Best Online Banks: Free Checking and High-Interest Savings Accounts

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Clark.com ranks the best online banks, taking free checking and high-interest savings accounts into consideration.
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The best online banks charge you fewer fees and pay you more interest. If you don’t mind doing your banking digitally rather than in person, they’re an excellent option.

In this article, I’ll explain the factors that you should consider when comparing online banks. I’ll also list some of the online banks that I recommend and tell you why they made my list of “best online banks.”


Best Online Banks in 2020

The first step in choosing the best online bank is to honestly assess your finances.

Do you have significant assets? Do you live paycheck to paycheck? Are you young and just starting your career, or are you nearing retirement?

If you have substantial money, particularly investable assets, money expert Clark Howard strongly recommends that you use a discount brokerage like Fidelity Investments or Schwab rather than a bank or credit union. They offer accounts that are fee-free and pay you market-rate interest on the money you haven’t invested.

For everyone else, Clark says that finding the right checking account is the priority when selecting a bank. In fact, he says it’s probably a good idea to have your savings account at a different place than your checking account if you don’t have investible assets.

“If they’re living more paycheck to paycheck, then the only criteria I care about is no minimum balance, no-fee checking accounts. I don’t really care about what the savings account does,” Clark says.

“I want the checking account to be what meets your needs first, and that’s what you focus on, getting a checking account that’s appropriate for you — earning interest, avoiding fees or having features that are very important to you, or any combination of those things.”

I’ve researched dozens of online banks to provide you with the best options that fit Clark’s criteria.

Some of the other things I considered include whether the financial institution is insured, the quality of the app, how competitive the interest rates are and whether the bank offers any especially customer-friendly features.


Table of Contents


Best Online Banks

Financial InstitutionWhy It Makes Our List
Ally BankNo fees, a proven reputation for customer satisfaction, competitive interest rates and features to help you save more
Axos BankArray of options includes a fee-free account with unlimited ATM reimbursements and 0.9% APY on savings
Capital OneThe ultimate jack of all trades, including no fees, competitive interest, free transfers and helpful savings software
ChimeDeepest pool of features on our list, including early access to direct deposits, and offers 1% APY on savings
Discover BankThe poster child for "no fees" also offers cash back on purchases and a competitive interest rate
Fidelity InvestmentsBrokerage account that allows you to bank for free and automatically earns you interest on your uninvested cash
SchwabBrokerage account that allows you to bank for free and offers unlimited ATM reimbursements worldwide and free foreign transactions
SimpleFee-free checking and savings that pairs with a suite of regarded budgeting tools and 0.8% APY

Ally Bank

Ally Bank is one of the easiest choices to make our list of the best online banks.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: 0.10%/0.25%
Savings: 0.80%

Checking: $0
Savings: $0

Checking: $0
Savings: $0

Checking: $0
Savings: $0

43,000+

4.0

4.7

The Details: Clark considers Ally Bank to be among the best free online banking options in the United States.

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Ally gets Clark’s seal of approval because its accounts carry no monthly fees, no minimum balances, no minimum deposits and no overdraft fees. Ally ranked second in a 2019 J.D. Power customer satisfaction survey of branchless banks. Its Interest Checking Account pays 0.1% APY or 0.25% if you keep an average daily balance of at least $15,000.

Ally Bank doesn’t let you deposit cash, but it does give you a mobile deposit option that’s compatible with Zelle and Amazon Alexa. Ally will reimburse out-of-network ATM fees up to $10 per month.

At 0.8% APY, its Online Savings Account offers a competitive interest rate. It lets you allocate funds into “buckets” within one account for specific savings goals.

The checking and savings accounts work well together, allowing you to automate recurring transfers. Ally will even push you toward good habits with “surprise savings,” a program that analyzes your checking account and automatically moves “safe-to-save” money into your savings.

Axos Bank

Axos Bank gives consumers a lot of good, customizable choices for checking accounts.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: Up to 1.25%
Savings: 0.90%

Checking: $0
Savings: $0

Checking: $0 to $50
Savings: $250

Checking: $0
Savings: $0

91,000+

4.0

4.7

The Details: Axos Bank is terrific if you appreciate choice and customization.

Its Essential Checking Account charges no monthly fees and requires no minimum deposit nor a minimum balance. It also doesn’t charge overdraft or non-sufficient funds fees and offers unlimited ATM fee reimbursement within the United States.

Axos Bank has four other checking account options. Each targets a different consumer group:

Axos Bank’s High Yield Savings Account requires a $250 minimum deposit. But it offers a competitive 0.81% APY, a free ATM card upon request (not always a given for a savings account), a suite of money management tools and $20 for referring a new customer who opens an account.

Capital One

Capital One is one of the best online banks because it offers quality on almost every important attribute.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: 0.10%
Savings: 0.65%

Checking: $0
Savings: $0

Checking: $0
Savings: $0

Checking: $0
Savings: $0

40,000+

4.6

4.8

The Details: Sometimes boring is good. Capital One is a prime example of that. It lacks a strong claim to fame or a singular marketing point. But I found it hard to find another bank that offers consistent, competitive quality in every aspect to the degree that Capital One does.

Capital One’s 360 Checking Account does not charge a monthly maintenance fee. Wire transfers are free. You can send and receive money for free through Popmoney. There’s no minimum balance or minimum deposit. You’ll earn interest on your balance.

You can find competitors that take “no fees” to an even bigger extreme or that pay a little more interest. But do they have an app with an average rating of 4.7 on Android and iOS? Are their customer service offerings as expansive? How about their savings accounts?

Capital One’s 360 Performance Savings currently pays 0.65% APY. Again, you can find some banks that pay more though usually not much more. Capital One also offers an automatic savings plan and the ability to allocate money toward specific purposes with “My Savings Goals.” You can also review your credit score for free, get tips on how to improve it and receive alerts when it changes.

Chime

Chime is already one of the best online banks despite being relatively new.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: -
Savings: 1.00%

Checking: $0
Savings: $0

Checking: $0
Savings: $0

Checking: $0
Savings: $0

38,000+

4.6

4.8

The Details: Chime is a relatively new online-only bank that does not charge fees. It’s an especially good option for the unbanked and those with a negative banking history, as Chime doesn’t hold that against you when you apply for an account.

Chime’s Spending Account does not pay interest but offers plenty of features. You can get access to your direct deposits up to two days early. Foreign transactions and person-to-person transfers are free. The account is compatible with Apple Pay, Google Pay and Samsung Pay. And its app’s combined average Android and iOS rating is the highest I found among more than 60 banks that I reviewed.

This bank doesn’t offer overdraft protection. In most cases, if you try to make a purchase that would drop your balance below zero, Chime will automatically decline the attempt. That matches Clark’s overdraft protection philosophy but also means you have to be careful not to overdraw your account.

Chime’s Savings Account pays a competitive 1% APY. It is also feature-heavy. In addition to early access to direct deposits, the “Save When I Get Paid” program automatically puts 10% of any direct deposit of at least $500 into savings. Another program automatically rounds up your debit card purchases to the nearest dollar and puts the change into savings.

Chime debit cards are also protected by the Visa Zero Liability policy, which ensures that “cardholders will not be responsible for unauthorized charges.” You can instantly block all transactions on your Chime debit card straight from the app without having to wait for a customer service agent.

You must have a Chime Spending Account to open a Chime Savings Account.

Discover Bank

Discover Bank offers cash back, competitive interest and no fees.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: -
Savings: 0.60%

Checking: $0
Savings: $0

Checking: $0
Savings: $0

Checking: $0
Savings: $0

60,000+

4.5

4.8

The Details: Discover Bank is the king of no fees. We’re talking $0 for monthly maintenance, debit card replacements, checks, insufficient funds, stop payment orders, deposited item returns and account closures.

Discover also pays 1% cash back on up to $3,000 in debit card purchases per month. (Again, Clark discourages debit card purchases.)

You won’t be able to deposit cash, and the ATM withdrawal limits are lower than some competitors’. But Discover does offer a competitive 0.6% APY through its Online Savings Account.

Its mobile apps (iOS/Android) also get high marks.

Fidelity Investments

Fidelity Investments' cash management account is a great banking option for those with investible assets.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

0.01%

$0

$0

$0

1,000,000+

4.6

4.8

The Details: Fidelity’s Cash Management Account is one of Clark’s favorite banking options for anyone with enough assets to invest.

In addition to providing inexpensive access to investing (and robust research tools), Fidelity acts like a free bank. Its cash management account offers check-writing, ATM access and even pays a little interest without levying any “gotcha” fees.

Fidelity automatically “sweeps” your uninvested cash into interest-yielding accounts, so you don’t have to worry about shifting funds between checking and savings. Clark loves the automated interest feature.

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To put it another way, Fidelity offers you what equates to a free checking account that automatically earns interest on your balance, while also giving you convenient access to investing in things like stocks and mutual funds.

Schwab

Charles Schwab offers online banking with access to equities, checking and savings accounts.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: 0.03%
Savings: 0.05%

Checking: $0
Savings: $0

Checking: $0
Savings: $0

Checking: $0
Savings: $0

Virtually unlimited

4.2

4.8

The Details: Schwab is also a broker that offers all the normal functionality of a bank.

If you have a significant amount of money, consider opening a Schwab One brokerage account. It will give you access to free checking and savings accounts.

Schwab offers unlimited ATM rebates worldwide and does not charge a foreign transaction fee, so it’s a strong option for frequent international travelers.

You can find digital-only cash management accounts that offer better interest rates than Schwab, but the investment capabilities of most other online options are not as strong.

Simple

Simple is among the best online banks in part due to its budgeting tools.

APY

Minimum
Balance

Minimum
Deposit

Monthly
Fees

ATMs

Android
App Rating

iOS
App Rating

Checking: -
High-Yield: 0.8%

Checking: $0
High-Yield: $0

Checking: $0
High-Yield: $0

Checking: $0
High-Yield: $0

40,000+

4.1

4.5

The Details: Simple’s free online checking accounts are mostly designed to use with its mobile app.

Simple’s app offers first-rate tools that centralize budgeting, banking and savings. Those tools provide a detailed breakdown of your spending and track how much of your money is “safe to spend” after bills, transfers and savings.

The bank doesn’t impose fees for overdrafts. Instead, it usually rejects transactions that would lead to overdrafts. Also, customers with Simple can transfer money to each other instantly through the app.

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Simple also works with Square, Venmo and PayPal. If you want to use an ATM, keep in mind that Simple does not offer reimbursements for out-of-network ATM fees.

Of course, Simple accepts direct deposits. You can also deposit a check through the app, transfer funds electronically from another bank, or you can deposit a check by mail.

Simple has a checking account that pays 0.8% APY interest. It’s called the High-Yield Account and includes “protected goals,” a way to allocate your savings toward specific items. It allows you to round up your purchases from your Online Checking Account to the nearest dollar and puts the change into the High Yield Account.

You must open a Simple Online Checking Account first in order to open a High Yield Account.


How to Choose an Online Bank

Above all else, you should avoid banks that charge you exorbitant fees. It’s one of the reasons that Clark consistently advises people not to do business with “The Big Four,” otherwise known as JPMorgan Chase, Bank of America, Wells Fargo and Citigroup.

There are other things you should look for when choosing a bank, as we mentioned earlier. Here are a few more details to consider.

Essential Requirements

  • Zero fees. You should find a bank or financial institution that offers free checking accounts. In other words, your bank should not charge monthly maintenance fees, overdraft fees, ATM fees or paper statement fees.
  • Low balance and deposit requirements. Ideally, your bank will not require you to deposit anything to open an account and will not require you to maintain a certain monthly balance. In some cases, it can be OK if a bank requires a small initial deposit but does not require an average minimum balance. You also don’t want your bank to require a minimum-level direct deposit to unlock perks or avoid fees.
  • FDIC insurance. Any worthwhile bank should have Federal Deposit Insurance Corporation (FDIC) insurance. The FDIC typically protects the money in your account up to $250,000. The National Credit Union Administration (NCUA) is the credit union equivalent of the FDIC.
  • Competitive interest rates. This is especially important to differentiate between savings account options, assuming no fees or requirements. You want your bank to offer a competitive rate relative to the market. It’s also a nice bonus if your checking account offers interest.

Other Items to Consider

  • Customer service availability. Does the online bank offer 24/7 phone support? When are the live chat hours? Can you email someone and expect to get a quick response? If you’ve ever called a customer service line, you also know that the quality of the customer support agents is important.
  • Highly-rated app. Most online banks have no physical locations. Since you’re doing all your banking online, your bank’s app and website must be easy to use. Make sure the app lets you make mobile deposits. Then you can assess the app’s other features to see what meets your needs. Looking at the app ratings on Android and iOS is a good indication of whether your institution has this nailed.
  • Features that fit your life. For example, Schwab offers unlimited ATM rebates worldwide and free international transactions. If you travel to other countries with any frequency, that could make Schwab attractive to you.

Online vs. Traditional Banks: Clark Howard’s Branch Test

The most obvious advantage of traditional bank accounts compared to online banks is the availability of physical locations.

You can walk into a branch, talk to a person, conduct simple transactions and even get access to things like notary services and safe deposit boxes. But for most people, the extra cost is not worth the benefits. It is not cheap to maintain a national network of physical branches, and the traditional banks reflect that in the fees they assess their customers.

If you find it more comfortable to go to a branch, consider what money expert Clark Howard said on one of his recent podcasts.

Clark answered an audience question about switching from one of the big banks by posing another question: “When was the last time you physically entered a bank branch?”

Clark said he’s found that some big bank customers are surprised when they realize they can’t even remember the last time they went inside a branch.

“For someone who is younger and doesn’t have a lot of money, I love the online banks,” Clark said. “People that are younger don’t understand why anybody would ever go to a branch. And there’s no reason for somebody younger to go anywhere other than a place that has no minimum required for an account, many of them no overdraft fees, no monthly fees, all that.”


Frequently Asked Questions About Online Banks

What Is an Online Bank and How Does It Work?

An online bank or credit union does business exclusively online and does not operate physical branches. As a result of that cost savings, online banks have a reputation for charging fewer fees and offering better interest rates.

As a customer of an online bank, you won’t be able to talk face-to-face with a person if you have a problem. You’ll rely on phone calls, live chats or emails to resolve any customer service issues.

Are Online Banks Safe?

Online banks are not inherently dangerous.

Still, you should check to make sure that the Federal Deposit Insurance Corporation (FDIC) insures accounts up to $250,000; the National Credit Union Administration (NCUA) provides the same service for credit unions. That way, no matter what happens to the bank, your money is insured up to a quarter of a million dollars.

Your online bank is vulnerable to hacking to some degree, just like other online businesses in 2020. So it’s important to follow best practices. That includes choosing a strong password, using biometrics like your voice and fingerprint for security when possible and monitoring your account for security alerts.

However, if your financial institution has robust internet security, it’s not something that should make you lose sleep.

Do Online Banks Let You Use ATMs for Free?

Online banks don’t have company-branded ATMs, but in most cases, they offer free access to a network of ATMs.

In our post about the best free checking accounts, the eight financial institutions I recommend give their customers free access to between 38,000 and more than 1 million ATMs. Most of them also offer some sort of monthly out-of-network ATM reimbursement.

So yes, online banks let you use ATMs. But it’s a good idea to look at the locations of the free ATMs available within each online bank’s network before you open an account. You’ll want to know how convenient they are for you.

How Do I Withdraw and Deposit Cash at an Online Bank?

The only thing you can’t do is walk into a physical branch and fill out a withdrawal or deposit slip.

Every online bank is different in terms of the features it offers. There are also many different ways to deposit money into your account: mobile deposit through an app, deposits via ATM, deposits via transfer from another financial institution and converting cash to money orders, which you can then deposit like a check.

Withdrawing from ATMs and getting cash back at retailers are your primary withdrawal options. For payments, you should be able to write a check, make an online payment or transfer or use your debit card like you would with a traditional bank account. Keep in mind that Clark discourages using your debit card for purchases.


Final Thoughts

For many people, it’s possible to forego using bank branches in 2020 without that much pain.

If you don’t have investible assets or live paycheck to paycheck, your No. 1 goal should be to find an online bank with no fees and no balance requirements.

If you have considerable assets, consider banking with a discount broker.

Clark considers savings accounts to be a secondary concern: It’s nice to find a high-yield savings account with a competitive interest rate, but he says it doesn’t have to be with the same institution that handles your checking.

You’ll also want your bank to have an app or website that’s easy to use and options that are tailored to your needs.


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