Getting an Online Checking Account:
Whichever one you choose, taking advantage of an online checking account is one of the best ways to get the most out of your money.
Online checking accounts are quickly overtaking traditional checking accounts in today’s financial landscape. While traditional checking accounts are familiar and add a human touch to banking, the best online banks make up for it by providing better rates, lower fees and convenient account access from any computer or mobile device.
As such, many traditional banks have transitioned to online models to encapsulate these key features in the checking account offerings. With so many different choices, finding the best online checking account for you comes down to comparing rates, benefits and looking at the unique tools and features you’d utilize the most.
5 best online checking accounts of 2020
- N26 – Best mobile app
- Ally – Highest APY
- Capital One – Best overdraft protection
- Discover – Best rewards
- Alliant – Best credit union
N26 – Best mobile app
Founded in 2013, N26 operates throughout Europe and the U.S. by offering exclusively online-only checking accounts. While you won’t be able to open a savings account or walk into any branch, N26 will still give you a debit card and offers customers no maintenance fees, no overdraft fees and no minimum balance requirements.
While this is nice, where N26 shines is its user-friendly and feature-stacked mobile app. Signing up for an account take mere minutes and it also has a sort of savings tool called Spaces, where with a few swipes you can stash money into a subaccount for things like vacations or a large purchase. In terms of perks, N26 doesn’t offer an APY; instead, you can receive cashback perks from select brands.
Even without a traditional APY, N26 is already a clean and transparent banking option and the added care given to its mobile integration makes it one of the best for online checking.
Ally Bank – Highest APY
Ally Bank swings in step with many of the other best online banks. It has no maintenance fees and no opening deposits. Where Ally sets itself apart is its high checking account APY. The starting rate of 0.10% for an account with less than $15,000 in it isn’t anything to get excited about, but once you hit $15,000, that rate launches up to 0.50%, making it one of the best around.
Beyond an astonishingly high APY, Ally Bank offers a plethora of other banking features such as savings accounts, CDs, money market accounts and personal loans. Its customer service is also a noteworthy feature, helping the online bank earn a 5 out of 5 from JD Power.
As a whole, Ally Bank’s offerings can go head-to-head with some of the best traditional banks. Even if you only take advantage of its high-APY checking accounts, Ally Bank is still an excellent choice.
Capital One – Best overdraft protection
Capital One is one of the largest and most popular online banks in the US that offers online checking, savings and CD accounts. The online checking accounts offer a flat 0.20% APY, there are zero account minimums and zero maintenance fees. It also has several actual branches you can visit — though these are limited mostly on the east coast.
What’s truly special is the flexibility Capital One gives you when it comes to overdraft protection. Capital One gives you the power to either auto-decline overdraft purchases, transfer funds from your savings account to cover the cost, allow you to overdraft on a line of credit (functions as a small loan) or give you a next-day grace period.
These overdraft policies combined with Capital One’s normal online checking account features help make it one of the best online banks around.
Discover – Best rewards
Where Discover comes out on top is with its cashback rewards on checking accounts. Typically cashback is a feature for credit cards. However, with a Discover online checking account, you get 1% cashback on up to $3,000 in purchases each month; meaning you can earn up to $360 in bonus cash back each year just from using your debit card.
Those cash back bonuses won’t cost you a dime, as the bank charges zero maintenance fees and has no account minimums. The bank doesn’t offer an ATM reimbursement or any interest growth, but having a free online checking account that rewards you for simply using your debit card makes Discover a great bank.
Alliant – Best credit union
Credit unions are generally noted for having better rates and lower fees than most traditional banks. For Alliant in the world of online banking, this holds true. Alliant’s APY of 0.25% is certainly attractive especially considering the national average APY sits at 0.05%. Alliant also has no account minimums and no maintenance fees.
The catch is that Alliant is a credit union — meaning only eligible members are allowed to join. Alliant’s eligibility requirements state that you must work or have worked for a company Alliant has partnered with, live or work in one of the Illinois communities around Chicago or be related to a current or past Alliant member.
Though this will certainly slim down the number of eligible members, if you do qualify, Alliant is still one of the best online checking options available.
Compare the 5 best online checking accounts of 2020
|Online Account||APY||ATM Reimbursement||JD Power/BBB Score||Best For|
|N26||N/A||2 free out-of-network withdrawals per month||A||Mobile app|
|Ally Bank||0.50%||$10 per cycle||5/5||Highest APYs|
|Capital One||0.20%||$20 per month||2/5||Overdraft protection|
|Discover||N/A||No fees at 415,000 ATMs worldwide||5/5||Cashback debit rewards|
|Alliant||0.25%||$20 per month||A+||Credit union benefits|
What is an online checking account?
An online checking account allows you to manage your money through a web browser or a mobile app. Anywhere you have an internet connection you can check on your account balances, make deposits, transfer funds, pay bills and more — beneficial if you’re nowhere near a local branch.
Online checking account vs. other accounts
Online checking account vs. traditional checking account
Online checking accounts function the same as a traditional checking account with the differences being the interface and interest rates. An online checking account gives you access to your banking features through a web browser or an app. A traditional checking account requires you to go into a local branch to do the same.
By cutting out the costs associated with local branches, online checking accounts can usually provide much higher interest rates and better perks than traditional ones.
Traditional accounts are still great for those who want a more personal banking experience. Those who value the perks more will find more through online checking accounts.
Online checking account vs. cash management app
Cash management apps are tools that help people manage their finances across multiple accounts and investments. An online checking account is a singular place where people can access and manage their money.
Cash management tools are designed to allow people to see all of their financial holdings in one place to help them make budgeting and financial decisions. As such, these apps often allow people to transfer funds between accounts. Comparatively, online checking accounts are merely places to deposit, withdraw and manage your money directly.
Online checking account vs online savings account
Online checking accounts are designed for daily use. Money is expected to flow in and out frequently. Online savings accounts are designed to hold money and grow interest. As such, savings accounts have much better interest rates than checking accounts.
Through the online platform, both online checking and savings accounts can cut out the costs associated with traditional accounts – giving better rates in the process.