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All Contents © 2019The Kiplinger Washington Editors
By Miriam Cross, Associate Editor
| July 6, 2018
Because online-only banks don't have the same overhead costs that brick-and-mortar banks do, they are more likely to pare down pesky fees and provide accounts with no minimum balances and higher yields.
For example, our picks charge only $25 for overdrafts (compared with the national average of about $32, according to Informa) and allow you to link accounts for free transfers. They also make up for a lack of in-person service with around-the-clock customer service.
Here's a look at our top picks for online-only banks.
Ally Bank, our top pick among online-only institutions, began nearly a century ago as GMAC, the auto-financing arm of General Motors. Ally keeps its account offerings simple: There's only one checking, savings and money market account, and each has no monthly fees and strong yields. Ally offers a range of CDs that can be opened with any amount, including an 11-month No-Penalty CD that allows you to withdraw your money, including interest, at any time without paying a penalty. (Yields range from 1.25% to 1.8%, depending on initial deposit.) The High-Yield CD pays between 2.1% and 2.3% for a one-year term, depending on initial deposit.
To address jitters about branchless banking, Ally gives you free checks, postage-paid deposit envelopes and free incoming wire transfers. You can avoid ATM fees by sticking with the more than 43,000 machines in the Allpoint network in the U.S., but Ally will offset up to $10 per month in charges from other banks' ATMs.
Ally also supplies a suite of digital banking tools, including remote check deposit, Ally Assist (a voice-enabled help service in the iOS app) and Ally Skill (account management by voice using Amazon Alexa). Live customer service is available by phone or online chat 24-7 (phone wait times are posted on the website), or you can correspond via Facebook Messenger or Ally's dedicated customer service Twitter feed. The bank offers mortgages and auto loans, as well as the Ally Invest brokerage.
First Checking, a joint account for teens younger than 18 and their parents, was added to Bank of Internet's lineup last year. The account charges no monthly fees and has no beyond an initial deposit of $100. It also imposes low daily withdrawal limits ($100 in cash withdrawals, $500 in purchases), nixes overdraft fees, and refunds $12 in ATM fees per statement cycle.
Once your teen turns 18, he or she will have several checking account options, including the no-frills, no-fee Essential Checking, with unlimited reimbursement of ATM fees in the U.S., or CashBack Checking, which rewards active debit card users with 1% cash back as long as they keep at least $1,500 in the account. Parents who bank with their kids may prefer the interest-bearing Platinum Checking or Rewards Checking. Parents can transfer money to their children instantly if both have a BofI account. The app also allows you to transfer funds and deposit checks remotely.
These stellar banks and credit unions are making all the right moves to win satisfied customers:
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