Best Online Banks for October 2023 – CNET [CNET]

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Dashia is a staff writer for CNET Money who covers all angles of personal finance, including credit cards and banking. From reviews to news coverage, she aims to help readers make more informed decisions about their money. Dashia was previously a staff writer at NextAdvisor, where she covered credit cards, taxes, banking B2B payments. She has also written about safety, home automation, technology and fintech.

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Shang Saavedra is the founder and CEO of Save My Cents, a personal finance education platform that helps Americans learn how mental health and financial wealth are connected, and how to use the power of an abundance mindset to unlock more wealth. Shang finished saving for her retirement by the age of 31, and now lives a work optional life in Southern California with her husband, two boys, and two cats. She teaches Americans the key habits and behaviors needed to become less fearful of money, and how to live life with joy. Her insights have been published by numerous national publications. Shang received her bachelor’s degree in economics from Harvard and her MBA from the University of Chicago Booth School of Business.

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Updated Oct. 24, 2023

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Online-only financial institutions that provide banking solutions are common today. The first online-only bank, First Internet Bank of Indiana, opened in 1999 and forever changed the way we bank. Whether through a bank, credit union or financial service firm, you can open savings or checking accounts to manage your day-to-day expenses or set up an emergency fund to save for a rainy day all without stepping foot in a brick-and-mortar location.

You might not be as familiar with online bank names, which can feel uncomfortable and unsettling to anyone new to managing their money online, said Rita-Soledad Fernández Paulino, who goes by “Soledad,” a personal finance coach and founder of Wealth Para Todos. But as long as the online bank is insured by the Federal Deposit Insurance Corporation or National Credit Union Administration, your money is protected up to $250,000 per bank, per account type.

You may want to consider online banks because they offer some of the most competitive rates on high-yield savings or certificate of deposit accounts. Some online-only banks offer many helpful features, such as 24/7 live customer service support, that will simplify your banking needs. You can choose an online bank or credit union as your primary bank or open multiple accounts at separate institutions to help you reach your financial goals.

Compare the best online banks

CNET’s list of the best online banks includes some of the most popular financial institutions nationwide. 

Note: APYs shown are as of Oct. 23, 2023. CNET’s editorial team updates this information regularly. APYs may have changed since they were last updated and may vary by region for some products.

What is an online bank?

An online bank, credit union or financial services firm lets you fully manage your money and accounts online via a website, mobile device or app. Most banking services — including transferring funds and depositing checks — can also be handled online.

“More people are leaning toward online banking,” said Bola Sokunbi, founder of Clever Girl Finance. But with technology making everything we do more accessible from a smartphone, that doesn’t mean there aren’t drawbacks to online banks. Online-only banks lack in-person assistance, and some might not offer cash deposits, making it tricky to bank there if you’re often paid in cash. 

But if you’re comfortable managing your money online, it can be a convenient, low-cost banking choice. “Just make sure the bank meets your needs and it’s not going to cost you a ton of money to keep your money there,” Sokunbi said.

Online banks typically offer higher interest rates than traditional banks, Sokunbi said. And one major advantage is that some even let you earn interest on your checking account, a feature most big banks don’t offer.

And although online accounts generally have fewer account fees, you can save a lot of money by being aware of any additional fees, Sokunbi said. An online checking account, for example, might charge an ATM withdrawal fee. And an online savings account might charge you an excessive withdrawal fee if you go beyond six transfers or withdrawals per statement cycle, said Shang Saavedra, founder and CEO of Save My Cents.  

Transferring money out of an online account can also take time. Make sure you feel comfortable with how you’re able to access your money — including withdrawing or transferring funds and making deposits. If you need assistance, you’ll need to navigate the bank’s customer service line, email support or chat.

How do I deposit and withdraw money from an online bank account?

How you deposit and withdraw money will depend on your bank. And the transfer time may make a big difference in which one you choose.

Bank transfer: A bank transfer is one of the most common and seamless ways to transfer money online from one bank account to another. You can transfer money to or from an existing account using the account and routing numbers through your online account or mobile app. Some banks also let you transfer money through banking platforms like Plaid or Zelle. While some banks may transfer your money instantly or within two business days, some can take as long as seven — which can make a big difference, Sokunbi said.

Mail or wire transfer: Even if the only bank you choose doesn’t have a physical branch you can visit, you may still be able to mail a paper check or wire transfer with the funds to deposit into your account. However, this route will likely take longer for your money to hit your account compared to other options.

Pros and cons of online banks

Are online banks safe?

Like traditional banks, money stored at an online bank is safe as long as it is FDIC- or NCUA-insured to protect your deposits up to $250,000 per individual, per bank. 

But keeping your financial and personal data secure when banking online is also important. Choose an online bank with robust safety and security features to protect your account. Some essential features to look for include two-factor or biometric authentication, end-to-end encryption and no liability for unauthorized transactions. This can help keep your account more secure and protect it from data breaches and hackers. Before opening an account at an online bank, ask customer service about any safety features and be sure to enable them for your safety. 

How to open an account with an online bank

Opening an account with an online bank is usually straightforward. Once you’ve compared different bank options and are ready to open an account, follow these steps:

• Go to the bank’s official website.
• Narrow down which account(s) you want to open and review any requirements and fees.
• Complete the application with any required personal information and verification.
• Fund your account using the bank’s approved deposit methods.

From there, you can download the bank’s official mobile app and request a debit card (if available).

How we research banks

CNET reviews online banks based on the latest APY information, fees charged and services offered from issuer websites. We evaluated online banks from among more than 50 banks, credit unions and financial companies. We selected the banks with the highest APY that were insured up to $250,000 by the FDIC or NCUA.

Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Credit One Bank, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank, and Wells Fargo.

This article includes some material that was previously published on NextAdvisor, a CNET Money sister site that was also owned by Red Ventures and which has merged with CNET Money. It has been edited and updated by CNET Money editors.

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