What online banks offer and why they differ

Online banks are financial institutions that operate without physical branches. You manage your account through a website or mobile app, deposit checks by photographing them, and withdraw cash at ATMs that belong to their network or partner banks. The main trade-off is convenience and lower fees in exchange for no in-person service.

The best online bank for you depends on what you actually do with your money. Some people need a place to park savings and rarely touch it. Others write checks weekly, need customer service by phone at 2 a.m., or want to deposit cash regularly. No single bank wins at all of these things, so this guide walks through the real differences and names specific banks where each strength shows up.

Key Takeaways

  • Online banks charge lower fees than traditional banks because they have no branches, but they vary widely in what they charge for overdrafts, wire transfers, and account maintenance.
  • Savings rates are higher at online banks than at brick-and-mortar banks, but the rate changes monthly and the difference shrinks when rates fall across the industry.
  • ATM access varies by bank—some offer thousands of free ATMs through networks, others charge you to withdraw cash, and a few reimburse ATM fees you pay elsewhere.
  • Customer service quality matters most if you have a problem, and online banks range from chat-only support to 24-hour phone lines.
  • Checking accounts at online banks work for bill pay and transfers, but if you deposit cash regularly or need a teller, a traditional bank or credit union may fit better.

Online banks with the highest savings rates

Savings rates at online banks move with the Federal Reserve's interest rate decisions. When rates are high, the difference between an online bank and a traditional bank can be 4 to 5 percentage points. When rates fall, that gap shrinks. Right now, online banks consistently offer rates 0.5 to 1 percentage point higher than what you will find at Chase, Bank of America, or Wells Fargo.

Marcus by Goldman Sachs, Ally Bank, and American Express Personal Savings all publish their rates on their websites and change them without penalty to your existing balance. Rates vary slightly between them—sometimes Marcus leads, sometimes Ally does—so if you are opening a new savings account, check the current rate on each site before deciding. The difference between 4.50% and 4.75% is real money on $10,000, but it shifts month to month.

High-yield savings accounts at these banks have no monthly fees, no minimum balance requirements, and no catch. The trade-off is that you cannot withdraw cash in person. If you need to move money out, you transfer it to a checking account (at the same bank or elsewhere) and then withdraw it, which takes one to two business days.

Online checking accounts for bill pay and transfers

Checking accounts at online banks work well if you pay bills online, use a debit card, and rarely write checks. Ally Bank, Charles Schwab, and Discover Bank all offer checking with no monthly fees, no minimum balance, and no overdraft fees—they straightforward decline the transaction instead of charging you $35.

Charles Schwab stands out because it reimburses ATM fees worldwide. If you use an out-of-network ATM and pay $3, Schwab credits it back to your account at the end of the month. This matters if you travel or live somewhere with few ATMs in your bank's network. Ally and Discover do not reimburse fees, but both have access to thousands of free ATMs through the Allpoint and MoneyPass networks.

Check writing is possible at all three, but online banks mail checks to you rather than keeping them in stock at a branch. If you write checks often—more than a few per month—a traditional bank or credit union may be faster. If you write one or two checks a year, online checking works fine.

Banks with the largest ATM networks

ATM access is where online banks vary most. Charles Schwab offers the broadest access because it reimburses fees, so you can use any ATM anywhere and get the fee back. If you do not want to wait for a reimbursement, Ally Bank and Discover Bank both participate in large ATM networks—Allpoint (55,000+ ATMs) and MoneyPass (30,000+ ATMs)—so you have free withdrawals at thousands of locations without needing a reimbursement.

Chime, a fintech bank, offers access to over 60,000 ATMs through its network, which is the largest single network available. However, Chime's checking account has different features than traditional banks—it is designed for frequent small transactions and paycheck advances, not for someone who wants a straightforward checking account.

If you live in a rural area or travel frequently, check the ATM locator on each bank's website before opening an account. A high savings rate means nothing if you cannot access your money without paying $3 per withdrawal.

Online banks that offer customer service by phone

Most online banks offer customer service through chat, email, and a mobile app. Some also have phone support, which matters if you have a fraud claim, a dispute with a merchant, or a technical problem that chat cannot solve quickly.

Charles Schwab, Ally Bank, and American Express all offer 24-hour phone support. Discover Bank has phone support during business hours. Marcus by Goldman Sachs offers phone support but not 24/7. If you need help at midnight on a Sunday, Charles Schwab and Ally are your options among the major online banks.

Response time on chat varies. Ally typically responds within minutes during business hours. Marcus and American Express can take longer during peak times. If you have a problem and need an answer the same day, call rather than chat—you will reach a person faster.

Online banks versus credit unions and traditional banks

Online banks win on fees and savings rates. They lose on cash deposits and in-person service. If you deposit cash regularly—at a job that pays you in cash, or because you prefer to handle money in person—a credit union or traditional bank with branches is more practical. Most online banks do not accept cash deposits at all.

Credit unions often offer rates close to online banks and have branches where you can deposit cash. The catch is that credit union membership is restricted—you have to live in a certain area, work for a certain employer, or belong to a certain organization. If you may have access to, a credit union is often the best of both worlds.

Traditional banks (Chase, Bank of America, Wells Fargo) charge higher fees and offer lower savings rates than online banks, but they have branches everywhere and accept cash deposits. If you value in-person service and do not mind paying for it, they work. If you want the lowest fees and highest rates, an online bank is the better choice.

How to move money between banks safely

Opening an online bank account does not mean closing your existing bank. Most people keep a checking account at a traditional bank or credit union for cash deposits and in-person needs, and open a savings account at an online bank for the higher rate.

To move money between banks, use an ACH transfer (Automated Clearing House). Both banks have an ACH transfer option in their online portal. You enter the other bank's routing number and your account number there, and the transfer takes one to two business days. There is no fee, and it is safe—the bank verifies the account before the money moves.

Wire transfers are faster (same day) but cost $15 to $30 and are harder to reverse if something goes wrong. Use ACH for routine transfers and wire only if you need the money the same day.

Frequently Asked Questions

Is my money safe at an online bank?

Yes. Online banks are insured by the FDIC (Federal Deposit Insurance Corporation) the same way traditional banks are. Your deposits up to $250,000 per account type are protected if the bank fails. Check the bank's FDIC certificate on its website to confirm coverage.

Can I open an online bank account if I have bad credit?

Most online banks do not check your credit score when you open a checking or savings account. They may check ChexSystems, a banking history report, to see if you have unpaid overdrafts or fraud at other banks. If you have a clean banking history, you can open an account regardless of credit score.

What happens if I need to deposit a check?

Online banks let you deposit checks by taking a photo of the front and back with your phone and uploading it through the app. The check must be endorsed on the back. Deposits typically post within one to two business days. Some banks limit the amount you can deposit per day or per month.

Do online banks offer credit cards?

Some do, but most online banks focus on checking and savings accounts. Ally Bank and American Express both offer credit cards. If you want a credit card and a bank account at the same place, check whether the bank you are considering offers both before opening an account.

Can I use my online bank debit card everywhere?

Yes. Debit cards from online banks work at any merchant that accepts Visa or Mastercard. The difference is that you cannot withdraw cash at a branch—you have to use an ATM in your bank's network or pay a fee.