How To Choose An Online Bank: 12 Top Things To Look For

Last updated Apr. 12, 2025 by Charles Zemub

With the convenience and digital integration that online banks offer, they have become increasingly popular with individuals seeking better financial management solutions. However, choosing the right online bank can feel overwhelming due to the vast number of options available. In this comprehensive guide, we will break down how to choose an online bank and highlight the top 12 things you should look for to ensure you secure the best fit for your banking needs.

1. Security Features

When it comes to banking, especially online, security should be your top priority. Look for banks that offer strong encryption, two-factor authentication, and fraud monitoring. These features ensure your personal and financial information remains secure. Verify that the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or an equivalent body, which protects your deposits up to $250,000.

2. Fees and Charges

One of the main attractions of online banks is the potential to save money with lower fees compared to traditional banks. However, it’s essential to read the fine print. Be on the lookout for hidden fees related to withdrawals, wire transfers, account maintenance, and international transactions. Opt for banks that have a transparent fee structure with minimal charges.

3. Interest Rates

Online banks often offer higher interest rates on savings accounts, money market accounts, and Certificates of Deposit (CDs) due to lower overhead costs. Compare the annual percentage yields (APY) of different banks to see which offers the best rates for your savings. Higher interest rates can contribute significantly to growing your savings over time.

4. Ease of Access

Your online bank should offer a user-friendly platform, accessible both via desktop and mobile for on-the-go banking. Features such as mobile check deposit, real-time transaction alerts, and easy fund transfers enhance your banking experience. Ensure that the bank’s app is compatible with your device and has received favorable reviews for functionality and reliability.

5. Customer Support

Good customer service is crucial, especially when dealing with your finances. Look for banks that offer 24/7 customer support with multiple contact methods such as phone, email, chat, or social media. Responsive and efficient support can make all the difference in resolving issues quickly and efficiently.

6. Account Offerings

Consider what types of accounts you need right now and potentially in the future. Some online banks specialize in savings accounts, while others offer a broader spectrum including checking accounts, investment accounts, and loans. Opt for a bank that provides the services you currently need, with options for expansion as your financial situation evolves.

7. ATM Access

While online banks do not have physical branches, many offer robust ATM networks for cash withdrawals. Look for an online bank that provides free access to a wide network of ATMs or reimburses ATM fees, as this can save you a substantial amount of money over time.

8. Transfer Capabilities

You’ll likely need to transfer money in and out of your online bank account frequently. Evaluate the bank’s transfer capabilities, including the speed, limits, and fees associated with electronic transfers, wire transfers, peer-to-peer payments, and third-party platform integrations. The more seamless these capabilities, the better.

9. Financial Tools

Some online banks offer budgeting tools, financial trackers, or advice that can help you manage your finances more effectively. If you’re looking to get more insights into your spending and saving habits, consider banks that provide these kinds of resources.

10. User Experience

A seamless, intuitive user experience can significantly enhance your banking satisfaction. Check out reviews and perhaps even test the user interface if demo versions are available. Ensure that navigating the platform, accessing funds, and conducting transactions feel straightforward and efficient.

11. Innovative Features

Certain online banks stand out for their innovative features, such as early access to paychecks, sub-saving accounts, or cashback offerings on debit card purchases. These features can offer added value and help you manage your finances more creatively.

12. Bank Reputation

Conduct thorough research on the bank’s reputation. Look at customer reviews, service history, and any recent news about the bank. You’ll want to choose a bank that has a strong track record and positive customer feedback to ensure you receive the best possible banking experience.

FAQs Section

What are some of the best online banks to consider?

While there are many online banks available, some highly rated ones include Ally Bank, Chime, Capital One 360, and Discover Bank. Each of these banks offers competitive interest rates, low fees, and high customer satisfaction.

Is my money safe in an online bank?

Yes, as long as the online bank is FDIC-insured, your deposits are protected up to $250,000. It’s essential to ensure your chosen bank uses robust security measures like encryption and two-factor authentication to protect your financial information.

What are the main advantages of online banks?

Online banks typically offer higher interest rates and lower fees than traditional banks due to their reduced overhead costs. They provide flexibility and convenience with 24/7 access to accounts and various online and mobile features.

How do I deposit cash into my online bank account?

Depositing cash can vary by bank, but popular methods include using integrated ATM networks, transferring from another linked bank account, or depositing checks via mobile apps. Some banks offer partnerships with retail stores for cash deposits.

Can I switch from a traditional bank to an online bank easily?

Yes, switching involves selecting your online bank, opening an account, transferring funds, and setting up direct deposits and bill payments. It’s essential to ensure all transactions are correctly redirected and no outstanding checks or payments get disrupted during the transition.

By carefully considering these criteria, you can select an online bank that aligns with your financial goals and lifestyle, ensuring a rewarding and secure banking experience.