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Compare Banking Accounts Providers 2021

Whether you’re looking to open a checking account, grow your money in a savings account or open CD – easily compare and find the right plan for your needs.

Products that appear on this page are from companies from which this website receives compensation. This may impact how and where products appear on this site (including, for example, the order in which they appear). We do not compare all providers in the market. Any information provided can be updated and may include additional terms.

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Bank Account Basics

In the past, if you wanted to access banking services, you needed to use a bricks and mortar bank, with branches on your local high street. However, the evolution of the internet now means that you can access those same services through online banks.

As the name suggests, an online bank is a financial institution that has no physical branches. Instead it operates purely online. While there are some banks that balance both an online and real world presence, many online banks have cut their costs and now have a completely online presence.

Many online banks provide similar services to what you would find with a traditional bank. You can get your salary paid into your account electronically, you can use a debit card tied to the account and can pay your bills with direct pay or transfers. There are even provisions for paying in checks, with many online banks allowing you to photograph the check and upload it via an app.

This means that you can access your banking services 24/7 from the convenience of your own home or on the go using your smartphone or mobile device.

How to Compare Online Banks?

Just like with traditional banks, there are a number of parameters that make it easier to compare. If you’re looking to compare online banks, there are several things you should consider. These include:

  • The Fees: Although online banks typically have far lower fees compared to their bricks and mortar counterparts, it is still an important point of comparison. Look at the fee structure for the types of products you are interested in. This includes monthly maintenance fees and overdraft fees for checking accounts, ATM fees, late payment fees and other penalties. While one online bank may look particularly attractive, the benefits can be easily offset if you need to pay a fee each month for operating the account.
  • The Variety of Products: Some online banks specialize in providing savings accounts and basic checking accounts, while others offer a full variety of banking services. While you may only be in the market for a checking account now, it is good to know that the online bank also offers loans, mortgages and other financial services. Once you have built up a relationship with your online bank, you will find it easier to access available services. So, think about your current and future banking needs.
  • Customer Support: The level of customer support can also vary from online bank to online bank. Remember that you may not have access to branch and teller services, so it is important that you can access help if you have a query or problem. Look for an online bank that offers phone, email and chat support. This will create multiple avenues if you need an urgent answer to something.
  • ATM Network: Following on from the last point, you also need to know whether an online bank has access to a wide ATM network. It is all very well having a local ATM, but what about if you are in a different town, state or even country, Will your ATM needs be met? Remember that if you use an ATM outside your bank’s network, you will incur a fee. Even a paltry fee of $2 or $3 can quickly add up if you need to perform multiple transactions on a non network ATM.
  • Safety: Finally, and most importantly, you need to compare the safety protocols of the online banks. Do they use two stage verification? Are they FDIC insured? How is your data protected? These are all important questions to answer to ensure that your money and financial details are safe.

JD Power National Banking 2020

How to Choose the Right Bank For My Needs?

Once you know how to compare online banks, you will need to consider how to choose the right bank for your needs. Before you commit to opening an account, there are several steps to ensure you make the right choice.

  • Consider Your Ideal Type of Account: The first step is to think about your specific needs. Trying to compare the myriad products and services on offer from the various banks can feel overwhelming. So, it is best to think about what type of accounts you need, so you can make a more refined comparison. If you’re looking for a checking account, you may prefer a bank that offers several options, or one that provides one excellent account that meets your needs.
  • Check the Fee Structure: We touched on this above, but this is an important point that needs to be reiterated. Online banks are well known for their low fees, as they have lower operating costs compared to bricks and mortar banks. However, look at what potential fees may apply. While you may have no intention of going overdrawn, you don’t want to get stung with a massive unauthorized borrowing fee if you accidentally do. Additionally, consider ATM fees, foreign transaction fees and any other charges that may apply to your day to day finances.
  • Assess Bank Convenience: Another crucial factor is bank accessibility. You will need to consider ATM locations, availability of customer support, and even whether there is an accompanying app. Remember that your new bank should make your life easier rather than being a pain. So, if you want to have access to your banking dashboard on the go, you may prefer an online bank that allows both online and app access.
  • Check the Terms and Conditions: Even if you are convinced that you have found the perfect bank, don’t forget to check the terms and conditions. All banks will provide details of the fine print and it is vital that you read through the document and understand the implications. You can double check the fees, ensure your money is federally insured by the FDIC and understand the limitations of any promotional deals.

How Do You Open an Account With an Online Bank?

Opening an online bank account is quick and easy. Most banks have an application process that takes just a few minutes and you won’t need to schedule an appointment to visit a branch. Like a traditional bank account, you will need some documentation including your Social Security number, government issued ID and a funding method, if you need an initial deposit.

Most account applications will begin by asking you the type of account you want to open and whether you will open a single or joint account.

You will then need to complete the application form with details including:

  • Your Name
  • Date of Birth
  • Contact Details
  • Postal Address

In most cases, you will need to confirm your information. So, you may need to email supporting documentation such as a copy of your driver’s license or other government issued ID. This helps the bank to verify your identity.

You will also need to set up a password to access the bank dashboard. The bank will detail the log in procedure and whether you need to complete two stage confirmation to log in. So, you may need to set up a password and a pin code, or provide a cell number, so the bank can confirm the log in with an SMS verification code.

Once your account is open, you can set up an initial deposit, if required and start to transfer over your bill payments and the direct deposit of your salary. Many banks will have a procedure to guide you through this and may even have an automated system to transfer all bill payments from your old account.

Financial assets provide security, but as this chart using FED Survey of Consumer Finances shows, the average financial assets increases as consumers age. The under 35s age group has an average of $35,000 in assets. This suggests that the under 35s may still be burdened by lower income jobs and student debt.

There is a significant increase in assets between this group and the 35 to 44 age group. After this point, there is a steady increase in assets until retirement.

Financial Assets by Age

Checking Vs Savings Account

Checking accounts don’t usually have restrictions about the number of transactions that you can do each month, while a savings account would have a limit to the number of withdrawals you can make in person or from an ATM.  There could also be a limit on the number of transfers you can make from savings to checking accounts.

Generally, you can’t make direct payments from your savings account because of a federal law that limits some withdrawals.  Experts call this provision of the law Regulation D.

It’s definitely easy to use the money in your checking account via an ATM withdrawal, writing a check, using your debit card, or paying electronically.  So, if what you need is an account to disburse funds, a checking account is most appropriate.

Savings are a crucial part of financial stability. Whether you have an emergency fund or investment funds, savings can provide security against unforeseen events or situations. As you can see in this chart using 2019 FED Survey of Consumer Finances data, Americans are saving more. In 2016, American savings had a value of $0.92 trillion. This has steadily increased over time to reach $1.29 trillion in 2019.

How Much Americans Save

Your Savings Account

When it comes to a savings account it’s designed to keep your money stored for later. That means you’re going to usually make some interest but you’re probably going to have some limits on what you can pull out and when.

Still, these accounts come with FDIC insurance and those interest rates. Even if the interest is less than 2% (which is the average) you can still get something back and you might find something better.

How Does It Work

When you open a savings account that means you could actually get penalized for taking the money out. That’s because banks have the right to limit withdrawals on what’s considered a ‘time deposit’ like your savings account. You generally won’t have to worry about this, but you want to look at the rules. You might be able to make a few transactions, but it’s probably limited to so many a month. You also want to look at different types of fees that are charged, including low balance charges.

There are limits that are imposed by the federal government related to just how many withdraw you can make over the telephone or electronic withdrawal. Usually, this isn’t going to apply to ATM transactions or to in-person requests.

What Are the Differences Between a Checking and Savings Account?

 

Checking AccountSavings Account
PurposeFrequent spending, direct depositsGrowing savings, earning interest
Minimum Balance25-100$None
InterestUsually don’t earn interestAbout 2% (as of March 2019)
Withdrawal RestrictionsDaily limitTypically 3-6 withdrawals a month
FeesMonthly maintenance fee + ATM withdrawalLittle to none
ProtectionUp to $250,000 per account holder by FDICUp to $250,000 per account holder by FDIC

Increase Your Interest – Savings Account

If you get a checking account you’re generally not going to have any interest building up. That means your money is just going to sit there and do absolutely nothing for you. That’s definitely not the way you want to keep your money, right?

With a savings account, you’re not necessarily getting a lot of interest, but at least you’re going to be building up something. Plus, you can look around for the best rates possible and get something a little better at least.

Lower Monthly Fees – Savings Account

Checking accounts are more and more frequently charging fees for monthly use.

That means you’re going to be paying a few dollars or more just to have that account. In some cases, however, there are ways to get this fee waived if you meet certain requirements. You want to watch for what those are and how you can meet them if you do use a checking account.

When it comes to savings accounts you generally don’t get the fees. That’s because banks are getting more interest than they’re passing on to you. So they take that money out of the fees that they would normally charge you. It means you’re going to save money this way.

Higher Withdrawal Limits – Checking Account

The Federal Reserve Board’s Regulation D requires that banks allow only 6 withdrawals from any account that’s considered money market or savings. If you use an ATM or an in-person request you get to make more, but you’ll want to keep track of how you do your withdrawals otherwise.

With a checking account, you’re not going to have a limit to how many times you want to withdraw money. On the other hand, you are going to have limits on how much money you withdraw.

When you use your card you can only charge up to $1,000 a day over all your transactions (though this may vary a bit with your card) or withdraw up to $500 from an ATM every 24 hours.

Minimum Balance Requirements – Savings Account

When it comes to how much money you need to store you’re going to have better benefits with a savings account. That’s because they usually have very low (if any) minimum balance requirements. They want you to keep your money there, after all, because it’s going to earn the bank interest.

When it comes to checking accounts you usually have an amount that you’re required to keep in the account at all times. This minimum could be only $25 or it could be up to $100 or more, depending on the type of checking account.

Safety and Protection – Both

You’ll get FDIC insurance up to $250,000 with either type of account, which means that you’re going to have much better protection than if you just store your money at home.

This protection occurs because the federal government says that financial institutions need to give you some insurance in exchange for giving them your money and your personal information. What’s even better is you don’t have to pay for this insurance at all.

Are Online Banks Safe?

Generally, online banks are safe, but only if the institution is insured by the FDIC. This is federal protection that provides coverage for up to $250,000. It offers the same protections that you would receive if you used a traditional bricks and mortar bank.

The FDIC provides a BankFind tool on its website that allows you to search by website address or bank name to ensure the specific bank is insured.

However, even if the online bank is FDIC protected, there are additional safety precautions you should take when banking online. These include:

  • Not using links you receive via email or SMS. You should always use the official website address and type it into your browser.
  • Regularly change your password and don’t use it elsewhere.
  • Set SMS alerts to check for any unauthorized transactions on your account.
  • Use multi factor authentication. While a two step authentication process adds work, it does provide another layer of security.

Online Bank: Benefits and Drawbacks

As with any financial product or service, there are both benefits and drawbacks associated with online banks. By being aware of these, you can make an informed decision.

The Benefits:

  • Lower Fees: Since online banks have lower overheads, as they don’t need to staff branches, they typically charge lower fees compared to traditional banks. This means that you can access the banking services you need without paying over the odds.
  • Better Rates: This follows on from the previous benefit, but online banks typically offer better rates. You may receive a higher rate on your savings or enjoy a lower rate on a personal loan or homeowner loan. Additionally, since you can manage your accounts online, you can more easily move your money around to get the most interest on your funds.
  • Variety of Banking Services: Online banks have come a long way in recent years and many now offer a wide variety of banking services. In this way, they are comparable to traditional banks. So, you can have all your banking needs catered for online.

The Drawbacks:

  • No Branch Service: Online banks have very limited access to in person support or help. Rather than having access to face to face assistance, you may need to use phone based customer support, email or chat. So, if you prefer to speak to a teller if you have any issues, an online bank is not the right choice for you.
  • Cash Deposit Issues: If you tend to deal with cash, you may run into cash deposit issues. While you can easily withdraw your funds using an ATM, if you want to pay in cash, you may need to pay it into a traditional bank and transfer it or find an ATM that accepts deposits. Some banks use third party services, so you can make a cash deposit via a retailer, but there are fees associated with this.
  • Fewer One Stop Shop Products: While some online banks offer superb savings and checking accounts, they may not have certificates of deposit and other financial products you’re looking for.

Online Banks vs. Traditional Banks? What Are the Differences?

While online banks can be quite similar to traditional banks, there are some key differences. The most obvious is that fully online banks don’t have branches. This means that you can’t simply pop into a branch to pay in cash or speak to a teller.

However, online banks tend to have more ready access to customer support. You are likely to find that you can access support via chat, email or phone 24/7.

This also reflects on when you can perform transactions and banking actions. While you would need to wait for normal business hours to open a new account or initiate a transfer, online banking allows you to do these things at any time. So, if you want to get your finances in order at midnight on a Sunday, you can.

How Do I Access Money in an Online Account?

While there is the limitation of no branch access, there are numerous ways that you can access your money in an online account. These include:

  • ATMs: Online banks provide access to an ATM network, where you can withdraw funds and perform other transactions.
  • Direct Pay: Depending on the type of online account, you may also be able to pay your bills by setting up direct pay with your creditors. You will simply need to provide your account and routing numbers, together with an authority to automatically pay your regular bill.
  • Transfers: You can also initiate transfers to your other online accounts or traditional bank accounts.
  • Swiping Your Debit Card: Finally, you can swipe your debit card at stores when you want to make a purchase.

Do Online Banks Have ATM Availability?

As we touched on above, most online banks use a third party ATM network. However, the specific network will determine the availability of machines in your area and whether you can find the machines outside the US.

Bear in mind that you may be able to use other ATM machines outside this network, but you are likely to incur a transaction fee. While a $2 or $3 fee may not seem like much, these fees can quickly add up if you perform multiple transactions.

Therefore, it is a good idea to check what ATM network an online bank uses and whether you would have ready access to machines before you sign up for an account.

Are Online Banks FDIC Insured?

FDIC is federal insurance for funds in your bank accounts. It offers coverage of up to $250,000. However, not all financial institutions have FDIC insurance.

Most established online banks provide access to FDIC insurance, but it is important to check that your chosen bank does before you open and fund an account. The FDIC website has a search tool, where you can enter the website or bank name to verify if you would enjoy FDIC coverage.

This will provide reassurance that your funds are protected and you won’t lose everything should something occur and the bank ceases trading.