Online Banking: Where Annoying Fees are Dropped & Deposits Earn High Rates of Interest

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These days, major banks are the source of unprecedented customer complaints. Consumers are unhappy with the absence of services like free checking, when they know quite well that banks make plenty of money by reinvesting those valuable customer deposits. Loans are hard to come by. ATM fees are outrageous, and banking hours can be limited and aggravating. The banking industry also receives much of the blame for the recent global financial crisis and the continuation of a lackluster economy. Bankers were, after all, responsible for most of the bad decisions that led to that historic train wreck.

The fact remains, however, that we need banking services, otherwise it would be virtually impossible to perform many of the basic, essential tasks required to function in modern society. You need a place to cash your checks and safely stash your savings. ATM cards are handier and more secure than carrying around wads of money, and paying bills every month is pretty complicated if you don’t have a bank account.

Many consumers have moved their money to credit unions or savings and loan institutions, but oftentimes that creates other hassles. You may not qualify for credit union membership, for example, and you may live a long way from your nearest savings and loan branch. Most big banks, on the other hand, have lots of convenient locations spread all across the region or nation.

An Overview of Top-Rated Online Banks

As long as we’re stuck needing banks, we might as well try to give our business to those that offer the most flexible terms, the highest rates of interest on savings, and the most universal and convenient access. That’s where online banking distinguishes itself because many online banks really shine when it comes to lower fees, higher interest rates on deposits and ease of online access.

Here is a sampling of online banks, which should give you an idea of how online banks may offer benefits your typical offline bank doesn’t.

ally logoAlly Bank- Ally Bank offers checking and savings accounts and also makes online banking easier with various deposit options including a mobile phone app. The bank will even reimburse customers for ATM fees charged by other banks, making it simple and affordable to do ATM transactions almost anywhere. Debit cards are by Mastercard, making it accepted anywhere that accepts MasterCard.


There’s no minimum deposit to open a savings or checking account, no maintenance fees, and there’s daily compound interest to maximize your earnings. Lately the bank has been averaging 0.87%, interest paid on customer deposits, too, which ranks it at the very top and makes Ally Bank an excellent choice for savers. In fact, Money Magazine ranked it as one of the Best Savings Accounts to have in October 2012. Ally Bank also offers High-Yield CD’s at 1.50% for five years and no minimum deposit required.

AMEX bank logoAmerican Express Bank- Another major player in the credit card industry, American Express, offers online banking that focuses primarily on savings accounts and certificates of deposit (CDs). While it’s not the solution for those who need a regular checking account, American Express Bank is a great choice for those who like to save and want their savings to go to work earning high rates of interest. Savings account rates from American Express Bank average about 0.86%, for instance, and there are no fees to open or maintain an Amex high-yield savings account. Since there is no minimum deposit amount you can start with as little as one dollar.


Deposits and withdrawals can also be done electronically by linking your existing account at another bank. So if you just want to keep your offline bank but move the money into a higher-earning savings account or CD, you can do that without having to actually switch banks. You’ll also enjoy legendary Amex customer service and convenient features like 24/7 account access by web or phone, making it easy to check your balance or transfer funds.

capital one 360 logoCapital One 360- Capital One recently started offering online banking called Capital One 360. The Capital One 360 online bank offers both savings and checking accounts that pay interest rates that are much higher than the average paid by offline banks. There is no minimum deposit or minimum balance requirement, and you can perform as many checking account transactions per month as you want, without penalties or limits. If you prefer paper checks versus electronic check writing you can order a 50-check checkbook for $5. Mobile check deposits are available online, with the smart phone app, or you can mail in your check deposits the old fashioned way.

You can also take out consumer loans or mortgages with the bank and there are no monthly maintenance fees or overdraft charges. There are about 40,000 ATM machines where you can use your Capital One 360 card without having to pay a fee. The card is accepted anywhere that accepts MasterCard, too, so you can use it for virtually all of your point-of-sale transactions. Capital One 360 also rewards those who open a new account with a chance to earn a $50 cash bonus within the first few months.

sallie mae bank logoSallie Mae Bank- Sallie Mae offers typical online banking plus it also offers student loans and insurance. While its online banking service does not have all the features that more sophisticated and larger financial institutions offers, Sallie Mae still competes with them toe-to-toe by offering interest rates on deposits of 0.85%. Sallie Mae does not offer a checking account, but does offer CD’s, High-Yield Savings account, and Money Market. Only CD’s require a minimum monthly balance and there are no monthly maintenance fees. They currently offer ten percent annual match on Upromise earnings if you meet the qualifications.

USAA bank logoUSAA Bank- Many veterans and active duty service men and women, as well as their families, do business with USAA because of its longstanding relationship to the military through its credit card division. For those who are eligible thanks to their military service, USAA Bank now also offers a full range of personal online banking features. Account holders will have access to over 60,000 USAA-preferred ATMs for free and will refund ATM fees from other banks up to $15 each month. Their savings accounts come with no monthly fees, deposits on the go, and the ability to make deposits anywhere, at any time with smartphones or a scanner. USAA Bank also offers CDs, personal loans, and home loans.

The Bottom Line

With most brick and mortar banks paying anemic interest rates on deposits and charging as much as $5 for ATM fees, $15 or in basic monthly charges, and $30 or so for overdrafts, an online banking account can be a good deal. Online banking is also very convenient for people who like to bank at odd hours or prefer keeping their transactions mobile, digital and paper-free. You’ll need a secure Internet connection and won’t have the luxury of face-to-face bank transactions. If you can live with that, though, you may find that online banking is the way of the future for you and your money.

*Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

Editorial Note: This content is not provided by American Express. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by American Express.

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