Want to Bank Online? Try One of These Top Checking Accounts (2024)

When customers grew tired of high cable and satellite bills, streaming giants Netflix and Hulu entered the playing field.

When customers lamented their experiences with taxis, Uber and Lyft offered a new way to get around town.

And when customers saw that their financial institutions were not working with their best interests in mind, online bank accounts came onto the scene to offer more.

The best online checking accounts offer members lower fees (or sometimes even no fees) and higher interest rates than their traditional bank and credit union competitors. Top checking accounts also have responsive websites and advanced mobile apps to provide the same convenience of in-person banking on the go.

And despite what you might think about an account that is entirely online, online checking accounts are incredibly safe. (Lack of safety is just one of many myths about online banks.)

All this makes online bank accounts highly appealing to savvy Penny Hoarders — or, in the case of online checking accounts, savvy penny spenders.

What Is an Online Checking Account?

An online checking account offers customers all the traditional functions of a traditional account, but the account is largely — or completely — managed online. Rather than going to a brick-and-mortar bank, you’ll use features like direct deposit, mobile check deposit, online bank transfers and sometimes ATMs to fund your account, and you can spend the money using a debit card, check, online bill pay or cash withdrawn from an ATM.

Because online banks have lower overhead than traditional physical banks, they can usually offer more competitive interest rates and lower (and fewer) fees. That makes online checking accounts especially attractive.

You can open an account at an online-only bank or a brick-and-mortar bank with special online accounts.

How Do Online Checking Accounts Work?

You can open most online checking accounts from your phone, tablet or computer in under five minutes. Just enter some basic info, like your name, date of birth and Social Security number to get started. You can then fund your account by mobile check deposit, coordinating an online bank transfer from an external account or setting up direct deposit before your next paycheck.

You can then manage the checking account completely online, using the bank’s mobile app or online platform to check balances and transfer funds. You’ll get a debit card and maybe a checkbook to treat the account just like any other checking account.

How Do I Deposit and Withdraw Money with an Online Checking Account?

Depositing checks at online banks is easy. Any account worth considering will have a mobile check deposit feature that allows you to take pictures of the front and back of the check. Funds will not be immediately available when you use this option, so hold onto the paper check until the money has cleared.

Note: Some banks may have limits on the size of the check that can be deposited. In that case, you may need to work with a brick-and-mortar bank to get the check cashed, but it’s rare that most of us will be cashing $50,000 checks.

If you have another savings or checking account with a physical bank, most online banking accounts will allow you to connect the two accounts so that you can transfer funds to your online-only bank. Having an online account with good rewards that is connected with a brick-and-mortar bank that is close to your home makes depositing funds easy.

To deposit cash, just go to an ATM within your online bank’s network or, if your bank does not accept ATM cash deposits, a retailer that facilitates deposits. For example, Chime lets you make fee-free deposits at Walgreens and Capital One at CVS. You can also buy a money order, which will carry some level of fee, albeit a minimal one.

You can also fund your checking account via direct deposit. If your employer offers direct deposit or you receive any kind of financial aid from the government, set up that direct deposit to go directly into your checking account.

Withdrawing money from your online bank account works similarly. You can go to an ATM that is in network for free withdrawals. You can also transfer money to a connected account and withdraw in person. Finally, online checking accounts should come with debit cards, which you can use to spend your money.

What to Look for in an Online Checking Account

If you keep your cash in a traditional bank or credit union but are drawn to the convenience and higher returns of an online checking account, consider several important factors about online banks:

• Annual percentage yield (APY): An annual percentage yield, according to Investopedia, is “the effective annual rate of return taking into account the effect of compounding interest.” If you are intrigued by complex math formulas, Investopedia even explains the calculation. But for those who, like me, shudder at the thought of high school math, here’s the easier thing to remember: The higher the APY, the more money you earn. An alternative to consider to APY is cash back. Some checking accounts, like Discover, offer cash back in place of interest. Depending on how much you spend in debit card purchases, cash back could be the better option.
• Minimum balance: The best online checking accounts typically require no minimum balance — or a reasonably low balance. Some banks may require minimum balances on checking accounts to achieve certain benefits, like a higher APY or ATM fee reimbursem*nts. Online banks more commonly require an opening deposit but don’t force you to maintain a minimum balances
• ATM fees: Speaking of ATMs, look for a mobile-based checking account with a large network of fee-free ATMs nationally, or even globally. A truly good checking account should even reimburse you for fees other ATMs outside of the network may charge you.
• Monthly fees: Make free checking accounts a top criterion when selecting an online bank account; this is often a key differentiator from checking accounts at traditional banks, which often charge monthly service fees. If an online bank includes “monthly maintenance fee” in its fine print, take your money elsewhere. The best online banks are fee-free.
• Foreign transaction fees: If you travel out of the country frequently, find a checking account with a debit card that does not charge you a fee to use an ATM or make a transaction abroad. However, this may not be the most important criterion, as many savvy online bank members also have travel rewards credit cards that are fee-free globally, eliminating the need for fee-free foreign debit card transactions.
• Overdraft fees: Everybody makes mistakes. Don’t let your online bank punish you for it. Find a checking account that will not charge you an overdraft fee if you accidentally overspend. Some checking accounts let you opt out of their overdraft programs.

How to Choose the Best Online Checking Account

Still not sure which online checking account to choose? Here are a few tips that might help in when searching for the best online banks.

Think About Your Needs from a Checking Account

Most online checking accounts — especially the ones on our top 10 list — offer some combination of good perks, though they might be missing out on others. Ultimately, you have to decide which checking account benefits are more important to you.

Are you looking at your checking account as a small but smart investment strategy? Go with an account with a higher APY. Do you regularly rely on cash when traveling? Look for an online bank without ATM surcharges and that reimburses you out of network.

You should also consider whether banks or credit unions are the right option for you when researching checking accounts.

You don’t need every feature, so think about your needs before choosing an account. Opening accounts with multiple institutions could help you secure the best features.

Maintain More Than One Account

You don’t have to have all your accounts through the same financial institution. You can start your savings and money market accounts at a local credit union, sign up for an online checking account for the high APY and easy access to ATMs and utilize a national brick-and-mortar bank for your car loan.

Many of those traditional financial institutions also offer their own online bank accounts for a “hybrid solution” that gives you in-person access to assistance and that still offers the benefits of an online account.

Know What You’re Signing

Before signing with an online checking account — or any account with any financial institution — read the fine print. Closely.

APYs that sound too good to be true may only apply for a set amount of time or under set conditions; ordering checks in the mail or wiring money may cost an unexpected fee; and foreign transactions may be free, but foreign ATMs may include a fee.

Reading the fine print of potential in-person or online banks may also help you discover other benefits (like no wire fees) that may be important to you but that are not commonly advertised.

Recapping the 10 Best Online Checking Accounts

• nbkc Everything Account: Best for Fee-Free Checking
• Axos Rewards Checking: Best for ATM Users
• Ally Interest Checking Account: Best for Mobile Banking
• SoFi Checking and Savings Account: Best for Combination Savings and Checking
• Discover Bank Cashback Debit: Best for Cash Back
• Consumers Credit Union Free Rewards Checking: Best for High APY Credit Unions
• Wealthfront Cash Account: Best for Investors
• Charles Schwab High Yield Investor Account: Best for Travelers
• Chime Checking Account: Best for Beginner
• Capital One 360 Checking: Best for Online Newbies

Methodology

To determine our list of the 10 best online checking accounts, The Penny Hoarder researched 25 of the best online checking accounts and compared key elements, including annual percentage yield (APY), minimum account balances, ATM fees, monthly service fees, foreign transaction fees and overdraft fees.

Based on these factors, we ranked the checking accounts by best features overall. While the 15 other popular accounts we researched had merits, we couldn’t justify choosing any of them over the 10 best checking accounts listed here.

Our most crucial advice during your pursuit: Always read the fine print before signing up for any checking accounts or savings accounts. Even the best online banks have some hidden fees to be aware of.

Pros and Cons of Online Checking Accounts

Online checking accounts offer a number of benefits over their traditional checking account competitors but some drawbacks as well.

Frequently Asked Questions (FAQs) About Online Checking Accounts

You probably have some questions about online checking accounts, and you’re not alone. We’ve rounded up the answers to the most common questions.

Timothy Moore is a personal finance writer and editor. He covers banking, loans, investing, insurance, taxes and budget-friendly travel and pet parenting for The Penny Hoarder. He’s been featured on sites like Sound Dollar, Debt.com and Insider.

Chime disclosure: Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

APY: The Annual Percentage Yield (“APY”) is variable and may change at any time. The disclosed APY is accurate as of May 22, 2023. No minimum balance required. Must have $0.01 in savings to earn interest

ATM: Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

SpotMe: Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.