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Online banks — especially online savings accounts —  have exploded in popularity in recent years.

Putting money in an online bank makes a lot of consumers nervous. The idea of using a bank that doesn’t have any physical location is still relatively new, and a bit scary to some.

However, the convenience and features of online banks (including very high annual percentage yields) have many consumers putting their fears aside. According to a recent Statista report, digital banking users in the U.S. rose by nearly 24 million from 2014 to 2018. That number is only projected to increase in the coming years.

dollarsprout best online savings accounts

We’ve put together a comparison of the best online banks and the benefits of each to help you decide if online banking is right for you.

Editorial Disclaimer: Please note that, although we regularly update this page, you should research a bank’s website to get the most up to date information available (including information on annual percentage yields). Some of the links from this page are from paid partners of DollarSprout. Here’s how we make money.

CIT Bank Savings Builder

new cit bank logoDollarSprout Rating: ⭐⭐⭐⭐⭐

Open Account

2.45% APY

Min. Deposit: $100

Overview: By rewarding people who actively add to their savings, the CIT Bank Savings Builder Account helps people build their savings account’s balance while building good saving habits, giving it a strong leg up on the competition. Read our full review.


Discover Bank

DollarSprout Rating: ⭐⭐⭐⭐⭐

Open Account

2.10% APY

Min. Deposit: $0

Overview: If you’re not sure about online banking, using a reputable, established company like Discover Bank should offer some peace of mind. Low fees, checking account availability, and high interest rates make Discover Bank a great option for online banking. Read our full review.


Ally Bank

ally logoDollarSprout Rating: ⭐⭐⭐⭐⭐

Open Account

2.20% APY

Min. Deposit: $0

Overview: Ally offers high rates, low fees, an easy-to-use app, and great customer service. $10 in ATM fee waivers each statement makes it easy to use any ATM you want, and their 24/7 customer support more than compensates for the lack of physical branches. Learn more.


Marcus by Goldman Sachs

marcus logoDollarSprout Rating: ⭐⭐⭐⭐

Open Account

2.25% APY

Min. for APY: $1

Overview: With no minimum deposit and one of the most competitive annual percentage yields you’ll find anywhere for a savings account, Marcus is a great place to park your savings. Since Marcus does not offer checking accounts, you will likely still need an outside account for day to day use. Learn more.


Barclays Bank

Barclays Bank LogoDollarSprout Rating: ⭐⭐⭐⭐

Open Account

2.20% APY

Min. for APY: $1

Overview: Barclays has no physical branches in the United States, but makes up for it with a very competitive annual percentage yield. There are no monthly fees and no minimum balance you must maintain. Learn More.


Synchrony Bank

synchrony bankDollarSprout Rating: ⭐⭐⭐⭐

Open Account

2.20% APY

Min. Deposit: $0

Overview: Similar to other banks on this list, Synchrony Bank offers an annual percentage yield that is significantly higher than the national average. If you are looking for a high yield account to grow your savings, but also want ATM access to your funds, Synchrony is worth looking into. Learn more.


Benefits of Online Banking

Higher interest rates: Many online banks offer much higher interest rates on savings accounts. The lower operating costs of online banks allow them to put more money back in your wallet.

Low fees: Most online banks have lower fees than traditional banks. That’s because online banks save tons of money by doing all their business electronically. Online banks don’t have the expense of maintaining and staffing physical branch locations.

Convenience: Driving around town to find a branch location for your bank, only to find that they close at 5 o’clock and aren’t open on weekends, is a pain. Many online banks are open 24/7, and you can access everything you need from your smartphone or computer.

Drawbacks of Online Banking

Cash is difficult: If you regularly deposit and withdraw cash from your bank account, you might find online banking inconvenient. Because there are no physical branches, it’s not possible to walk into the bank and deposit cash. Some online banks belong to ATM networks, but these ATMs may be harder to find than major banks’ ATMs.

Less personal service: Of course, online banks typically have a customer service hotline or online chat service. But with online banks, you don’t have the option of walking into a branch and sitting down face-to-face with a banker.

You can read more about the pros and cons of online banking here.

Combining Online Banks with Traditional Banks

If you aren’t ready to fully commit to online banking, you may want to consider a hybrid approach.

For example, you can use an online bank for most of your everyday banking needs but still keep a small savings or checking account at a local bank or credit union for when you need access to cash or in-person banking services.

The good news is that no matter what your preferences are, there’s a banking style out there that’s right for you.

Which online savings accounts have you used? Did you find it a hassle to not have a brick-and-mortar location? Let us know in the comments!

Author
Jeff Proctor

Hi! I'm Jeff. A personal finance nerd and entrepreneur at heart, I'm here to bring you all the latest cool ways to make and save extra money. I've been quoted in several online publications, including Entrepreneur, NBC News, GoBankingRates, Student Loan Hero, Business.com, Credit Karma, The Simple Dollar, US News & World Report, Lifehacker, MSN Money, Moneyish, Zumper, IdeaMensch, Discover Bank, PrimeRates, Credit.com, Yahoo! Finance, Club Thrifty, Guru Focus, Rent Track, Fit Small Business, Coupon Chief, and more.