Friday, 2 June 2023
Updated on Wednesday, May 19, 2021
The future of banking is online — and you don’t want to miss it. Online banking has become almost synonymous with low fees and earning top-notch interest rates, in addition to convenient account access. Whether you’re looking to take your entire banking suite completely mobile, or just want to stash your savings while earning the best online rate, we’ve got you covered.
In the third edition of our Best Online Banks roundup, we hope to make the choice a bit easier for those looking to make the most of an online account.
How we picked the top five: We chose banks with the highest 1-year CD rates that have consistently ranked in MagnifyMoney’s Best CD Rates page for the last two years.
Marcus by Goldman Sachs and its competitive CDs came out on top this year as our best online bank for CDs. You need just $500 to open a Marcus CD, including its No-Penalty CDs. Its High-Yield CDs also come with a 10-day rate guarantee, so that you can lock in the highest earning rate at the time if you make your initial deposit within 10 days of opening the account.
Ken Tumin, founder of DepositAccounts.com, lauds Marcus as a longtime top-runner in the space. “Marcus has a long history of offering competitive CD rates for a wide variety of terms,” Tumin said. “The bank also has many features that make opening, funding and managing a CD easy.”
With the exception of No-Penalty CDs, Marcus will assess an early withdrawal penalty if you withdraw funds from your account before maturity. The penalty associated with its 12-month CD equals 270 days of simple interest on the principal.
Taking second place again this year, Ally Bank offers competitive rates across three different CD account types: High Yield CDs, Raise Your Rate CDs and No Penalty CDs. Ally Bank’s No Penalty CDs are of particular interest as they allow you to avoid paying the price for closing out your certificate before it reaches maturity.
Ally Bank CDs rank highly for their consistent rates as well as their lack of a minimum deposit requirement, which lets savers with low balances benefit from Ally Bank’s products. Ally Bank also provides a rate guarantee that allows you to earn the highest rate available when you make your deposit within 10 days after opening or renewal, as well as a Loyalty Reward rate boost when you renew your Ally CD.
In third place comes Discover Bank and its wide range of top-earning CDs. Discover is a great option for those who don’t want to worry about fees, since the bank promises zero fees. (The only charge you may face is to send a wire transfer from your account.)
Discover Bank requires a $2,500 minimum deposit to open, which is why it falls toward the bottom of this ranking. Depending on your CD term, the early withdrawal penalty ranges from three to 24 months of interest; the penalty for a 12-month CD is equal to six months of simple interest.
Barclays rounds out our list for its lineup of CDs. Though the bank has historically offered consistently competitive CD rates, it comes in fourth due to a series of rate cuts in 2020.
Still, its 12-month CD in particular could be worth a look given the number of perks that Barclays still does offer account holders. The Barclays 12-month CD currently earns a 0.25% APY on all balances, and interest compounds daily. Plus, there is no minimum balance needed to open or maintain the account, nor are there monthly fees.
Barclays has a more lax early withdrawal penalty than its competitors, as well. For the 12-month CD, the penalty equals 90 days of simple interest on the amount withdrawn.
How we picked the top five: We chose banks that have maintained the highest savings account earning rates and consistently ranked in MagnifyMoney’s Best Savings Account page for the last two years.
Barclays improved its ranking from last year, taking the title of the best online savings account for 2021. Its APY has been competitive for the last two years, in spite of some declines in 2020.
Barclays Online Savings stands out because it doesn’t require a minimum balance to open or maintain, nor does it charge a pesky monthly fee. We also favored Barclays for its high withdrawal and deposit limit at $250,000 per electronic or ACH transaction.
“An often overlooked feature for an online bank is its capability to allow you to easily transfer funds electronically,” Tumin said. “Barclays’ online banking offers this capability, allowing you to easily establish links to your accounts at other banks and initiate electronic transfers.”
Barclays is accessible online and in its mobile app, in addition to over-the-phone customer service.
Up one spot from last year, Synchrony ranks well for its consistently solid High Yield Savings account, which currently offers a 0.40% APY on all balances. Even better, there’s no monthly fee to worry about.
Synchrony comes with the added bonus of an optional ATM card, which gives you another convenient way to access your money. Synchrony will even rebate up to $5 in ATM surcharges per month. You can also access your money via electronic transfer, check or wire transfer. Synchrony can be accessed online, which includes online chat, as well as through its mobile app and over the phone.
Another top contender, Marcus by Goldman Sachs earns its 0.50% APY on all Online Savings Account balances. There is no monthly fee.
Marcus scores high in part thanks to its favorable transaction policies. It allows same-day transfers of up to $100,000 both to and from your Marcus account. On top of that, Marcus doesn’t charge for wire transfers.
Marcus can be accessed online, through its mobile app and over the phone.
Ally Bank is an ongoing favorite for its great products, user-friendliness and transparency. Its Online Savings Account, which earns an APY of 0.50%, is open to all balances and does not charge a monthly fee.
The Online Savings Account allows you to save towards different goals in various buckets — all within the same account — so you can differentiate where your money is going. The account also comes with what Ally calls “boosters,” or transaction roundups, which help you automatically save when your savings account is linked to an Ally Interest Checking account.
New Ally customers are limited to $10,000 in outgoing ACH transfers per item per day and a $500,000 limit on ACH deposits into the account. The Online Savings account and all its features can be accessed online and in the Ally mobile app. You can also reach an Ally representative over the phone or live chat online.
Ever since Vio Bank burst onto the scene in 2018, it has offered one of the competitive rates. As of this writing, its rate actually beats out the other best online banks for savings. While Vio doesn’t charge a monthly fee, it earns a slightly lower ranking due to its $100 minimum deposit requirement. There is also a $5 fee if you receive paper statements each month.
Vio Bank also has a relatively low transaction limit compared to other banks on this list. It allows you to make transfers up to $25,000 per day and $100,000 per month when made through the Vio Bank External Transfer Service. There are no limits to transfers when initiated at another institution. Vio Bank is a division of MidFirst Bank.
How we chose the top five: The winner of best bank for money market accounts is the institution that had the highest money account earning rate and consistently held a spot on MagnifyMoney’s Best Money Market page for two years.
For the second year in a row, Premier Members Credit Union earns the top spot for online banks with money market accounts, thanks to its top special money market rate and lack of monthly maintenance fees.
“Premier Members Credit Union’s Money Market has a unique reversed tiered system that offers a big rate advantage for those with small balances,” said Tumin. As of this writing, this Money Market Account offers its top 2.00% APY on balances up to $2,000, while its top tier of $250,000 and over earns 0.15% to 0.25% APY. You only need $5 to open a new money market account. Another plus is the account’s inclusion of paper checks for further convenient access.
Premier Members Credit Union began in 2015 as a merger between Boulder Valley Credit Union and Premier Members Federal Credit Union. Credit union membership is open to residents and employees within select Colorado communities; employees of select partner companies as well as those members’ relatives; and relatives of current members. You can also become eligible by joining the Impact on Education charity.
The only runner-up in this category, Ally Bank’s Money Market Account currently earns 0.50% APY on all balances, comparable to the bank’s Online Savings Account. This account doesn’t charge a monthly maintenance fee, and has consistently been featured on our top money market page over the last two years.
This true money market account comes with the added access of a debit card and paper checks. Plus, you can use the Ally Bank debit card at any Allpoint® ATM for free, and benefit from up to $10 in ATM surcharge reimbursements.
How we chose the top five: Our best online banks for checking needed to check off a few boxes: charge no monthly maintenance fees, offer out-of-network ATM fee refunds and consistently rank in MagnifyMoney’s Best Checking Account page for the last two years.
Earning the title as the best bank for checking accounts, Ally Bank’s Interest Checking account charges no monthly fees, refunds up to $10 in third-party ATM fees each month and has consistently held a spot on MagnifyMoney’s Best Checking Account page for two years. “The Ally Interest Checking account has many features that make it a great primary checking account such as ATM fee reimbursements, free checks and free overdraft transfers,” said Tumin.
The account also earns interest — a big win for a checking account. With the Interest Checking account, your balance determines your rate. Balances of $15,000 and over can earn the account’s higher rate.
Discover offers a unique and appealing take on checking accounts with Cashback Debit. The account earns 1% cash back on up to $3,000 in debit card purchases each month. While not an APY, the cashback rate has remained consistent over the past two years.
This account also scores well for us due to its fee-free setup. That means no fees for items like monthly maintenance, standard checks, deposited item returned or insufficient funds.
Consumers Credit Union’s Rewards Checking account doesn’t quite earn interest outright; instead, you’re required to meet certain qualifications in order to determine your rate on balances up to $10,000. Meeting the requirements also guarantees unlimited reimbursement for any and all ATM fees.
The starting 2.09% APY requires you to enroll in eDocuments, make at least 12 debit card purchases totaling at least $100 each month and receive direct deposits or ACH credits totaling at least $500 per month. Meet those requirements, plus spend at least $500 in CCU Visa Credit Card purchases each month, to earn the 3.09% APY, or spend at least $1,000 in CCU Visa Credit Card purchases each month to snag the top rate of 4.09% APY. If your balance surpasses $10,000, you will earn significantly lower rates.
Rewards Checking doesn’t charge a monthly fee and includes unlimited check-writing abilities. Consumers Credit Union provides members with access to over 30,000 ATMs and over 5,000 shared branches. Consumers Credit Union opens membership to anyone who becomes a member of the Consumers Cooperative Association with a one-time $5 membership fee.
Ally Bank is popular in the online banking space for a reason: it offers standout products. The online bank appeared as either a winner or runner up in all four of our categories — savings accounts, CDs, money market accounts and checking accounts — landing it the ultimate title of best overall online bank.
Ally Bank’s roots date back to 1919, when it was a financing division of GM. Today, it is one of the biggest names in online banking, boasting consistently competitive rates and minimal fees across its products, coupled with a reputation for good customer service and well-rated mobile apps.
“Few online banks come close to Ally when you consider Ally’s wide variety of products, low fees, history of competitive rates and its feature-rich online and mobile banking,” Tumin said.
Barclays, which takes the No. 2 spot for best overall online banks, is another name you’ve seen on this list a couple times already. The bank clinched the top spot for its Online Savings account, which has no minimum balance requirement nor monthly fees and offers easy accessibility. It ranked for its CDs as well, a space in which it has long been competitive despite flagging rates recently. However, these are the only two products available through Barclays in the U.S.
Barclays Online Bank is an offshoot of one of the oldest banks in the world, founded in London in 1690.
Marcus by Goldman Sachs stood out again this year for its CD offerings, landing the title of best online banks another time, though it fell in the rankings slightly for its savings account. These are the only two accounts Marcus offers, though it does provide some variety with its High-Yield CDs and No-Penalty CDs.
Still, this online-only branch of Goldman Sachs shines out for having low to no fees, favorable transaction policies and easy accessibility.
Discover didn’t crack our list of the top overall online banks last year, making it a notable addition for 2021. While perhaps best known for its credit cards, Discover Bank also stands out for its CDs and checking account offerings.
You don’t have to sweat the fees with Discover’s CDs, though they do require a steeper $2,500 minimum opening deposit. Meanwhile, Discover’s checking account is similarly light on the fees, with a unique cashback rewards setup that lets you earn on your debit card purchases.
Though its saving account was only unveiled in June 2020, Affirm is worth a look, which is why we’ve named it the best new online bank for 2021. Notably, Affirm is not actually a bank but a financial technology company. It partners with Cross River Bank, a member of the Federal Deposit Insurance Corp. (FDIC), to hold its accounts and provide FDIC insurance.
Affirm, founded in 2012 by PayPal co-founder Max Levchin, is perhaps best known for offering payment plan options at checkout. However, its new savings account is certainly putting it on the map in the deposits space, as it has no monthly fees, no minimum and a sleek mobile app. Even better, Affirm has managed to offer a competitive APY since its launch.
“I’ve been impressed with how well Affirm has been able to keep their savings account rate competitive in the last year,” Tumin said.
Source: https://www.magnifymoney.com/blog/best-of/best-online-banks-2021/
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