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Imagine being able to manage your finances from anywhere in the world irrespective of the time of the day! There is no need to make multiple bank visits or wait in the queues for long.
All this is possible through an online bank. Almost every trusted bank these days has introduced its mobile or web application through which you can open an account, start investments, transfer funds, and do multiple other banking-related tasks from the comfort of your home at the time that suits you.
It means, that even if you wish to open an account at midnight, you can do it with just a few clicks through their mobile application.
You can enjoy multiple benefits through an online bank, like higher interest rates and negligible fees. However, you must opt for a trusted internet bank to enjoy all the perks.
In this article, we will help you understand what online banks are and how they can make financial management and banking easy and convenient for you. Furthermore, we have listed out the top 10 best online banks that you can consider to manage your finances digitally.
Key Takeaways
- Digital transformation of the banking sector helps people manage their financial activities through a digital platform without visiting a physical branch.
- Digital platforms provide convenience, and higher interest rates, and it is an overall cost-effective option due to less overhead cost.
- It is crucial to consider factors like interest rate, additional fees, ratings, market reputation, and customer support efficiency while choosing the right online bank.
- Opening an online account is a simple process, you just have to fill out an application form available on the bank’s website.
- Online vs traditional banks; online banks offer convenience and higher interest rates. Whereas, a traditional bank has a physical presence but lower interest rates.
What Is Online Banking?
As the name suggests, it is a bank that is available online on a digital device. It is a digital setup for you to manage all your banking activities through your mobile phone or desktop. There is no need to visit a physical branch, as you can perform every banking activity with just a few clicks.
From opening a bank account to managing your investment, everything is possible on the mobile application; and the best part is that these apps are easy to understand and use.
All you need to do is sign up on the application by entering all the required information, and you are ready to explore a convenient way of banking.
Recently, online banks have become very popular and experienced a wide inclination by people across the globe. Even banks are actively attracting their customers towards it by offering competitive interest rates, secured gateways, and much more.
Thus, it is a profitable move to switch to digital banking. Let us discuss how online banks work to help you understand the concept better.
How Does Online Banking Work?
Banks offer a user-friendly interface in their digital application, allowing everyone to access it without outside assistance. So, you do not need any expert help to start using online banks. Start by signing up on your preferred online bank by putting all the necessary information.
The bank may ask you to generate a PIN, which you will use to authenticate your identity before performing any activity, like a fund transfer. Every time you wish to use the application, you will log in with your credentials, and all the features will be in front of you on the dashboard.
Security is the most common concern when it comes to online transactions. If you also have it in mind, know that the best online bank will never compromise your security.
It always offers a secure environment through encryption and other latest techniques, keeping the data and all the confidential information safe. Your bank will ask you to generate a PIN, which you will use to authenticate your identity before performing any action on the application.
Moreover, banks may also offer you a two-factor authentication process for added security.
10 Best Online Banks in the USA
The following are some of the best online banks available in the USA you can explore, and choose one to carry out all your banking activities online.
Varo Bank
It is one of the most popular online banks in the USA, with only a digital presence. The platform offers a wide range of banking facilities, like opening a savings account, checking balance, and fund transfer.
There are no hidden fees or expenses involved in using this digital bank, making it a cost-effective and customer-friendly option. Moreover, the bank has FDIC approval, making it a secure option.
Ally Bank
Ally operates on the digital-only model, with no physical presence. The bank offers a wide range of banking options through a feature-rich digital platform.
It offers high-interest savings accounts, credit cards with no additional fee, and multiple loan and mortgage options. Additionally, the bank ensures easy access to cash countrywide through its wide network of ATMs.
Discover Bank
Discover is a leading player in the online banking space, with customer-focused services and an easy-to-use digital platform. The bank offers financial products, like checking accounts, CDs, and savings accounts through its online platform and the wide network of ATMs all across the United States.
For utmost customer satisfaction, they offer 24×7 customer support, handling all customer queries instantly. Apart from the banking services, the bank is also popular for its credit card offerings that come with multiple reward options.
Axos Bank
In 2000, it opened as the Bank of Internet USA, and later it was rebranded into Axos Bank. It is known for its competitive interest rates on savings accounts and CDs.
The mobile application and online platform have advanced digital tools for customers to track their activities and enjoy a seamless banking experience. It also provides 24×7 customer support to assist the customers and answer all their queries.
TIAA Bank
It is a rebranded version of EverBank with a focus on online banking. The bank offers a wide range of financial services through its digital platform, including account management, fund transfer, and multiple loan options.
You can access customer support through phone and online support, and get your queries readily answered by the experts. With low fees and comprehensive digital banking solutions, TIAA offers a modern banking experience to its customers.
CIT Bank
CIT is a popular name in the online banking industry, offering higher interest rates, no monthly fees, and no requirement for maintaining a minimum balance. It offers savings products like other internet bank options. Additionally, it provides home loans, including home equity lines of credit and more.
The digital banking platform is user-friendly, and the customer can use all the financial tools without any assistance.
Quontic Bank
Quontic is a trusted digital bank in the US that perfectly combines the benefits of a traditional bank with the convenience of a digital platform. The bank works with a vision to serve minority communities through its competitive interest rates and high-yield savings accounts.
The account holders can access its nationwide ATM network and enjoy its zero maintenance fees which makes it one of the best digital banking options in the country.
The mobile application that the bank offers is user-friendly, allowing customers to enjoy a manageable banking experience from the comfort of their homes.
SoFi Bank
It is a part of the popular financial service company, Social Finance Inc. The company offers an array of options in digital banking, investment, and loans, known popularly for no fee and no minimum balance requirement feature.
Through the user-friendly application, it allows you to perform all the banking activities from anywhere around the globe with just an uninterrupted internet connection. The best part is that SoFi also offers benefits like financial planning consultancy, educational events, and coaching provisions for productive investments.
Chime
It is a financial service-providing company with only a digital presence. Chime gained popularity very fast through its user-friendly digital platform and banking model that doesn’t charge any maintenance or additional fees.
You get access to various banking services, like savings accounts, secured credit cards, and spending accounts through Chime Digital Bank. It is significant to note that the bank doesn’t have any physical presence, and its entire focus is on digital advancements.
So, if you wish to enjoy digital banking services at your own convenience and cut down the additional fees, Chime is your preferred option.
Capital One 360
It is primarily an online bank with physical branches at a few locations. So, it is ideal for you if you wish to enjoy the digital banking experience but also prefer visiting the physical bank.
The bank has a wide network of ATM network, making it easier for you to withdraw cash without paying any transaction fee. Additionally, it offers robust digital tools to manage finances in the most sorted manner.
What are the Pros and Cons of Online Banks?
Online banks have multiple benefits and help make financial management super convenient for you. However, there are certain drawbacks that you should be aware of, to enjoy a wonderful experience.
Pros
- These banks give higher interest rates on different investments because their overhead expenses are less.
- You can access the digital platform from anywhere if you have a stable internet connection. So, the convenience it offers is unmatchable.
- Many banks remove the additional expenses, like monthly maintenance over their digital platforms, making it an affordable option.
- It is also an environment-friendly approach as it significantly reduces paper usage. The customers get digital receipts of their transactions, reducing their carbon footprint.
Cons
- If you prefer in-person interactions, you may still feel the need to visit a physical branch.
- There is a high dependency on technology. You can only access the digital platforms if you have a stable internet connection and a supporting digital device.
If you research the benefits and drawbacks, you will see that the advantages of opting for a digital banking setup outweigh the cons. Thus, it is certainly a promising option.
How to Choose the Best Online Bank?
There are multiple online bank options these days, which confuse you. Every bank will claim to offer the best services, but it is crucial for you to do thorough research and decide which one will suit your requirements. To help make fruitful decisions, we are listing some tried and tested strategies for narrowing the options and selecting the best online bank.
Check Interest Rates
The first and most significant thing to do is check the interest rates that your preferred banks offer on savings, current, and other account types. Make sure you choose the bank that offers competitive rates.
Confirm Additional Fees
Enquire about all the additional fees and expenses that your preferred bank will charge. It will save you from the disappointments in future, and you can choose the bank that takes zero or negligible maintenance fees.
Check Reviews & Rankings
Make sure you check the reviews and ratings left by other customers for your preferred online bank. You can also verify the same on authority websites and go with the one having an excellent market reputation.
Enquire About Customer Support
Though the digital platforms are easy to use and have all the features right there on the dashboard, you may still need customer support. Hence, it is crucial to verify that the customer support team will be readily available for your assistance in case you need it.
These simple strategies will help you pick the best online bank out of a plethora of options. If you still need more assistance, you can check the list of top 10 online banks filtered by our expert team.
Are Online Banks Safe?
Online banks are a safe option, and that is one reason why there has been a global inclination towards them. However, the level of safety of your Internet bank also depends on the financial institute that you choose.
Here are a few things you should ensure while choosing the right bank to enjoy a safe banking experience.
- Make sure your online bank is FDIC (Federal Deposit Insurance Corporation) insured. It will give you an assurance that your deposits are protected up to a certain limit in case of any crisis in the bank.
- Check and ensure that the bank uses encryption and other security measures on their digital platforms. It is the best way to secure your personal data.
- You should also incorporate healthy habits, like setting up a strong password while using digital banking features for your safety.
How to Open an Online Bank Account?
Opening a bank account online is an easy process, provided you have chosen a bank that prioritizes customer convenience. Simple steps that are common for almost every online bank are listed below.
- Select a bank that stands tall on all your requirements, like interest rate, features you expect, and more.
- You will need a few documents to complete the process, like a valid ID, social security number, proof of address, and more. Check all the documents you might need and keep them handy while opening an online account.
- You can find the application form on the bank’s website. Fill in all the details and submit it. You might have to set the security questions, PIN, and more to keep your banking experience safe and sorted.
- Once the bank approves your account, you can log in and access your account digitally through the mobile application or website.
The steps may vary for different banks, but the basic process remains the same. Once you log in, you can perform all the banking-related activities through it.
Online Banks vs. Traditional Banks
Here’s the comparison table between online banks and traditional banks on the basis of various factors.
| Factors | Online Banks | Traditional Banks |
| Presence | These banks are only digitally present and do not have any physical presence. | Physical presence in a brick-and-mortar building. |
| Fee Involved | There are generally zero or negligible additional fees involved. | May have higher additional expenses. |
| Interest Rates | Offers higher interest on savings and various investments. | Typically low interest rates. |
| Technical Advancement | Entire focus is on digital banking. | May have a few digital options, but the focus is not on technical advancements. |
| Support Type | You can get chat or call support through the mobile application or the website. | You can get a chat or call support through the mobile application or the website. |
| Security | Highly secured environment with encryption, two-factor authentication, and more. | Though there are security measures taken, but not as much as on digital platforms. |
Conclusion
After exploring all the details about an online bank and the benefits that these digital platforms offer, it is fair to say that it perfectly meets the requirements of modern customers.
By switching to these tailored platforms, you have complete control over your banking activities with the ability to perform them from anywhere at any given time.
The only effort you need to put is in choosing the best online bank that provides a seamless banking experience through its app. Moreover, you should also look for the one offering perks like higher interest rates and lower fees.
Our experts have carefully curated the list of the top 10 best online banks, like Ally and Varo Bank. All of them stand true to your expectations, whether you are seeking convenience, efficient customer support, or flexibility. So, make the right choice, sign up, and explore the new-age banking that works just the way you want.
FAQs
Which online bank is best in the US?
It is difficult to name the best online bank in the US, as it may vary for different people. However, Ally Bank is one digital platform that caters to the needs of almost every user in the best possible way.
How do you protect yourself while banking online?
For a safe banking experience, you should choose a digital bank that opts for encryption and other security measures. Additionally, you should develop habits of setting up strong passwords and always keep your two-factor authentication open for a safe banking experience.
Are online banks FDIC-insured?
Yes. Every trusted online bank is FDIC-insured. It ensures that in case of a crisis in the bank, the customer deposits will be safe up to a certain limit.
Which online bank offers the highest Interest Rates?
CIT bank is known to offer the highest interest rates in the USA.
