Did you know that the first online bank in the United States was launched way back in 1999? On February 22, 1999, the First Internet Bank of Indiana was launched at a ceremony at the Museum of American Financial History in New York City. (At the time, online banking was a far-out concept). Online banking is now a commonplace practice. So, what are the best online bank accounts you should consider?
The best online bank accounts will provide you lots of convenience in conducting your personal finances.
And perhaps even save you money when it comes to traditional bank fees.
However, you may have to deal with a few disadvantages too.
Best Online Bank Accounts – Pros and Cons
The biggest upside in applying for one of the best online bank accounts is the convenience.
It’s the 21st century. According to a 2013 Pew Research Center poll, over 51% of American adults conducted their banking almost exclusively online.
And that was the reality many years before the pandemic even hit. There are many upsides to owning an online bank account.
For one thing, you can conduct your finances online at your convenience, 24/7.
Save for visiting an ATM to withdraw or deposit money, you don’t need to visit a physical bank location to conduct business. This saves you a lot of time as you conduct your finances.
Opening an online bank account also helps you to save more money. With an online bank account, you will be charged far fewer fees.
You pay more fees with a traditional bank account because of the overhead involved in running a brick-and-mortar location.
Additionally, online banking platforms are extremely user-friendly and easy to navigate.
One of the downsides of maintaining an online bank account is that they can sometimes be tedious to manage.
The only way to transfer money into an online bank is to deposit money into a traditional ATM and transfer the funds. Or, you need to send a money to your online bank and then suffer waiting through snail mail processing times.
Also, you won’t have access to live representatives or customer service (which may be good or bad depending on your POV).
Now that we know all of this, here are some the best online bank accounts services.
Radius Bank
Radius Bank has yet to become a household name in terms of the best online bank accounts, but it’s on its way.
The Boston-based online bank is FDIC-insured and facilitates well over $1.3 billion in financial assets.
Radius bank is known for its user-friendly interfacing capabilities. The Radius app can be used on iOS or Android devices. The app can be used to pay bills, deposit checks, access budgeting plans and tools, and more.
The minimum deposit required to open a Radius Bank account is only $100. After that, there are no minimum account balance requirements.
Some accounts, like the Rewards Checking account, come with a modest 0.10% to 0.15% monthly fee. The Free Checking and the Retail Money Market accounts feature no monthly fees.
You even get a free Radius Bank ATM card after opening an account.
Save $25,000 in a Radius Bank savings account and you’ll get an 0.25% APY.
Ally Bank
If you couldn’t name 5 of the best online bank accounts, you can at least name one – Ally. Ally Bank was launched in 2009 in Sandy, Utah.
Additionally, Ally Bank became a ubiquitous brand name with its ambitious TV commercial marketing campaign in the 2010s.
Ally Bank has no physical, brick-and-mortar locations and exist solely as an online banking service.
There are no minimum account balance or monthly maintenance fees. Ally Bank interest fees are modest but still competitive compared to other online banks.
For example, if you have $500 or $1,000 in your Ally online account, you will have an APY of 0.10%. The more money you have in your Ally Bank account, the more interest you will accrue.
Ally Bank offers over 43,000 ATMs through its Allpoint network for its users to use.
As an Ally online back account holder, you will also have access to live customer service representatives via cell phone or text 24/7.
However, you cannot deposit money into your Ally Bank account via ATM. You will either have to transfer funds online from another bank account or deposit money via snail mail check.
Bank5 Connect
Bank5 Connect is the online-exclusive subsidiary of Fall River, Massachusetts-headquartered BankFive.
If you open a high-interest Bank5 Connect checking account, you only need $10 to start. The interest rate and APY are just 20%.
You can only earn interest if you deposit $100 or more into a Bank5 Connect online account.
If you open a high-interest savings account and deposit over $100 then you will earn an APY and interest rate of 0.75%.
You can use Bank5 Connect’s vast ATM network for free. Also, you can use out-of-network ATMs for free as well.
As long as you forgo receiving paper bank statements by mail Bank5 Connect won’t charge you any maintenance fees at all.
Best Online Bank Accounts – Start With Research
You should approach selecting the best online bank for your personal finance needs the same way you would with a traditional bank.
Start with a lot of comparison shopping. Some online banks offer free checks, better interest rates, and so on.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.