Best Online Banks for 2020

Millennial Money has partnered with CardRatings and creditcards.com for our coverage of credit card products. Millennial Money, CardRatings and creditcards.com may receive a commission from card issuers. This site does not include all financial companies or financial offers.

Online banks offer some attractive features and are often thought to be the future of managing money. Let’s dig deeper and learn a little more about online banking, as well as the best online banks on the market right now.

Because, honestly, there are some excellent choices that provide a convenient, affordable, and secure way to manage your money at the click of a button.

While most banks will now have an online banking option (that allows you to complete banking tasks from your computer or smartphone), in this post, I’m talking about online-only banks.

By that, I mean banks that only offer their services online, and don’t have actual branch locations. In other words, they’re the non-traditional banks that provide banking from the comfort of your own home.

Because online banks don’t have to maintain brick-and-mortar presence, they often charge lower banking fees and offer better interest rates.

Plus, you can complete common banking tasks without having to meet anyone face-to-face or speak to a bank’s representative over the phone – and, in this digital day and age, that’s a bonus for many people I know!

Best Online Banks for 2020

Here are the 8 best online-only banks:

  1. 🏆 CIT Bank: Overall Best Online Only Bank
  2. Chime Bank: Best Online Bank for Millennials
  3. Betterment Bank: Best Online Bank for Robo Investors
  4. Aspiration: Best Cashback Online Account
  5. Discover Bank: Best National Online Bank
  6. Radius Bank: Best for Early Deposit Feature
  7. Huntington Bank: Best MidWestern Bank
  8. Ally Bank: Best for Customer Service

1. CIT Bank

CIT stands for Commercial Investment Trust – which was the name the company initially used. CIT Bank is owned by CIT Group – a financial holding company that has been around since 1908. CIT Group is headquartered in New York City, and CIT bank is CIT Group’s subsidiary.

CIT also owns award-winning OneWest Bank, which is their Southern California branch. OneWest Bank is a regional bank with over 60 physical bank branches, whereas CIT is an online-only bank. 

CIT Bank offers two types of banking – commercial and consumer banking.

Its commercial segment offers commercial financing, equipment financing, real estate financing, factoring, and railcar financing. CIT’s consumer banking segment offers high yield savings accounts, money market accounts and certificates of deposit.

Summary of CIT Bank:
  • Banking Products: High yield savings accounts, money market accounts and certificates of deposit
  • Rates: Competitive interest rates on high-yield savings accounts (up to 0.75% APY; minimum deposit $100), money market accounts (1.00% APY; minimum deposit $100), and certificates of deposit (up to 1.05% APY; minimum deposit – $1,000)
  • Fees: No monthly fees
  • Mobile App: Check your account balance and transaction history, transfer money between CIT accounts, deposit checks to savings and MMA accounts
  • ATMs: No access to ATMs
  • Other: Does not offer checking accounts.
  • Learn More: Read our full CIT Bank Review.

2. Chime Bank

If you’re after no-hassle banking, Chime bank may just be what you’re looking for. It’s quick and easy to use with a solid app that allows you to manage all your accounts in on place – and there are no hidden (nor visible) fees.

Opening a bank account with Chime gets you a Chime Visa Debit Card, a Spending Account, as well as a Savings Account (optional). The current APY for Chime’s Savings account is a competitive 1.00%.

Summary of Chime Bank:
  • Banking Products: Online bank account (a Spending account with an optional Savings Account)
  • Rates: Savings Account – 1.00% APY
  • Fees: No monthly fees, no overdraft fees (SpotMe feature that allows you to overdraw up to $100 with no fees – if you qualify), no card replacement fees (other fees may apply)
  • Mobile App: 7 on the App store; 4.6 stars on Google Play
  • ATMs: Large ATM network – access over 38,000 no-fee MoneyPass and Visa Plus Alliance ATMs; out-of-network ATM transactions will cost you $2.50 (no reimbursement)
  • Other Features: Automatic saving features; get paid early via Chime’s Early Direct Deposit feature
  • Learn More: Read our Chime Bank Review

3. Betterment Bank

One of the leading robo-advisors now has a full-service checking account — Betterment Checking.

As you might expect from a bank launched in 2020, you’ll get streamlined mobile-first online banking that models elegance and simplicity. Even Betterment Checking’s debit card looks minimalistic.

One of my favorite aspects of Betterment Checking is seamless transfers between Betterment Checking and Betterment, the robo-advisor.

However, if you’re the type of account holder who dips into overdraft once in a while, be careful: Betterment won’t charge overdraft fees but the bank can pull from your other accounts — including your investments — to compensate for your overdraft.

Accounts left overdrawn for more than 30 days will be closed.

This simple approach defines the bank’s functionality, too.

Summary of Betterment Checking:
  • ATM Fees: The bank reimburses all ATM fees worldwide with no questions asked or action required.
  • Minimum Balance: No minimum balance is required.
  • Monthly Fees: No minimum balance fee and ATM fees are reimbursed.
  • Overdraft Fees: None, though this doesn’t mean you can leave an account overdrawn.
  • International Transactions: Betterment will even reimburse you for Visa’s 1 percent fee on international transactions.
  • Learn More: Read our full Betterment Review

4. Aspiration Spend & Save™

People who align their financial choices with their environmental principles will like Aspiration. They have earned B Corp status for their sustainability efforts.

But what does this mean to account holders? For one thing, you’ll get incentives — 1 percent cash back on debit card purchases —  for supporting eco-friendly retailers. All other debit card transactions earn 0.5 percent cash back.

The Aspiration Spend & Save™ Account charges no fees — monthly, overdraft, or ATM — and even pays a nice 1 percent APR on your checking account balance.

Summary of Aspiration Spend & Save™:
  • No minimum deposit required
  • $10 minimum deposit to open
  • No physical branches or cash deposits
  • Limited investing and retirement accounts available
  • Simple sync with mobile pay apps
  • Aspiration gives 10 percent of revenue to environmental causes.

5. Discover

Imagine you could cash in as much as $30 a month just for using your debit card. Sound too good to be true? Not with Discover bank.

Most people are familiar with Discover as a credit card company – but it does a lot more than that.

Offering straightforward account options and generous cashback, Discover is definitely one of the best online banks out there. Whether you’re after a savings account, a checking account, a money market account – you’ll find that, and more.

Plus, if you need a student loan, Discover also offers one of the best private student loans for 2020 – so it could become a bank you use for most of your financial needs.

Summary of Discover Bank:
  • Banking Products: Online savings account, money market account, cashback rewards checking account, CDs, and trust accounts
  • Rates: Online savings account – 1.01% APY (no minimum balance); money market account – 0.85% APY (for balances under $100,000), 0.90% APY (on balances of $100,000 and over); rewards checking account – earn 1% cash back on up to $3,000 in everyday debit purchases; certificate of deposit – 0.90% APY (12-month term), 1.01% APY (24-month term), 1.15% APY (5-year term)
  • Fees: No maintenance fees (other fees may apply)
  • Mobile App: 8 on the App store; 4.7 on Google Play
  • ATMs: Over 60,000 no-fee ATMs nationwide; could be charged a fee by out-of-network ATMs
  • Other Features: Offers a variety of other products with generous rewards (like credit cards), as well as private student loans, personal loans, home equity loans, and more
  • Learn More: Read our Discover Bank Review

6. Radius Bank

Radius Bank offers some solid rates on checking and savings accounts as well as certificates of deposit.

You can also get 1% cashback on your debit card purchases as well as up to 0.15% APY.

However, do bear in mind that to enjoy these high rates, you will need to satisfy account balances, which are quite high.

Summary of Radius Bank:
  • Banking Products: Checking accounts, high-yield savings accounts, money market, CDs
  • Rates: Rewards Checking – 1.00% cashback on debit card purchases, 0.10% APY (balances of $2,500- $99,999.99), 0.15% APY (balances of $100,000 or more); Superhero Checking – 0.05% APY (on balances of $2,500 and more); high-yield savings account rates –0.25% APY (on balances of $25,000 and up), 0.15% APY (on balances of $2,500–$24,999.99); look up the full list of Radius Bank’s CD rates here
  • Fees: No monthly service fees (other fees may apply)
  • Mobile App: 4 stars on the App Store, 4.4 on Google Play
  • ATMs: Free ATM access worldwide (unlimited rebates for fees charged by other banks)
  • Other Features: For some accounts, Radius will match your interest and donate it to March of Dimes; Early Direct Deposit feature available; offer an Essential Account, designed for those with poor banking record which you can use to improve your credit record
  • Learn More: Read our Radius Bank Review

7. Huntington Bank

Unless you live or travel in Midwestern states such as Illinois, Michigan, or Ohio, you probably haven’t heard about Huntington Bank. The bank has a growing presence in the Heartland, but it’s also becoming a solid option for customers everywhere online.

First-and-foremost, Huntington is a traditional bank, so it doesn’t quite fit in on this list. But I’m including it for two reasons:

  1. Because of its 24-hour grace period on overdraft charges.
  2. Because Huntington’s savings rate can compete with an online high-yield savings account.

Ideally, you would always keep your checking account up to date and never need a grace period. But anyone who has experienced out-of-control overdraft fees will appreciate this feature.

Essentially, you’ll get a heads-up before the fees start rolling in, the downside:

If you don’t or can’t get the account under control, Huntington will assess some heftier-than-average fees: $37.50 per transaction up to four times a day.

Huntington’s checking accounts offer solid no-fee options for millennials, both in checking and savings accounts. You won’t have to maintain a minimum balance to avoid checking account fees which also helps Huntington stand out.

If you’d like a traditional bank with strong online tools — and you’d like to earn a decent rate of interest on your Money Market savings account — give Huntington Bank a close look.

Summary of Huntington Bank:
  • Banking Products: Checking, Savings, Certificates of Deposit, Insurance, Investments, Loans, Budgeting Tools.
  • Rates: Competitive with online banks for Money Market savings; no return on checking account balances; CDs have nice introductory rates.
  • Fees: No fees for checking account, $3 out-of-network ATM fee, $37.50 overdraft fee (after 24-hour grace period), $25 extended overdraft charged every five business days account is below $0.
  • Mobile App: Solid, especially for a traditional bank. Google Play users give it 4.2 stars; iPhone users rate the app 4.8 stars.
  • ATMs: 1,800 in Midwest; $3 fee to use other banks’ ATMs.
  • Other: Available as a traditional brick-and-mortar bank in Ohio, Michigan, Wisconsin, West Virginia, Pennsylvania, Indiana, Illinois, and Kentucky.

8. Ally Bank

Ally Bank is another attractive option for the tech-savvy account holder – no wonder it ended up in our “best banks for millennials” list. You get low fees, high-interest rates – as well as a selection of different types of accounts (checking, savings, CD, money market, and IRA).

Ally also offers plenty of credit cards, loans, and investments to choose from – meaning it could also handle many more of your financial needs.

Summary of Ally Bank:
  • Banking Products: Online savings, interest checking, money market and a range of CD accounts (as well as IRA and trust accounts)
  • Rates: Online savings account – 1.00% APY on all balance tiers; interest checking account – 0.10% APY (on less than $15,000 minimum daily balance), 0.50% APY on $15,000 daily balance or more; money market accounts – 0.50% APY on all balance tiers; high-yield CD – up to 1.15% APY (no minimum account balance); no penalty CDs – 0.95% APY with an 11-month term
  • Fees: No monthly account maintenance fees; but there are fees for excessive transactions (savings account), outgoing domestic wires, and other transactions
  • Mobile App: 8 stars on App store; 4.3 on Google Play
  • ATMs: Access to over 43,000 ATMs for checking or money market accounts, fees reimbursed (up to $10 per statement cycle for fees
  • Other Features: Offers stock trades and ETFs and a range of loans, as well as financial tips, tools, and banking advice
  • Learn More: Read our Ally Bank Review

Pros and Cons

As with everything, there are pros and cons to online banking:

Pros

  • Convenient
  • Low or No Fees
  • Better Interest Rates

Cons

  • No face to face interaction

Are Online Banks Safe?

Quick answer, yes, as long as you make sure the online bank that you are interested in is backed by the FDIC, they are safe. So, as long as they are insured by the Federal Deposit Insurance Corp, your account is insured up to $250,00.

Choosing The Best Online Bank For Your Needs

We all have different financial needs – and some features may be more important to you than others, such as a free checking account. Some may want to easily manage their everyday spending on an online bank app – while others may simply want to park their money in a high-yielding savings account.

Before you choose which bank to go with, make sure you read the fine print. Taking a good look at the bank’s website and making sure you’re aware of all potential fees is a must.

While most online banks don’t charge monthly fees – there could be other fees, so make sure you know what they are in case the bank charges a fee for a common banking task for you.

Additionally, make sure you choose a bank that offers solid interest earnings – but make sure you know what the required account balances for that are. There’s no point in choosing an online bank that gives you excellent APY if you can’t qualify for it.

Finally, make sure your money is protected – choosing a bank that is FDIC insured will give you peace of mind, so always check whether the bank you’re considering is federally insured.

Additional Disclosures: Millennial Money has partnered with CardRatings and creditcards.com for our coverage of credit card products. Millennial Money, CardRatings and creditcards.com may receive a commission from card issuers. This site does not include all financial companies or financial offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

Leave a Reply

Your email address will not be published. Required fields are marked *

In This Article