The 5 Best Online U.S. Bank Accounts to Open
With much gratitude for modern day technological advancements, the conventional banking system has been permanently disrupted for the better. If you can’t see yourself walking into a bank branch to register an account, you’ll be glad to hear that nowadays bank registering methods are much more convenient.
With a steadily rising demand for more banking convenience and immediate electronic processing, the banking industry has put out “online-only/digital” banking to attract new clients. The online banking sector focuses primarily on bettering traditional bank services through the use of consumer technology by leveraging smart phone integration, digital applications, and cashless money transfer.
How exactly does an online bank work?
A simple way to think about online banking is banking without a physical presence. At its core, online/ digital banking involves no more cash transactions, walking into brick and mortar locations, and long waiting periods to get simple services performed.
Everything can be done from a common electronic device that can support your target bank’s mobile application, such as a smart phone, tablet, laptop, or even a smart watch. Whether you’re seeking to transfer money, make payments, or register for a new bank account, everything can be performed from within the application itself.
With the recent invention of online banking, there’s no need to walk into a branch or call a representative unless you encounter issues.
Online banking vs. Traditional banking
The overarching good news is that since online banks operate with lower overhead costs than traditional banks do (due to having few or zero physical locations) you are more likely to receive favourable interest rates by using them. Many online banks will let you register for standard bank accounts with significantly reduced fees and improved product conditions.
With that said, it’s worth mentioning that a handful of online banks do have a few physical walk-in establishments as well, although the majority of their business is handled digitally. This may or may not affect the competitiveness of their pricing models.
What are the downsides of online banking?
The primary trade-off that you accept when using an online bank is the general level of account security you receive. Truthfully, online banks do not have a longstanding history or proven track record that spans for decades, leading many people to believe they can’t be trusted or aren’t properly insured in case of insolvency.
In addition to this, you can’t simply resolve your personal banking inquiries by walking into a branch near you. You’ll have to contact a bank’s customer service department either over the phone or through email. Although these drawbacks certainly can’t be ignored, you (fortunately) don’t need to decide between the two – you can have accounts registered under a traditional bank and an online bank simultaneously.
TOP 5 BEST ONLINE BANK ACCOUNTS TO OPEN IN THE UNITED STATES
Whether you’re a permanent resident of the US or live outside the country’s borders, you can still take advantage of a USD-denominated bank account.
Apart from being available to US residents, Canadians also seek the benefits of these accounts as well. International snowbirds, foreign investors, and world travellers that share a common interest in the United States have their own reasons to pursue these accounts.
Here’s a list of our favourite online US bank accounts along with their pros and cons (in no particular order)
#1 Charles Schwab Bank Account
Although Charles Schwab is more commonly known as a service for investors, they also have a banking platform that you could take advantage of. Charles Schwab will provide their registered banking users with the standard chequing/savings accounts online, loans, and retirement-centred accounts. The company takes pride in being able to offer round the clock customer support over the phone, their website chat box, or through social media.
PROS: No annual or monthly fees, no minimum bank account balances, and unlimited fee rebates on global ATMs; perfect for travelling.
CONS: You need to register for their brokerage/investment services before you can utilize their banking platforms.
#2 Discover Bank Account
Discover Bank offers a generous interest rate on their savings account offerings at 0.55% APY but will also allow you to tap into multiple financial products as well. Discover provides their clients with the traditional chequing/savings, but they also offer money market accounts on top of that. Like most other consumer-focused online banks, you can contact their representatives through social media or email.
PROS: No annual or monthly fees, unrestricted access to tens of thousands of ATMs around the United States, and competitive interest rates.
CONS: Their money market financial product side requires a minim balance of at least $2,500 USD.
#3 Capital One Bank Account
Operating as one of the pioneers of online banking in the United States, Capital One provides their clients with a wide array of financial products and services. They have a full line-up of online bank services that heavily compete with brick-and-mortar banking. Capital One is technically not online-only, but they do generate most of their revenue through the online banking space.
PROS: No monthly account fees, no minimum balances, 0.5% savings interest, free credit score checks, and compatible with direct deposit.
CONS: There currently is no physical ATM/debit card support for their performance online savings account.
#4 Ally Bank Account
Capitalizing on the new innovative wave of hybridized bank accounts, Ally Bank allows their clients to register for online chequing accounts that earn periodic interest. If you’d prefer a US online bank account that accrues even more interest, you could go with their conventional online savings account instead. Ally Bank also offers certificates of deposits and retirement account options. Their customer support line can be easily accessed over the phone, through direct messaging, or email.
PROS: Many different ways to reach their client service department, 0.6% savings account interest, no fees for savings accounts.
CONS: Does not support cash deposits (you have to fund your Ally Bank accounts through different means).
#5 Alliant Credit Union Account
Although Alliant functions as a credit union and not a bank, it still counts as a major online financial institution. One primary advantage to choosing Alliant over a different bank is that it is supported by the National Credit Union Administration. In addition to this, Alliant has several account options for youth under the age of 18, by opening parent-monitored accounts through joint ownership.
PROS: Alliant appeals to students and minors that wish to get a head start on their finances. The credit union also has substantial ATM accessibility around the United States.
CONS: Alliant is not easily accessible. You need to meet certain requirements before you can be eligible to register for their accounts.
FINAL THOUGHTS: Is it a good idea to open an online US bank account?
In theory, as long as you don’t put all your eggs in one basket, you can get a considerable amount of utility from an online US bank account. Since most individuals hesitate to register based on the grounds of questionable account security, make sure you research your targeted bank to ensure they have the proper safety measures in place.
You can easily check for things like:
- FDIC (Federal Deposit Insurance Corporation) insurance support against insolvency or other banking failures
- Support for encryption protection and fraud monitoring
- Compatibility with anti-virus software
- Strong reputation (Google reviews and check if they are backed by any financial regulatory boards)