Start with what you actually use your account for
The best online checking account for you depends on how you bank, not on which bank has the most ads. Before you compare features, write down what you do with your money each month: Do you deposit checks by phone? Do you need to withdraw cash often? Do you send money to family in another country? Do you keep a small balance or a large one? Do you have questions you want to ask a real person?
An online bank that has no branches and no phone support is cheaper to run, which is why it can offer higher interest rates and lower fees. But if you need to deposit cash or talk to someone in person, that savings means nothing to you. The account that looks best on a comparison chart might be the wrong choice for your actual life.
Key Takeaways
- Online banks have lower fees and higher interest rates because they have no physical branches, but you cannot deposit cash or speak to someone in person.
- Banks with branches let you deposit cash and talk to a person, but charge higher fees and pay lower interest on the money you keep in the account.
- The features that matter most are the ones you will actually use — check deposits by phone, ATM access, international transfers, or customer service by phone.
- Compare the monthly fee, the interest rate paid on your balance, and any minimum balance requirement before you open an account.
- You can open an account online in minutes with just an ID and a Social Security number, but read the terms about how long transfers take before you move your money.
Understand the trade-off between fees and interest
Online banks typically charge no monthly fee and pay interest on the money you keep in your checking account. A traditional bank with branches usually charges a monthly fee (often $10 to $15, though this varies) and pays little or no interest. The online bank's advantage shrinks if you keep a large balance — the interest you earn might not cover the branch bank's fee. But if you keep a small balance, the online bank saves you money every month.
Interest rates change, so do not choose an account based on today's rate alone. Instead, look at whether the bank has a history of paying competitive rates. Read the account terms to see whether the interest rate drops if your balance falls below a certain amount, or whether the bank can lower the rate without warning.
Decide whether you need to deposit cash
This is the biggest practical difference between online and traditional banks. If you receive cash as payment and need to deposit it, a pure online bank cannot help you — they have no tellers and no deposit machines. Some online banks partner with ATM networks that let you withdraw cash, but depositing is harder.
A few online banks have found workarounds. Some let you deposit cash at a partner retail location like a grocery store or pharmacy. Some let you mail checks or deposit them by phone camera. But none of these methods are as fast as walking into a branch. If you deposit cash more than once a month, a traditional bank or a credit union with branches is probably the better choice, even if you pay a monthly fee.
Check what happens when you need customer service
Online banks offer customer service by phone, email, or chat — usually 24 hours a day. But they do not have branches where you can walk in with a problem. If you have a question about your account, you will wait on hold or type a message instead of talking to someone face-to-face. Some people prefer this. Others find it frustrating.
Read the bank's customer service hours and the methods they offer. Some online banks have phone support only during business hours, even though they advertise 24/7 service through chat. If you think you might need to talk to a person, call their customer service line before you open an account and see how long you wait.
Look at ATM access and transfers
Most online banks let you withdraw cash at ATMs, but they do this through a network rather than their own machines. Some networks are large and convenient; others have fewer machines in your area. Check whether the bank reimburses ATM fees charged by other banks, and how many free withdrawals you get per month. A few online banks charge a fee if you use an ATM too often.
Also check how long transfers take. When you move money from an online bank to another bank, it usually takes one to three business days. If you need money faster, some banks offer same-day transfers for a fee. Read the fine print about what "business day" means — some banks do not count weekends or holidays.
Compare the accounts side by side
| Feature | Online Bank | Traditional Bank with Branches |
|---|---|---|
| Monthly fee | Usually $0 | Usually $10–$15 (varies) |
| Interest on checking balance | Usually 0.01% to 0.05% (varies) | Usually 0% |
| Deposit cash in person | No | Yes |
| Deposit checks by phone | Usually yes | Usually yes |
| Withdraw cash at ATM | Yes, through a network | Yes, at their machines |
| Talk to a person in person | No | Yes |
| Talk to a person by phone | Usually yes | Usually yes |
Write down the features that matter to you from the list above. Then visit the websites of three banks you are considering and note their monthly fee, interest rate, ATM network, and customer service hours. The cheapest account is not always the best account — the best account is the one you will actually use without frustration.
Once you have narrowed your choices to two or three, spend a few minutes on each bank's website looking at how the account works. Some banks make it straightforward to see your balance and send money. Others bury these features in menus. If the website feels confusing to you now, the account will feel confusing to you later.
Know what you need to open an account
You can open an online checking account in minutes from your phone or computer. You will need a valid government ID (a driver's license or passport), your Social Security number, and a way to verify your identity — usually a phone number or email address the bank can reach you at. Some banks ask for a small deposit to start, though many do not.
The bank will run a background check using a service called ChexSystems, which keeps records of closed accounts and overdrafts. If you have had problems with a bank account in the past, some banks may decline to open an account for you. You can check your own ChexSystems record for free at chexsystems.com before you open an account, so you know what the bank will see.
Frequently Asked Questions
Can I use an online bank if I do not have a computer?
Yes. You can open an account and manage it entirely from a smartphone. You can deposit checks by taking a photo with your phone camera, check your balance, and transfer money using the bank's app. You do not need a computer.
What if I get rejected because of my ChexSystems record?
Some banks specialize in accounts for people with banking history problems. Credit unions also sometimes have more flexible policies. You can also ask the bank that rejected you what specific issue caused the rejection — sometimes it is a mistake you can correct.
Do online banks protect my money the same way as traditional banks?
Yes. Online banks are insured by the FDIC (Federal Deposit Insurance Corporation) just like traditional banks. Your money is protected up to $250,000 per account type. Check that the bank you choose displays the FDIC logo on their website.
Can I switch to a different bank later if I change my mind?
Yes. You can close an online account anytime and move your money to another bank. The process usually takes a few days. You do not have to stay with the first bank you choose.
What is the difference between an online bank and a credit union?
A credit union is owned by its members rather than shareholders, and often has lower fees. Many credit unions have branches and ATMs. Some credit unions are online-only. If you belong to a group (like a workplace or a community organization), you may be able to join a credit union that serves that group.