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Best Online Checking Accounts
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A few years ago, if you told someone that you put your savings into an online bank, people would look at you funny. They ask whether or not your money was safe and secure, as if your dollars were actually locked away in a vault at the local bank. They’d ask whether you could talk to a human being if you needed to or if the banks themselves were safe (“because they’d heard stories”).
Well, years later, after enjoying yields of 5% or more, the general public is starting to pick up on the fact that just like buying books and CDs online, you can find better prices for your savings by shopping online.
It’s only natural that after savings and certificates of deposits, the next bank deposit product to start percolating the interwebs would be checking accounts. Most checking accounts do not bear any interest and often cost consumers money in various fees, from overdraft to ATM fees.
So what if I told you that you can get an online checking account, pay virtually no ATM fees, and increase your interest rate all at the same time? Well you can… online checking accounts offer just that.
In fact, some of the online checking accounts I list below may give you a higher interest rate than your brick and mortar savings account!
EverBank – Best Interest Rate
EverBank’s checking account offers the highest APY of the group – a 2.51% 3-month bonus rate on deposits up to $100,000 and then a 1.51% APY thereafter. There is a minimum opening balance requirement of $1,500 but afterwards there are no minimum required to earn interest, no monthly fees, free check writing, debit cards, online banking, plus unlimited ATM fee reimbursement if your balance is at least $5,000. Billpay is free if you maintain a minimum monthly balance of $5,000.
Schwab High Yield Investor Checking – Kiplinger’s Pick
Named the “Best Checking Account” by Kiplinger’s Personal Finance in 2008 and 2009, the Schwab Bank High Yield Investor Checking account tops our list of the best online checking accounts. Like the other banks on this list, you get FDIC insurance up to $250,000, plus no ATM fees (plus ATM fee rebates up to $9 per statement), free online bill pay, and no minimum balance. Add to that a yield of 0.75% APY, which you won’t get from your brick and mortar checking account, and it’s obvious why this checking account leads the way.
Only one downside, according to Kiplinger’s you need to link it to a Schwab One brokerage account, which doesn’t have a minimum either.
If you have an E*Trade account, they also offer a Max-Rate checking account with a 0.30% APY on accounts $5k+, ATM fee refunds, free billpay.
PerkStreet Financial – Best Rewards & Bonus
PerkStreet Financial is the name of the online checking account product offered by PerkStreet Financial and they’ve partnered with the Bancorp Bank to offer a free FDIC-insured online checking account. Debit cards rarely offer cashback features (allegedly only 17% of debit cards offer rewards, according to the BAI/HItachi 2008 Study of Consumer Payment Preferences) and that’s what is notable about this non-interest bearing online checking account. If you’re anti-credit card and use only debit, consider this online checking account because of the opportunity to earn rewards.
There are no minimum balance requirements beyond the $25 initial deposit, you get free online banking and billpay, along with a PerkStreet $50 promotional bonus offer for new accounts. The big draw of this checking account is the rewards, not the promotional bonus.
ING Direct – Best Package Deal
Finally, you have ING Direct, the grand daddy of online savings accounts and their checking account offer, Electric Orange. I mention them because of how feature-rich ING Direct’s savings accounts are and how easy it is to open. The yield on balances up to $49,999.99 is only 0.25% APY but if you can break $50,000, you can appreciate a yield of 1.40% APY. You also get FDIC insurance, free online bill pay, free debit card, and access to the Allpoint ATM network.
If you want to get an online checking account and already have an ING Direct savings account, you can save yourself some hassle by going with a company you’re already working with. To truly maximize your savings, keep money in your savings account and only transfer them over to the checking when you need it.
With those four options, each with compelling reasons why they’re one of the best, you should be able to find the one that matches your needs.
Is there a better online checking account I missed?
{ 34 comments, please add your thoughts now! }
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I actually like iGoBanking’s checking account. The only problem I have with them is they don’t do unlimited ATM fee reimbursements. You have to use one of their in network ATM’s. They have recently dropped their rate to .50% but there is no minimum deposit and no minimum balance requirements for bill pay or anything like that.
A lot of people are skeptical of a bank they can’t walk into, a real building.
John DeFlumeri Jr
I don’t really see why you should. As long as it’s FDIC insured, there’s not much to worry about. You can always have a brick and mortar account on the side in addition to an online account.
I think it goes both ways, many younger people wont step into a brick and mortar if they dont have to.
It takes time to drive/walk/bike to a branch… I’d prefer to call or go online. When it comes to security, going online might be even more secure because another human being doesn’t see my balance, see my personal information, try to sell me other products, and computers don’t make mistakes (they may be programmed with bugs, but they’re deterministic and only make the mistakes programmers put in!).
Since you mentioned using ING and keeping your money in a higher yield savings account until you needed it in your Electric Orange checking account, I wanted to add a reminder that you can only withdraw from a savings account 6 times per month.
I’ve got an Electric Orange account that I use for monthly recurring bills and for a while I was keeping my money in my Orange Savings and transferring as bills would come due. After a few months I got a letter from ING stating that they would have to close my savings account if I continued to have more than 6 withdrawals per month.
Since then I haven’t bothered to do it at all. In the grand scheme of things, it was earning me maybe $5 more per year back when the interest rate was 4.5%. At this point it’s probably not worth the extra complications.
I ran into that problem as well. Now I only have my mortgage and my primary credit card pulling from that account. The rest pull from my Electric Orange Checking. This allows me to keep a fairly low balance in the checking. Seems to be a nice balance of maximizing my returns while following their rules. Plus I have the freedom to make 4 other withdrawals if needed.
This is because of a regulatory issue. I had the same problem making multiple transfers out of my chase savings account.
What about opening high interest Reward Checking Accounts online? These are usually with brick and morters but the rates are even better.
my vote to schwab..especially since i am starting with on their credit card and about to start using their brokerage account.
I’ve been happy with Umbrella Money/Market and checking, except for the recent drop in Interest rates (now they are down to about 1.25 in the MM). Paper checks available, free bill pay, and it’s easy to schedule transfers from the MM to the bill paying checking account.
“I wanted to add a reminder that you can only withdraw from a savings account 6 times per month. ”
Luckily ING lets you create as many savings accounts as you need!
I have direct deposit to an ING savings account and do auto bill pay from ING’s Electric Orange. I pull from my savings account 3 times a month:
1) A transfer for my scheduled fix-priced bills
2) A transfer for my credit card payment (varies — I pay it off)
3) I transfer whatever is left at the end of the month to a rainy day savings account.
Most people don’t have the slightest clue of how banks work. Pretty much everything they believe is because “they’d heard stories.”
When it was clear Washington Mutual was close to going under, everyone I knew was frantically telling everyone to drain their Washington Mutual bank accounts before it happened so they wouldn’t lose any money. When I told them I wasn’t touching the money in my account and if Washington Mutual went under it would be open for business as normal the following monday, they looked at me like I was crazy. (Their accounts and mine were all under the then $100,000 FDIC limits)
It’s no surprise that these same people don’t trust online banks.
Is there anyway you can have one of these accounts without having a regular checking account for deposits? I don’t see the real advantage over a physical bank. Unless you keep a lot of cash in checking the interest rate earnings aren’t much.
i have the ingdirect savings but i mean, realistically, like $100,000 for everbank or whatever..and 50,000 for ing direct checking…these are lofty lofty goals.
plus having been a wamu guy and now being a chase guy (albeit begrudgingly) the fact that there is either a chase or duane reade (with chase atms) EVERYWHERE i go ever within the tristate area i have no complaints. (until i stop paying hawk like attention and get dinged with a fee)
Thumbs up to Ally Bank and I’m recently trying Perk Street.
PerkStreet is a quasi-checking, quasi-prepaid check/debit card account. You earn 0% on the money that you must deposit to make transactions. The others are ok. Schwab checking unfortunately definitely does hard pull (hard inquiry) on credit report. There is a Century Bank in KY (direct online checking), and they have quite competitive rate for a checking account with some atm reimbursement. Bankdeals.blogspot dude has more info on this.
I have heard good things about the Schwab checking account, but with the recent Black Friday bonus of $121, I went with the Electric Orange account. I have been happy with it so far.
One benefit of having the additional checking acocunt is for budgeting. This allows me to do an electronic version of the envelope system. Money for bills and essential expenses remains in my BoA account, while spending money is in my Electric Orange account. I know this seems backwards since the account with the more money is not interest bearing, but I like the BoA billpay for now.
This post just got a whole lot more interesting to me. Chase just told me that starting Jan 1, I’ll have to pay the 9.95 per month fee to have quicken access my accounts. That sucks!
That’s absurd… do you think it’s a case of Chase trying to make more money or do they really incur that level of expense to support Quicken access? I have to believe it’s #1.
I was a Bank One customer before Quicken even existed. Because of that I have free access. I dont know when they started charging for it, but im guessing its been 3-4 years. I have an old type of account that they have been pushing for years to get me to switch out of. Well on Jan 1 they are making the switch for me. They say its an upgrade, but the only upgrade will be in the fees. I’ve never paid a fee to have an account or use quicken and I dont want to start now. The guy basically said there is nothing they can do.
So now im stuck.
Its free if I log on and hit the button to download my activity, but somehow it costs them 9.95 if quicken initiates a download automatically.
Anyone else know of banks that DO NOT charge for quicken access.
TD bank doesn’t charge for Quicken access.
I’ve been banking online for three years and love it. I have set all my bill to be paid automatically and I have a Tax-Free savings account. They also have pavilions beside the ATM were you can walk in and talk to a President’s Choice Financial representative, for that added security and help. I think its great!
I personally believe that USAA is the best online banking…anyone else agree?
I’m surprised nobody mentions USAA in these lists, since their online banking is open to the general public and is a great deal once you consider all the free stuff they include. Here’s what stuck out to me, there’s probably more:
- Free postage-paid deposit envelopes
- $15/month in atm fee redemptions
- Zero-fee overdraft from an attached USAA savings and/or credit card (configurable via site)
- 0.1% interest (meh) for amounts beyond the first $1000
- When transferring money via the USAA website, its immediately listed as available. Haven’t “tested” this though..
- Also important to me is that I actually *like* USAA as an institution, which is very unusual for a bank, especially these days
Once my checking is fully switched over, I might also open a credit card with USAA, even though I technically get better features (specifically a higher cashback %) on my cards elsewhere. However, I’ll probably still keep my emergency fund in separate higher-rate accounts (currently in Ally no-penalty CDs).
USAA isn’t bad at all, but they don’t have high account rates.
PerkStreet Financial offers seems to have expired!
I’m getting 4.3% from my checking account. 10 debit transactions per month and direct deposit required.
Ally Bank’s money market account is very close to a checking account….nice about it is it offers 1.5%/years interest as well!
I’ve had Charles Schwab for several year now. Other than not having a physical location, its been fantastic. I’m in my early 20′s, I rarely need to walk into a bank. I also have the charles schwab credit card that gives me back 2% each month on my purchases and deposits it in my brokerage account.
So I’m making interest on the money that sitting in the checking account and the credit card purchases each month.
I wouldn’t call Everbank “Best Interest Rate” if it’s only for 3 months. I recently opened an online checking account at IncredibleBank that pays 2.02%.
I have PerkStreet and I would recomend it. The 1% really adds up and they give their customers opportunity to earn more points/money by taking surveys. I’ve earned more cash back than I would with a card with apy
I have moved to USAA where ATMs, checks, Bill Pay, and everything thing else is free, along with interest.
Don’t you need an existing checking account to use these?