimbursed. Customers of CIT Bank are not charged to use an ATM owned by another bank.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Accounts
  • Debit Cards
  • Mortgage
  • What CIT Bank products are inflation proof?

CIT Bank has a decent product lineup, but only its lending products are genuinely inflation proof. While the bank has reasonable savings and CD rates, there is nothing to suggest that these will dramatically rise if the rate of inflation starts to increase.

However, there are fixed rate home loans that allow you to lock in your mortgage rate. This means that even if the rate of inflation and interest rates go up, you don’t need to worry that your monthly mortgage payment will also increase.

  • What is required to open a CIT Bank account?

As with all major banks, whether they are online or have a physical branch network, you will need to provide some personal details including a valid home address, your Social Security number, and contact information.

You will also need to verify your identity with a government ID, such as a passport, driver’s license, or state ID.

  • Is CIT Bank worth it if I'm a student?

CIT Bank does not have any dedicated student accounts, but this does not mean that it is a bad bank for students. The eChecking account is a mostly fee free account and you can access great saving rates.

However, if you’re looking for credit cards, loans and other student friendly products, you may find CIT Bank a little disappointing.

  • Do CIT Bank offers a free checking account?

CIT Bank only has one checking account option; the eChecking account. However, this account is mostly fee-free. There are no monthly maintenance fees and CIT Bank also offers up to $30 in ATM fee reimbursement per statement period.

The only fees that apply to this account relate to stop payments, returned items, and excessive transactions. So, if you keep your account in good order, you are unlikely to incur any fees.

Axos Rewards Checking

On Axos Secure Website

Axos Bank

APY Savings

Up to 0.61%

Fees

$0

Current Promotion

$150 Use Promo Code “HOLIDAY” for a $150 bonus when you apply for a Rewards Checking account. Expired on 12/31/2022

Minimum Deposit

$50[

On Axos Secure Website

One of the first banks that offers online inly serviceoffer is Axos Bank. The Axos checking account has no minimum balance restriction and offers unlimited domestic ATM charge reimbursements. On all purchases made using your signature, you can receive up to 1% cash back with Axos rewards checking.

Compared to many physical banks, the Axos Bank High Yield Savings account offers greater rates. Currently, the APY on this savings account may reach Up to 0.61%. Features including account access, fund transfers, online bill payment, and mobile check deposits are available on the Axos Bank mobile app.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Account
  • Mortgage
  • Debit Card
  • Investing
  • Who is Axos Bank?

Axos Bank is an FDIC-insured technology-driven financial services company that offers a wide range of innovative products and services to individuals, businesses, and institutions across the country. Axos Bank is headquartered in San Diego, California, and has nearly $14.4 billion in assets.

We aim to be the most innovative digital bank in the United States, offering products and services that are superior to those of our competitors.

  • How is Axos physical coverage?

Axos is a bank that only operates online. Although Axos Bank has three locations, none of them are open to the public; the bank operates entirely online. As a result, if you're looking for a bank where you can get help from a teller in person, Axos is not the right choice for you.

  • How is Axos bank customer service?

Axos has a 24-hour helpline, but you can also chat with the Evo virtual assistant or browse the extensive support section of the website.

The Axos app can be used to not only transfer funds and manage transactions, but also to access support and manage your card. You can even use the app to locate the nearest fee-free ATM, which is extremely useful if you're in a foreign country. The Axos is rated 4.7/5 by Apple and 4.5/5 by Google.

  • How does the Axos savings account work?

If you want to start growing your savings and working towards your savings goals, Axos Bank has a few options for you. Axos offers a high yield savings account with an APY of Up to 0.61%, but it also has a number of other features.

You can, for example, request a free ATM card, but there are no monthly fees. There are no minimum balance requirements and interest is compounded daily. This account also gives you access to a number of online money management tools.

  • What ATMs are available to me?

Your account provides free ATM withdrawals at over 91,000 convenient locations across the country. Log in to online banking and use our ATM Locator to find out where you can make free ATM withdrawals near you.

Chime

Chime logo

Chime

On Chime Secure Website

Chime Banking

APY Savings

2.00%*

Fees

$0

Current Promotion

None

Minimum Deposit

$0
On Chime Secure Website

All Chime products are designed to assist customers in rebuilding or establishing credit. There are only two savings accounts, one checking account, and one credit card available.

Chime's checking account does, subject to qualification and terms, provide a fee-free $200 overdraft facility. Chime's "When I Get Paid" savings feature saves a percentage of your paycheck each time you get paid.

The Chime app has a rating of 4.8/5 on Apple and 4.7/5 on Google and offers a great user experience, allowing you to not only transfer funds and manage your transactions, but also access support and manage your card. Chime also has a toll-free number that is available 24 hours a day, 7 days a week, so you can contact the customer service team at any time.

  • Savings Accounts
  • Checking Accounts
  • Debit Card
  • Credit Cards
  •  
  • Is Chime a good bank for teens?

Chime is a great bank for older teens who already have a regular source of income and are looking to start to establish their credit without paying account maintenance fees or needing to worry about minimum balance requirements.

The Chime debit card is only available for those aged 18+, but there is no parental control. This means that this account is only suitable for teens who are already comfortable managing their finances, since parents cannot intervene with spending controls.

  • Does Chime work for Millenials?

Millennials tend to prefer convenience and simplicity and Chime can offer this. Even if you don’t struggle with your credit rating, the fee free checking account and impressive savings account make a good combo to manage your money. The online platform is easy to use and there is an accompanying app, so you can manage your finances on the go.

However, if you need more from your bank than a checking account, savings and secured credit card, then this is not the bank for you.

  • Is Chime worth it for Joint Accounts?

Chime does not currently offer joint accounts or the ability to have secondary cards on your account.

Chime does appreciate the importance of sharing your bank account with your spouse, so it is looking to add this feature to the accounts, but at this time, if you want a joint account, you’ll need to consider other bank options.

  • Is my money safe on Chime ?

Chime has FDIC insurance, so up to $250,000 deposit funds are federally protected. The bank also has two factor authentication and supports fingerprint authentication for your data protection.

The Chime debit cards are also protected with Visa Zero Liability. So, you don’t need to worry about unauthorized charges and can shop worry free with millions of merchants.

  • Can you buy/invest in Crypto via Chime ?

Chime does not have investment capabilities, so it is not possible to use this bank to buy or invest in stocks, shares or cryptocurrencies. So, if you are interested in crypto, you may wish to consider using a different bank with an investment platform or through an independent broker.

Discover

discover logo
On Discover Secure Website

Discover Bank

APY Savings

3.00%

Fees

3.00%

Current Promotion

$150 / $200 Minimum deposit required: $15,000 or $25,000 within 30 days. [/sc]

Minimum Deposit

$0
On Discover Secure Website

Since its inception as a credit card provider, Discover has come a long way. Discover offers a simple savings account. There are no account fees or minimum deposits, and you can earn 3.00%.

While Discover's checking account does not pay interest, you can earn 1% cash back on debit card purchases. There are no fees, as with eChecking. If you need a replacement debit card, have insufficient funds, or have a deposit returned, you will not be charged a fee.

Of course, credit cards are available, but you can also get home loans, personal loans, and a variety of checking and savings products such as retirement accounts, CDs, and money market accounts. Discover's has a rating of 4.9/5 on Apple's App Store and 4.6/5 on Google Play.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Account
  • Mortgage
  • Credit Card
  • Debit Card
  • Personal/Student Loans
  • Is Discover worth for Millenials?

Most millennials look for convenience and functionality in their banking services and Discover does meet this requirement. The checking account is fee free, so you don’t need to worry about meeting fee waiver criteria.

Additionally, since Discover is an online only bank, the interface is easy to use, making it easy to manage your account at home or on the go via the Discover app. This makes Discover worthy of serious consideration by any millennial looking for banking services.

  • Is Discover worth it if I have bad credit?

While Discover does not have a dedicated bad credit checking account, the bank does have an excellent secured credit card that is designed to help those with bad credit improve their credit report.

The Discover It secured card has no annual fee and you can activate the card with a refundable security deposit. The minimum deposit is $200 and your credit line will be determined by your deposit amount. So, if you deposit $1,000, you’ll have a $1,000 credit limit on your card.

You can then use your card to make purchases, pay the balance and this activity will be reported to the major credit bureaus, which can help you to rebuild your credit.

  • Can you close a Discover bank account over the phone/online?

Discover has a toll free customer support line that you can call to close your account. The Discover representative will go through the account closure procedure to make it as easy and painless as possible. The bank does not support account closures via the website, so you will need to be prepared to spend a little time on the phone if you want to close the account.

  • Does Discover worth for Joint?

It is possible to have a joint account with Discover. The bank allows co-ownership of most types of accounts, but both parties will need to verify their ID and personal details to be added to the account. It is also possible to add a second person to your existing Discover account. You can do this online or by calling the Discover customer support helpline.

  • How's Discover Performs During Recession?

Discover is a household name with a long track record. The bank has weathered adverse financial conditions over the years. Even after the 2007/2008 financial crisis, when the bank received $1.2 billion in federal bail out funds, Discover was able to repay these funds by 2010.

Of course, Discover is also FDIC insured, so even if the bank starts to struggle, you can rest assured that your deposits up to $250,000 are federally insured.

  • Can you buy/invest in gold products via Discover Bank?

Discover does not have an investment arm, so it is not possible to buy or invest in gold products through this bank. If you are interested in getting into investments, you may need to consider a brokerage or another bank that has an integrated investment service platform.

SoFi Checking and Savings

SoFi logo
SoFi logo

SoFi Bank

APY Savings

3.25%

Fees

$0

Current Promotion

$50 – $250 Minimum deposit of $1,000 – $5,000

Minimum Deposit

$0

The hybrid savings and checking account from SoFi offers 3.25% APY, which is one of the highest rates available right now in the US. There is no required minimum deposit for SoFi savings, and there are no hidden costs.

Additionally, the SoFi hybrid account contains a few useful checking account features. This includes rounding up, so the difference from your debit card purchases is put into one of your savings accounts.

You won't be charged if your available balance falls too low because there is also $50 in fee-free overdraft protection. Additionally, SoFi provides a $100 welcome gift to new users.

  • Savings Accounts
  • Checking Accounts
  • Mortgage
  • Investing Capabilities
  • Credit Cards
  • Debit Card
  • Personal Loans

How's SoFi overdraft fees work?

SoFi doesn't impose any overdraft fees. The transaction will fail, and SoFi won't charge you if you write a check that doesn't have enough money or try to withdraw more money than you have available.

Does SoFi provide paper checks?

Yes, SoFi provides checks without charge. After ordering, your paper checks are supposed to arrive in 10–14 days.

Can you close the SoFi bank account over the phone/online?

As a fully online platform, SoFi encourages you to use the website dashboard to manage all your account activity, including closing your account. Once you log into your dashboard, you’ll find the “Close Account” button under the “more” tab. This screen will take you through the checks before closing your account, including if you have any pending transactions or outstanding card disputes. After you’ve checked these items, you can click to close your account. You’ll see a confirmation screen to verify the account closure.

Can you buy/invest in Crypto via SoFi?

SoFi has recently launched SoFi Crypto, which as the name suggests, allows you to buy, sell and trade cryptocurrencies. You can manage SoFi Crypto via the bank’s app and get started for as little as $10. However, SoFi Crypto is unavailable in all states, so you must check the availability in your home state.

Can you Be Denied a SoFi Checking Account?

While SoFi is reputed to have flexible approval criteria for its checking account, there is still a possibility that your application may be declined. This is usually if SoFi cannot verify your identity or has a query about the personal information you’ve provided. You will receive an email letting you know your application has been declined, but you may be able to provide additional information and have your application reconsidered.

How's SoFi physical coverage?

SoFi is a fully online bank, and it has no physical branch coverage. All your transactions and queries must be performed online or by calling the appropriate helpline.

Is SoFi Account suitable for teens?

SoFi requires account users to be 18+, so it is not a good option for teens. The bank has no dedicated children’s accounts, so if you are looking for a checking or savings account for your teenager, SoFi is not the best option.

What is required to open a SoFi account?

Like the major banks, SoFi requires applicants to verify their identity and personal details to open an account. This will include your Social Security number, a valid home address, and contact details. All of these details are included in the application form, so be sure that you don’t leave any mandatory fields blank.

TIAA Bank

On TIAA Secure Website

TIAA Bank

APY Savings

2.30%

Fees

0.10%

Current Promotion

None

Minimum Deposit

$25
On TIAA Secure Website

The high minimum requirement for some of the accounts gives depositors an advantage. There are two checking accounts available through TIAA: Basic Checking and Yield Pledge Checking. The bank stays true to its promise to give APYs that are among the highest in the industry. The Yield Pledge Money Market account is above average product when you place it side-by-side with other banks’ money market account.

We like the bank because it offers a wide range of products from checking and savings accounts, to CDs, money market and credit cards. They also have loan products and investment accounts.

It’s good to have a bank that can provide the full array of common bank products that a typical customer might need. One does not have to open another account in another bank just because it’s not available in your primary bank.

  • Savings Accounts
  • Checking Accounts
  • CDs
  • Money Market Account
  • Investing
  • Credit Cards
  • Debit Cards
  • TIAA accounts: what exactly is 360° Financial View?

It's a safe tool that allows you to see all of your TIAA accounts as well as accounts from over 17,000 banks, brokerage firms, retirement plans, and other data sources.

Combining these accounts gives you a complete picture of your finances, allowing you to quickly calculate your total net worth, analyze your investment allocation, track your spending, and create a budget. The 360° Financial View is a free service provided by TIAA.

  • What types of accounts are available at TIAA Brokerage?

Individual, Joint (Tenants with Rights of Survivorship, Tenants in Common, Community Property, Tenants by the Entirety), Custodial (Uniform Transfer to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA)), Traditional IRA or Rollover IRA, Roth IRA, Inherited IRA, Simplified Employee Pension (SEP) IRA, Savings Incentive Match Plan for Employees (SIMPLE) IRAs,

  • What are the fees for my Self-Directed Brokerage account?

There are no fees associated with opening an account. Many fees are determined by the services and features you choose to use, as well as how you invest.

Marcus

Marcus logo
Marcus logo
On Marcus Secure Website

Marcus

APY Savings

3.00%

Fees

$0

Current Promotion

None

Minimum Deposit

$0
On Marcus Secure Website

Marcus is a subsidiary of Goldman Sachs, and this is reflected in its products. The bank provides high-yielding savings products such as CDs and a savings account. Personal loans, home improvement loans, and debt consolidation loans are also available.

Marcus provides a high yield savings account with a 3.00%. There are no account features or perks, but the rate is impressive and outperforms the typical interest rate offered by a high street savings account.

The Marcus app has a rating of 4.9/5 on the Apple App Store and 4/5 on Google. 

  • Savings Accounts
  • CDs
  • Investing Platform
  • Personal Loans
  • Does Marcus offer a free checking account?

No, although Marcus offers savings, CDs, and loans, the bank’s product line does not include a checking account at this time.

  • Does Marcus allow joint savings accounts?

A Marcus savings account can be opened with two account holders. This means that both parties can enjoy co-ownership of the account and make independent decisions. As a result, if one account holder notifies the bank of an action, Marcus will not confirm the action with the other party. However, you must open a new joint account because converting a sole account to a joint account is not possible.

  • Is Marcus relevant for Millenials?

The general trend among millennials is an interest in nontraditional banks. Marcus has a specialized product line that may assist customers in becoming acquainted with investments. The bank has a fantastic app that can help you manage your money while you're on the go. However, if you need a checking account to manage your day-to-day transactions, this is not the bank for you.

  • Is Marcus worth it if I have bad credit?

Marcus has a great savings account that is suitable for anyone, but if you want a lending product, you may need to work on your credit score. Marcus does not disclose the minimum credit score requirements, but it is likely that you will need a score of 660 or more to qualify for a loan.

  • Can you close Marcus bank account over the phone/online?

You can close your Marcus account by calling the bank’s helpline or by sending an email to the bank. The phone method is likely to be the easiest, as the Marcus team will guide you through the closure process.

Online Bank Reviews

Bank Account Basics

In the past, if you wanted to access banking services, you needed to use a bricks and mortar bank, with branches on your local high street. However, the evolution of the internet now means that you can access those same services through online banks.

As the name suggests, an online bank is a financial institution that has no physical branches. Instead it operates purely online. While there are some banks that balance both an online and real world presence, many online banks have cut their costs and now have a completely online presence.

Many online banks provide similar services to what you would find with a traditional bank. You can get your salary paid into your account electronically, you can use a debit card tied to the account and can pay your bills with direct pay or transfers. There are even provisions for paying in checks, with many online banks allowing you to photograph the check and upload it via an app.

This means that you can access your banking services 24/7 from the convenience of your own home or on the go using your smartphone or mobile device.

How to Choose the Right Bank For My Needs?

Once you know how to compare online banks, you will need to consider how to choose the right bank for your needs. Before you commit to opening an account, there are several steps to ensure you make the right choice.

  • Consider Your Ideal Type of Account: The first step is to think about your specific needs. Trying to compare the myriad products and services on offer from the various banks can feel overwhelming. So, it is best to think about what type of accounts you need, so you can make a more refined comparison. If you’re looking for a checking account, you may prefer a bank that offers several options, or one that provides one excellent account that meets your needs.
  • Check the Fee Structure: We touched on this above, but this is an important point that needs to be reiterated. Online banks are well known for their low fees, as they have lower operating costs compared to bricks and mortar banks. However, look at what potential fees may apply. While you may have no intention of going overdrawn, you don’t want to get stung with a massive unauthorized borrowing fee if you accidentally do. Additionally, consider ATM fees, foreign transaction fees and any other charges that may apply to your day to day finances.
  • Assess Bank Convenience: Another crucial factor is bank accessibility. You will need to consider ATM locations, availability of customer support, and even whether there is an accompanying app. Remember that your new bank should make your life easier rather than being a pain. So, if you want to have access to your banking dashboard on the go, you may prefer an online bank that allows both online and app access.
  • Check the Terms and Conditions: Even if you are convinced that you have found the perfect bank, don’t forget to check the terms and conditions. All banks will provide details of the fine print and it is vital that you read through the document and understand the implications. You can double check the fees, ensure your money is federally insured by the FDIC and understand the limitations of any promotional deals.

How Do You Open an Online Bank Account?

Opening an online bank account is quick and easy. Most banks have an application process that takes just a few minutes and you won’t need to schedule an appointment to visit a branch. Like a traditional bank account, you will need some documentation including your Social Security number, government issued ID and a funding method, if you need an initial deposit.

Most account applications will begin by asking you the type of account you want to open and whether you will open a single or joint account.

You will then need to complete the application form with details including:

  • Your Name
  • Date of Birth
  • Contact Details
  • Postal Address

In most cases, you will need to confirm your information. So, you may need to email supporting documentation such as a copy of your driver’s license or other government issued ID. This helps the bank to verify your identity.

You will also need to set up a password to access the bank dashboard. The bank will detail the log in procedure and whether you need to complete two stage confirmation to log in. So, you may need to set up a password and a pin code, or provide a cell number, so the bank can confirm the log in with an SMS verification code.

Once your account is open, you can set up an initial deposit, if required and start to transfer over your bill payments and the direct deposit of your salary. Many banks will have a procedure to guide you through this and may even have an automated system to transfer all bill payments from your old account.

Financial assets provide security, but as this chart using FED Survey of Consumer Finances shows, the average financial assets increases as consumers age. The under 35s age group has an average of $35,000 in assets. This suggests that the under 35s may still be burdened by lower income jobs and student debt.

There is a significant increase in assets between this group and the 35 to 44 age group. After this point, there is a steady increase in assets until retirement.

 

Your Savings Account

When it comes to a savings account it’s designed to keep your money stored for later. That means you’re going to usually make some interest but you’re probably going to have some limits on what you can pull out and when.

Still, these accounts come with FDIC insurance and those interest rates. Even if the interest is less than 2% (which is the average) you can still get something back and you might find something better.

How Does It Work

When you open a savings account that means you could actually get penalized for taking the money out. That’s because banks have the right to limit withdrawals on what’s considered a ‘time deposit’ like your savings account. You generally won’t have to worry about this, but you want to look at the rules. You might be able to make a few transactions, but it’s probably limited to so many a month. You also want to look at different types of fees that are charged, including low balance charges.

There are limits that are imposed by the federal government related to just how many withdraw you can make over the telephone or electronic withdrawal. Usually, this isn’t going to apply to ATM transactions or to in-person requests.

What Are the Differences Between a Checking and Savings Account?

Checking accounts don’t usually have restrictions about the number of transactions that you can do each month, while a savings account would have a limit to the number of withdrawals you can make in person or from an ATM.  There could also be a limit on the number of transfers you can make from savings to checking accounts.

Savings are a crucial part of financial stability. Whether you have an emergency fund or investment funds, savings can provide security against unforeseen events or situations. As you can see in this chart using FED Survey of Consumer Finances data, Americans are saving more. 

 

Generally, you can’t make direct payments from your savings account because of a federal law that limits some withdrawals.  Experts call this provision of the law Regulation D.

It’s definitely easy to use the money in your checking account via an ATM withdrawal, writing a check, using your debit card, or paying electronically.  So, if what you need is an account to disburse funds, a checking account is most appropriate.

 

Checking AccountSavings Account
PurposeFrequent spending, direct depositsGrowing savings, earning interest
Minimum Balance25-100$None
InterestUsually don't earn interestAbout 2% (as of March 2019)
Withdrawal RestrictionsDaily limitTypically 3-6 withdrawals a month
FeesMonthly maintenance fee + ATM withdrawalLittle to none
ProtectionUp to $250,000 per account holder by FDICUp to $250,000 per account holder by FDIC

Increase Your Interest – Savings Account

If you get a checking account you’re generally not going to have any interest building up. That means your money is just going to sit there and do absolutely nothing for you. That’s definitely not the way you want to keep your money, right?

With a savings account, you’re not necessarily getting a lot of interest, but at least you’re going to be building up something. Plus, you can look around for the best rates possible and get something a little better at least.

Lower Monthly Fees – Savings Account

Checking accounts are more and more frequently charging fees for monthly use.

That means you’re going to be paying a few dollars or more just to have that account. In some cases, however, there are ways to get this fee waived if you meet certain requirements. You want to watch for what those are and how you can meet them if you do use a checking account.

When it comes to savings accounts you generally don’t get the fees. That’s because banks are getting more interest than they’re passing on to you. So they take that money out of the fees that they would normally charge you. It means you’re going to save money this way.

Higher Withdrawal Limits – Checking Account

The Federal Reserve Board’s Regulation D requires that banks allow only 6 withdrawals from any account that’s considered money market or savings. If you use an ATM or an in-person request you get to make more, but you’ll want to keep track of how you do your withdrawals otherwise.

With a checking account, you’re not going to have a limit to how many times you want to withdraw money. On the other hand, you are going to have limits on how much money you withdraw.

When you use your card you can only charge up to $1,000 a day over all your transactions (though this may vary a bit with your card) or withdraw up to $500 from an ATM every 24 hours.

Minimum Balance Requirements – Savings Account

When it comes to how much money you need to store you’re going to have better benefits with a savings account. That’s because they usually have very low (if any) minimum balance requirements. They want you to keep your money there, after all, because it’s going to earn the bank interest.

When it comes to checking accounts you usually have an amount that you’re required to keep in the account at all times. This minimum could be only $25 or it could be up to $100 or more, depending on the type of checking account.

Safety and Protection – Both

You’ll get FDIC insurance up to $250,000 with either type of account, which means that you’re going to have much better protection than if you just store your money at home.

This protection occurs because the federal government says that financial institutions need to give you some insurance in exchange for giving them your money and your personal information. What’s even better is you don’t have to pay for this insurance at all.

Are Online Banks Safe?

Generally, online banks are safe, but only if the institution is insured by the FDIC. This is federal protection that provides coverage for up to $250,000. It offers the same protections that you would receive if you used a traditional bricks and mortar bank.

The FDIC provides a BankFind tool on its website that allows you to search by website address or bank name to ensure the specific bank is insured.

However, even if the online bank is FDIC protected, there are additional safety precautions you should take when banking online. These include:

  • Not using links you receive via email or SMS. You should always use the official website address and type it into your browser.
  • Regularly change your password and don’t use it elsewhere.
  • Set SMS alerts to check for any unauthorized transactions on your account.
  • Use multi factor authentication. While a two step authentication process adds work, it does provide another layer of security.

Online Bank: Benefits and Drawbacks

As with any financial product or service, there are both benefits and drawbacks associated with online banks. By being aware of these, you can make an informed decision.

The Benefits:

  • Lower Fees: Since online banks have lower overheads, as they don’t need to staff branches, they typically charge lower fees compared to traditional banks. This means that you can access the banking services you need without paying over the odds.
  • Better Rates: This follows on from the previous benefit, but online banks typically offer better rates. You may receive a higher rate on your savings or enjoy a lower rate on a personal loan or homeowner loan. Additionally, since you can manage your accounts online, you can more easily move your money around to get the most interest on your funds.
  • Variety of Banking Services: Online banks have come a long way in recent years and many now offer a wide variety of banking services. In this way, they are comparable to traditional banks. So, you can have all your banking needs catered for online.

The Drawbacks:

  • No Branch Service: Online banks have very limited access to in person support or help. Rather than having access to face to face assistance, you may need to use phone based customer support, email or chat. So, if you prefer to speak to a teller if you have any issues, an online bank is not the right choice for you.
  • Cash Deposit Issues: If you tend to deal with cash, you may run into cash deposit issues. While you can easily withdraw your funds using an ATM, if you want to pay in cash, you may need to pay it into a traditional bank and transfer it or find an ATM that accepts deposits. Some banks use third party services, so you can make a cash deposit via a retailer, but there are fees associated with this.
  • Fewer One Stop Shop Products: While some online banks offer superb savings and checking accounts, they may not have certificates of deposit and other financial products you’re looking for.

Online Banks vs. Traditional Banks? What Are the Differences?

While online banks can be quite similar to traditional banks, there are some key differences. The most obvious is that fully online banks don’t have branches. This means that you can’t simply pop into a branch to pay in cash or speak to a teller.

However, online banks tend to have more ready access to customer support. You are likely to find that you can access support via chat, email or phone 24/7.

This also reflects on when you can perform transactions and banking actions. While you would need to wait for normal business hours to open a new account or initiate a transfer, online banking allows you to do these things at any time. So, if you want to get your finances in order at midnight on a Sunday, you can.

How Do I Access Money in an Online Account?

While there is the limitation of no branch access, there are numerous ways that you can access your money in an online account. These include:

  • ATMs: Online banks provide access to an ATM network, where you can withdraw funds and perform other transactions.
  • Direct Pay: Depending on the type of online account, you may also be able to pay your bills by setting up direct pay with your creditors. You will simply need to provide your account and routing numbers, together with an authority to automatically pay your regular bill.
  • Transfers: You can also initiate transfers to your other online accounts or traditional bank accounts.
  • Swiping Your Debit Card: Finally, you can swipe your debit card at stores when you want to make a purchase.

Do Online Banks Have ATM Availability?

As we touched on above, most online banks use a third party ATM network. However, the specific network will determine the availability of machines in your area and whether you can find the machines outside the US.

Bear in mind that you may be able to use other ATM machines outside this network, but you are likely to incur a transaction fee. While a $2 or $3 fee may not seem like much, these fees can quickly add up if you perform multiple transactions.

Therefore, it is a good idea to check what ATM network an online bank uses and whether you would have ready access to machines before you sign up for an account.

Are Online Banks FDIC Insured?

FDIC is federal insurance for funds in your bank accounts. It offers coverage of up to $250,000. However, not all financial institutions have FDIC insurance.

Most established online banks provide access to FDIC insurance, but it is important to check that your chosen bank does before you open and fund an account. The FDIC website has a search tool, where you can enter the website or bank name to verify if you would enjoy FDIC coverage.

This will provide reassurance that your funds are protected and you won’t lose everything should something occur and the bank ceases trading.

FAQs

If the savings account is different than the checking account you are transferring to, it might take 3-5 business days to get your funds. Wire transfers also take a few business days. If the banks are the same, some have instant transfer options.

When you make the transfer, it should tell you how long it will take and give you a confirmation.

Most online bills will not allow you to directly link a savings account to auto-pay or bill pay. Savings account also do not come with checks so you can’t pay bills with checks. Mortgage accounts and auto loans also cannot be set up with savings accounts.

They should not be used to make payments or to do business. They are only designed to store extra money that you don’t need right away.

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Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann's areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
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