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

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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 you should consider when comparing online banks. I’ll also list some of the online banks I recommend and tell you why they made my list of “best online banks.”

This article was updated in July 2024. We review the rates weekly and the included banks monthly. I added Betterment and Wealthfront and removed Chime and Schwab during this most recent update.

Best Online Banks in July 2024

Financial InstitutionWhy It Makes Our ListSavings APY
Ally BankNo fees, a proven reputation for customer satisfaction, competitive interest rates and features to help you save more4.20%
American ExpressCombines high-interest checking and no fees with debit card rewards for AmEx credit card holders4.25%
Axos BankArray of options includes a fee-free account with unlimited ATM reimbursements0.61% (checking up to 3.30%)
BettermentTrusted cash management account nearly identical to Wealthfront including high APY and investing and retirement planning tools5.00%
Capital OneThe ultimate jack of all trades, including no fees, competitive interest, free transfers and helpful savings software4.25%
Discover BankThe poster child for "no fees" also offers cash back on purchases and a competitive interest rate4.25%
Fidelity InvestmentsBrokerage account that allows you to bank for free and automatically earns you interest on your uninvested cash2.72%
WealthfrontTop-tier cash management account offers great APY, automated savings and investing tools, up to $8 million in FDIC insurance, sign-up bonsues and more5.00%

The first step in choosing the best online bank is to 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 you use a discount brokerage such as Fidelity rather than a bank or credit union. They offer fee-free accounts and pay you solid 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 customer-friendly features.

Table of Contents

Best Online Banks

Ally Bank

American Express

Axos Bank


Capital One


Discover Bank

Fidelity Investments


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 I 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 the best 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. Some institutions offer unlimited ATM rebates worldwide and free international transactions. If you travel to other countries with any frequency, that could make one of those institutions 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 traditional banks reflect that in the fees they assess to their customers.

If you find it more comfortable to go to a branch, consider what Clark said on one of his 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 those 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 2024. 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 financial institutions I recommend give their customers free access to between 19,000 and more than 1 million ATMs. Most of them also offer some version 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 (or have the institution send one for you), make an online payment or transfer or use your debit card as 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 without 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.