Decided to open an account with an online bank? Online banks offer numerous advantages over traditional banks, such as greater convenience, lower fees, and no need to wait in lines. Choosing to open an online bank account is just the beginning. The next step is selecting the right online bank for your needs. While all online banks share the common feature of providing services exclusively online, they differ in aspects like features, fees, and customer support.

How do you navigate the options and find the best fit for you? Continue reading for our top 8 factors to consider when choosing an online bank.

Types of Accounts

Before you start, clarify what type of account you need. Are you looking for a checking account, a savings account, a certificate of deposit, or a combination of these? The good news is that online banks offer a variety of account types to suit your needs. Some online banks provide the same range of accounts as traditional banks, while others, like Marcus by Goldman Sachs, focus on specific areas, such as high-yield savings accounts and CDs, allowing customers to transfer funds from their regular bank accounts.

Fees

One of the key advantages of choosing an online bank is the reduced fees. Since online banks don’t maintain physical branches, they save on operational costs and pass those savings on to customers through lower banking fees. For example, some banks like NBKC offer no monthly fees and minimal additional charges, except for wire transfers. Others, such as NASB, may charge a monthly fee but provide extra benefits in return (see “Other Benefits” below). Many banks, including NASB, will also waive the monthly fee if you maintain a minimum account balance.

Mortgages and Other Loans

Expanding on account types, many online banks go beyond traditional banking services. Leading online banks often provide personal loans, and some even offer home loans and commercial loans. Additionally, certain online banks grant customers access to a wider range of services through their parent companies. For instance, SoFi Money customers can benefit from discounted rates on other SoFi products, such as mortgage refinancing, student loan refinancing, and loans for medical or dental students.

Wire Transfers

As of 2024, some banks still require customers to visit a branch for international wire transfers. If you’re setting up an online checking account for everyday transactions, having easy access to wire transfers is essential. For an online savings account, the bank should facilitate simple deposits. When comparing online banks, check how their wire transfer process works, the time it takes to send and receive funds, and the associated fees.

While fees for international transfers are typically unavoidable, some banks offer more competitive rates than others. Unfortunately, even some online banks charge fees for domestic wire transfers. If you anticipate making regular wire transfers, it’s a good idea to compare several online banks to find the one with the lowest fees.

Mobile Accessibility

Online banks prioritize convenience, and mobile banking apps take it a step further by placing your bank account directly in your hands. A PwC survey shows that 15% of Americans now prefer banking on their smartphones over any other method, up from 10% the previous year. Most reputable online banks provide mobile apps for both iPhone and Android users. The best apps not only match the functionality of their desktop counterparts but often offer additional features. One standout feature is mobile check deposit, allowing you to scan and deposit checks directly from your phone—making banking more convenient than ever.

Security

Regardless of whether you choose an online or traditional bank, ensuring your financial security is essential. Before opening an account, verify that the bank is insured by the Federal Deposit Insurance Corporation (FDIC). You can usually find this information by scrolling to the bottom of the bank’s homepage and looking for the “FDIC Member” logo. Additionally, online banking security is crucial. Reputable online banks typically have a “Security” page on their website that explains their protective measures. Your bank should use strong SSL encryption (such as EV SSL) and offer multi-factor authentication, which requires more than just a username and password to verify your identity.

Help & Support

Online banks allow you to handle all your banking needs online, eliminating the need to wait in line at a branch. However, excellent customer service should still be a priority for online banks. The best ones provide outstanding support because you, as the customer, rely on them to protect your funds. You have the right to receive assistance whenever you need it, ensuring your banking experience is as smooth and secure as possible.

Unfortunately, many online banks do not provide 24/7 support, though some, like Discover, offer assistance during extended business hours. At a minimum, your bank should offer support through a toll-free phone number and live chat. An excellent online banking website should be user-friendly and feature a comprehensive FAQ page with answers to common questions.

Other Account Benefits

If you’re primarily interested in an online bank account for basic functions like safeguarding your money and handling occasional wire transfers, that’s perfectly fine. However, it’s worth noting that some online banks offer additional perks beyond standard banking services. For instance, NASB charges a monthly fee of $6-$8 per account but provides various benefits, including discounts from partner retailers, cell phone protection, identity theft insurance, and emergency roadside assistance. Whether these benefits justify the monthly fee is up to you to decide, but it’s useful to be aware that such options are available.

Find the Best Online Bank for Your Needs

No two online banks are identical. One may offer better fees, another may excel in features, and yet another might provide superior mobile support. Once you determine what you need, it’s essential to compare several online banks to find the one that best suits your requirements and preferences. The best online banking companies offer a range of options and benefits tailored to different needs, so thorough research is crucial before making your choice.