Best Online Banks for Lower Fees and Better Savings Rates
The best online banks can help you cut common account fees and earn better savings rates by running with fewer overhead costs than many brick-and-mortar banks. But “best” depends on how you use your money: how often you need cash, whether you overdraft, how many transfers you make, and whether you want checking, savings, or both under one login.
Contents
28 sections
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Why online banks often have lower fees and higher rates
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Best online banks: what to compare before you open an account
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1) Savings rate (APY) and how it works
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2) Monthly fees and minimums
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3) ATM access and reimbursement policies
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4) Overdraft options and costs
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5) Transfer speed and limits
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6) Cash deposits, checks, and money orders
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7) FDIC insurance and account ownership
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Common fees to watch (and how to avoid them)
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How to choose between online checking, online savings, or both
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Option A: Checking and savings at the same online bank
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Option B: Online checking + separate high-yield savings elsewhere
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Option C: Local bank or credit union for checking + online bank for savings
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Practical examples: estimating the value of switching
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Example 1: Savings APY difference
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Example 2: Fee reduction from avoiding overdrafts
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Example 3: ATM fees for frequent cash users
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Checklist: what to review on a bank's website before opening an account
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Security and consumer protections to look for
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How to switch to an online bank without missing bills
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Step 1: Open the new account and test transfers
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Step 2: Move direct deposit and recurring bills
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Step 3: Keep a buffer in the old account during the transition
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Step 4: Download statements and tax documents
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Step 5: Monitor for fraud and update passwords
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Questions to ask yourself before picking an online bank
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Bottom line: match the bank to your money habits
This guide walks you through what to compare, which fees matter most, and how to choose an online bank that fits your habits. You will also find checklists, decision rules, and examples you can use to estimate your real costs and benefits.
Why online banks often have lower fees and higher rates
Online banks and online-only divisions of traditional banks typically spend less on branches and in-person staffing. Many compete by offering:
- Higher annual percentage yield (APY) on savings accounts
- Lower monthly maintenance fees, or no monthly fees
- Lower minimum balance requirements
- More free features like mobile deposit, bill pay, and budgeting tools
That said, not every online bank is cheaper for every person. If you frequently deposit cash, need cashier’s checks often, or rely on in-person help, a branch-based bank or credit union might still be the better value.
Best online banks: what to compare before you open an account
Use this section as your comparison framework. A bank can advertise a great APY and still cost you money through overdrafts, out-of-network ATM fees, or slow transfer times.
1) Savings rate (APY) and how it works
APY is the interest rate you earn on savings, including compounding. When comparing APYs, also check:
- Rate tiers – some banks pay the top APY only above a certain balance.
- Intro vs ongoing rate – promotional rates can change after a period.
- How often interest compounds – daily compounding is common.
Decision rule: If you keep a steady emergency fund, prioritize a consistently competitive APY over short-term promotions.
2) Monthly fees and minimums
Look for accounts with no monthly maintenance fee and no tricky waiver requirements. If a fee exists, confirm how to avoid it (direct deposit, minimum balance, or a certain number of transactions).
Decision rule: If you do not want to track requirements, choose accounts that are fee-free without conditions.
3) ATM access and reimbursement policies
Online banks often partner with ATM networks. Compare:
- Network size and where ATMs are located near you
- Out-of-network fees charged by the bank
- ATM surcharge reimbursements – whether the bank refunds fees charged by the ATM owner, and any monthly cap
Decision rule: If you withdraw cash weekly, prioritize a large fee-free ATM network or reliable reimbursement.
4) Overdraft options and costs
Overdraft policies vary widely. Key items to compare:
- Overdraft fee per item
- Overdraft protection via linked savings account or line of credit (if offered)
- Grace periods or low-balance alerts
- Ability to decline transactions when funds are insufficient
Decision rule: If your balance is tight at times, choose a bank with low or no overdraft fees and strong alerts.
5) Transfer speed and limits
Even if you rarely visit a branch, you still need money to move smoothly. Compare:
- ACH transfer timelines (incoming and outgoing)
- External account linking process and verification
- Wire transfer availability and fees (if you might need it)
- Daily or monthly transfer limits
Example: If you pay rent from checking and keep savings elsewhere, slow transfers can cause overdrafts or late payments. In that case, keeping checking and savings at the same institution can reduce timing risk.
6) Cash deposits, checks, and money orders
Many online banks do not accept cash deposits directly, or they require using third-party services that may charge fees. If you receive tips, cash gifts, or cash income, confirm:
- Whether cash deposits are supported, and where
- Any per-deposit fees or limits
- How to get cashier’s checks or certified checks if needed
Decision rule: If you deposit cash more than once a month, consider keeping a local fee-free account for cash deposits and transferring funds electronically.
7) FDIC insurance and account ownership
Make sure your deposits are protected by federal deposit insurance. You can look up whether a bank is insured using the FDIC’s BankFind tool at FDIC.gov. Also consider how you want to title the account:
- Individual vs joint accounts
- Payable-on-death beneficiaries
- Trust accounts (if applicable)
These details can affect how insurance coverage applies and how smoothly funds transfer to heirs.
Common fees to watch (and how to avoid them)
Online banks often reduce fees, but you still need to read the fee schedule. The most common costs show up when you use services outside the “happy path” of direct deposit, card purchases, and in-network ATMs.
| Fee type | Where it shows up | How to reduce the risk |
|---|---|---|
| Monthly maintenance fee | Checking or savings accounts with minimum requirements | Pick accounts with no fee, or set alerts to maintain the minimum balance |
| Overdraft fee | Transactions that exceed your available balance | Enable low-balance alerts, link savings, keep a buffer, or opt out of overdraft coverage |
| Out-of-network ATM fee | Cash withdrawals at ATMs outside the bank’s network | Use in-network ATMs, choose a bank with reimbursements, withdraw less often |
| Excess transaction or transfer limits | Some savings products may limit certain transfers | Use checking for frequent payments, keep savings for storage, confirm limits before opening |
| Wire transfer fee | Sending or receiving wires for time-sensitive payments | Use ACH when possible, compare wire fees if you expect to use them |
| Foreign transaction fee | Card purchases in foreign currency or processed abroad | Choose a debit card with no foreign transaction fees if you travel |
How to choose between online checking, online savings, or both
Many people do best with a two-account setup: checking for bills and spending, savings for emergency funds and goals. The question is whether those accounts should be at the same bank.
Option A: Checking and savings at the same online bank
- Pros: Faster internal transfers, one login, easier budgeting, fewer timing issues.
- Cons: If cash deposits are hard, you may need a workaround. If the bank’s savings APY drops, you might move money again.
Good fit if: You want simplicity and you mostly use digital payments.
Option B: Online checking + separate high-yield savings elsewhere
- Pros: You can shop for the best savings features without changing your bill-pay setup.
- Cons: External transfers can take time, which can matter near due dates.
Good fit if: You are comfortable planning transfers a few days ahead.
Option C: Local bank or credit union for checking + online bank for savings
- Pros: Easy cash deposits and in-person services, while still earning a higher APY on savings.
- Cons: Two institutions to manage, possible fees at the local account if not chosen carefully.
Good fit if: You handle cash often or want branch access for certain services.
| Your situation | What to prioritize | Likely setup |
|---|---|---|
| You rarely use cash and want fewer fees | No monthly fees, strong app, large ATM network | Online checking + online savings at one bank |
| You keep a large emergency fund | Consistently competitive APY, easy transfers, FDIC insurance | High-yield online savings (checking can be separate) |
| You deposit cash weekly | Cash deposit convenience, low fees, ATM access | Local checking + online savings |
| You have occasional overdrafts | Low or no overdraft fees, alerts, easy transfers from savings | Checking and savings together, with overdraft controls |
| You travel internationally | No foreign transaction fees, good card controls, fraud support | Online checking with travel-friendly debit card |
Practical examples: estimating the value of switching
Rates and fees change, so it helps to estimate your personal “switching value” using your own balances and habits.
Example 1: Savings APY difference
If you keep $10,000 in savings, a higher APY can matter. The difference between a low-rate savings account and a higher-rate account may add up over time. To estimate:
- Multiply your average savings balance by the APY difference.
- Adjust for taxes if you want a net estimate (interest is often taxable).
Decision rule: If the estimated extra interest is smaller than the hassle of switching and you rarely keep a balance, focus on fee reduction instead of APY.
Example 2: Fee reduction from avoiding overdrafts
If you pay overdraft fees a few times per year, reducing those fees can outweigh a small APY increase. For example, avoiding two overdraft fees could save more than a modest interest gain on a small savings balance.
Decision rule: If overdrafts happen, prioritize account controls: alerts, the ability to decline transactions, and low-cost overdraft options.
Example 3: ATM fees for frequent cash users
If you withdraw cash often and pay out-of-network ATM fees, a bank with a large network or reimbursements can reduce those costs. Track your last two months of ATM usage and estimate your monthly total fees.
Decision rule: If you pay ATM fees most months, make ATM access a top-three feature in your comparison.
Checklist: what to review on a bank’s website before opening an account
- Account fees: monthly fee, overdraft fee, wire fees, foreign transaction fees
- APY details: tiers, minimum balance, how often the rate changes
- ATM access: network name, reimbursement limits, cash withdrawal limits
- Deposits: direct deposit timing, mobile deposit limits, cash deposit options
- Transfers: ACH speed, external linking process, transfer limits
- Security: two-factor authentication, card lock, real-time alerts
- Customer support: hours, chat availability, phone support, dispute process
Security and consumer protections to look for
Online banking is convenient, but you should evaluate security features the same way you evaluate fees. Look for:
- Two-factor authentication for logins
- Real-time alerts for purchases, transfers, and low balances
- Card controls like freezing your debit card in the app
- Clear dispute process for unauthorized transactions
If you use a debit card often, review how the bank handles errors and unauthorized transfers. The CFPB has consumer resources on banking and payments at consumerfinance.gov.
How to switch to an online bank without missing bills
A smooth switch is mostly about timing and redundancy. Use a step-by-step approach so you do not accidentally bounce payments.
Step 1: Open the new account and test transfers
Before moving everything, link your old and new accounts and test a small transfer. Confirm how long it takes for money to arrive and become available.
Step 2: Move direct deposit and recurring bills
Update your payroll direct deposit first, then move recurring bills one by one. Keep a list of every autopay and subscription.
Step 3: Keep a buffer in the old account during the transition
Leave enough money in your old account to cover any bills that might still hit. Many people keep the old account open for one full billing cycle after the last autopay change.
Step 4: Download statements and tax documents
Before closing an account, download statements and any tax forms you may need later. If you are unsure what you need for taxes, the IRS has general guidance at irs.gov.
Step 5: Monitor for fraud and update passwords
Use a unique password and enable two-factor authentication. If you are concerned about identity theft or suspicious activity, the FTC provides practical steps at consumer.ftc.gov.
Questions to ask yourself before picking an online bank
- How often do I withdraw cash, and where are the nearest in-network ATMs?
- Do I need to deposit cash? If yes, how will I do it and what will it cost?
- How often do I overdraft or run close to $0 before payday?
- Do I want checking and savings together for faster transfers?
- Do I need features like bill pay, Zelle or other P2P payments, or early direct deposit?
- Is customer support available when I typically need it?
Bottom line: match the bank to your money habits
The best online banks for you are the ones that reduce the fees you actually pay and support how you move money day to day. Start by listing your top three priorities, such as no monthly fees, strong ATM access, and a competitive savings APY. Then compare a few banks side by side using the fee schedule and account terms, test transfer speed, and set up alerts so you can keep more of your money without adding stress.
