Credit & Money Management

7 Great Online Bank Deals

With high-interest checking, low fees and reimbursements for ATM withdrawals, these financial institutions are gunning for your business.

By Laura Cohn, Associate Editor, Kiplinger's Personal Finance

June 17, 2009

If you're looking for a little extra return on your cash (and who isn't?), online banks are a good place to start. You can find checking accounts with 2% to 3% yields -- well above the average bank yield of 0.94% and way above what you get at Bank of America (0.01%) or Citibank (0.1%). Likewise, you can get a yield as high as 2.05% on your savings, a lot better than the bank average of 1.37%.

Online banks tend to charge lower fees than money-center financial institutions, which are slamming consumers with higher monthly maintenance charges, not to mention ever-rising fees for overdrafts, balance transfers and overseas transactions.

An online bank may also be a good choice if you travel a lot or tend to stray from your bank's ATM network. Most reimburse you for using another bank's ATMs, at least up to a certain dollar amount.

We asked Informa Research Services to scour its database to find the best deals at online banks. Using their analysis as a starting point, we did our own digging and came up with the following list of favorites. Banks can change their rates at will, so double-check the details before you dive in.

You can compare rates on bank accounts, certificates of deposit, mortgages and other products at Bankrate.com. If you find a rate you like but aren't familiar with the bank, make sure it's covered by the Federal Deposit Insurance Corp.

BEST FOR LOW-MINIMUM CHECKING: KeyDirect

You don't need to worry about a minimum balance to earn interest on a KeyDirect checking account. A balance of less than $2,500 earns 1.25%, and a $5,000 balance gets a still-competitive 1.75%. High rollers with balances of more than $100,000 earn 2%. But watch the monthly maintenance charges. While KeyDirect will waive the fee for the first three months for new account holders, a monthly charge of $15 kicks in after that unless you keep a combined balance of $10,000.

Amount to open account: $50
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: Combined balance of $10,000; otherwise, monthly charge is $15
Reimbursement for ATM withdrawals: $12 a month

BEST FOR HIGH-MINIMUM CHECKING: EverBank

EverBank is offering a 3% yield on new checking accounts. The catch: The bank promises that rate for only three months, after which it could default to the current rate. For those with accounts holding less than $10,000, the current rate is 1.52% for the first year. However, EverBank pledges to keep its yields in the top 5% of those surveyed by Bankrate.com.

Amount to open account: $1,500
Minimum to earn interest: None
Savings rate: 2%
Minimum to avoid maintenance fees: None, unless you use online bill-paying. If you do, you must maintain a balance of $5,000 or else pay an $8.95 fee.
Reimbursement for ATM withdrawals: $6 a month if you maintain a $5,000 balance

BEST FOR SAVINGS: Ally Bank

Ally Bank, the former GMAC Financial Services, is offering high savings rates to lure business. It also has no-penalty CDs, which allow you to withdraw money without paying a fee. It doesn't offer checking accounts, but you can withdraw money from savings at the ATM.

Amount to open account: No minimum
Minimum to earn interest: None
Savings rate: 2.05%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: $6 a month

BEST FOR LOW FEES (TIE): ING Direct

You don't need to read the fine print at ING -- there are no maintenance fees, period, for its checking accounts. ING currently has an Electric Orange account that provides a yield of 1.65% to those holding $100,000 or more in it. An account with $50,000 to $100,000 gets 1.6% -- but balances of less than $50,000 earn only 0.25%. You get a bonus of $25 for opening an Electric Orange account and using the debit card.

Amount to open account: No minimum
Minimum to earn interest: None
Savings rate: 1.5%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: None, but it has more than 32,000 ATMs in its network (see below)

BEST FOR LOW FEES (TIE): Salem Five Direct

Salem requires no minimum balance for its high-interest eOne account, and you aren't on the hook for any maintenance fees, either. Plus, you'll earn 1.4% on balances of less than $50,000. If you sign up for direct deposit, you get a one-time $25 bonus.

Amount to open account: $100
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: $15 per month

BEST FOR ATM NETWORK: ING Direct

ING Direct is a member of the Allpoint network, which has 32,000 ATMs, and you don't pay any fees for using Allpoint ATMs. If you go outside the network, ING won't charge a fee, though other banks might. And it doesn't reimburse for other banks' fees.

Amount to open account: No minimum
Minimum to earn interest: None
Savings rate: 1.5%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: None, but it has more than 32,000 ATMs in its network

BEST FOR ATM REFUNDS: Salem Five Direct

Salem will reimburse you up to $15 a month for the ATM fees of other banks.

Amount to open account: $100
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: $15 per month

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