Best Deals in Online Banking, 2017

(Image credit: iStockphoto)

published 24 May 2017

Banking without a branch is getting easier. Mobile-deposit capability, refunds of ATM fees and customer service that extends beyond the phone to online chat and social media allow customers to get by without tellers or a dedicated network of ATMs. Plus, because internet banks don't have the overhead costs that come with full-service branches, they tend to have lower fees and higher interest rates.

Online banks are upping their customer-friendly features, too. Some have jumped on the mobile-wallet bandwagon, offering debit cards with Apple Pay, Android Pay or Samsung Pay compatibility. Online banks often have kinder overdraft policies than those of traditional banks; some even let you borrow from a line of credit for a low fee -- or free.

We picked Ally Bank and Bank of Internet as the top do-it-all online banks in our Best Banks, 2017 package (more on both of them later in this slide show). But perhaps you seek only a specific type of online-only account –- for instance, a certificate of deposit in which to safely park some cash, or a convenient checking account with high yields. Follow along for top accounts from online banks in a variety of categories. We also give honorable mention to runners-up in each category. Except where noted, the accounts don't charge monthly maintenance fees or require you to keep a minimum balance (though some ask for a minimum initial deposit). Each bank offers mobile check deposit, and all but one of the checking accounts include free bill-paying services. Take a look.

Topics

Lists

BEST DO-IT-ALL: Ally

Ally Bank simplifies online banking by offering one checking, one savings and one money market deposit account. None of the accounts charges a fee or requires you to keep a minimum amount on deposit. The checking and money market accounts come with free checks, and if you're not comfortable using the mobile app to make deposits, you get free postage-paid envelopes to mail them in. Customers can use Allpoint network ATMs free, and the bank rebates up to $10 per month in ATM fees when you go outside of the network. Ally also offers auto and mortgage loans, and it recently debuted Ally Invest, a low-cost trading platform and robo-adviser.

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RUNNER-UP, DO-IT-ALL ONLINE BANK: Bank of Internet

Bank of Internet offers a range of no-fee checking accounts that cater to a variety of customers. For example, both the no-frills Essential Checking account and CashBack Checking, which rewards customers with up to 1% cash back on debit-card purchases, offer free ATM withdrawals anywhere in the U.S. The Platinum Checking account, which delivers a flat rate of 0.71% on balances of $5,000 and above, reimburses you up to $8 per month on domestic withdrawals. The savings account pays 0.61%, and the money market deposit account yields 0.75%—with no fees or minimum-balance requirement. Another nice perk: You can get up to 15% cash back from retail partners when you use your debit card to shop.

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BEST HIGH-YIELD CHECKING: Redneck Rewards Checking

Interest rate: 1.5% on up to $10,000; 0.5% on the portion of your balance higher than $10,000Minimum initial deposit: $50ATM fees: Reimbursed up to $25 per monthOverdrafts: Free automatic transfers from a linked account or $25 per item if the bank covers the overdraft
HONORABLE MENTION: Rather than pursue an all-or-nothing approach, Bank of Internet USA divides your earning potential into three increments of 0.4166% for its Rewards Checking account. To receive the max rate of 1.25% on up to $150,000 in deposits, you'll earn 0.4166% once you make monthly direct deposits of $1,000 or more, another 0.4166% when you make at least 10 purchases with your debit card, and another 0.4166% when you make another 5 purchases with your debit card, bringing the monthly total up to 15. Plus, there are no fees for overdrafts or ATM usage in the U.S.

This online division of All America Bank makes it easy to earn a top rate of 1.5%: Use your debit card for 10 purchases each month, receive electronic statements and log in to the website to view those statements each month. (If you fall short of these requirements, your rate drops to 0.25%.) Once you've made those 10 purchases, you'll trigger a monthly rebate of $25 in ATM fees; this should come in handy for anyone banking outside of Oklahoma, where the bank's ATMs are located, because Redneck charges 75 cents for out-of-network ATM withdrawals. There are no monthly fees, but you can only pay 10 bills free via Redneck each month. Transfers to external bank accounts are limited to $5,000 per day.

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BEST HASSLE-FREE INTEREST CHECKING: Aspiration Summit

Interest rate: 0.25% on balances up to $2,500; 1% on balances of $2,500 and aboveMinimum initial deposit: $10ATM fees: Unlimited reimbursementOverdrafts: $25 per item
HONORABLE MENTION: Bank5 Connect has offered a steady rate of 0.76% for almost four years on its High-Interest Checking account. You just need to maintain a balance of more than $100 to earn it. On top of that, you'll earn one point per $2 spent on your Bank5 Connect debit card when you sign for transactions (rather than enter a PIN), and can redeem those points for vacation packages, gift cards and more. Rather than paying interest, Discover Bank lets you earn 10 cents each time you swipe your debit card, pay a bill online or write a check, on up to 100 transactions per month. Cash withdrawals are free at a network of more than 60,000 ATMs.

Aspiration's "pay what is fair" model means you're free to assign yourself a monthly fee of up to $10 -- and "zero" counts. (Aspiration's two mutual funds operate on a similar model for their management fees.) The bank then donates 10% of customer fees to charitable partners such as the Accion U.S. Network, which provides microloans to low- to-moderate income business owners in the U.S. On top of that, Aspiration doesn't charge for ATM withdrawals anywhere in the world, and will reimburse fees levied by the ATM's owner. Purchases with your debit card outside of the U.S. will incur a 1.1% foreign-transaction fee. Bill-paying is free through the Aspiration app.

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BEST TRAVELER-FRIENDLY CHECKING: Charles Schwab Bank High-Yield Investor Checking

Interest rate: 0.13%Minimum initial deposit: NoneATM fees: Unlimited reimbursementOverdrafts: Free automatic transfers from a linked account or $25 per item
HONORABLE MENTION: Capital One 360 is handy for travelers, with free withdrawals from Allpoint and Capital One ATMs. When you go abroad, 360 waives the fee at ATMs worldwide, though you may still be charged a fee by the ATM owner. You won't pay transaction fees when you make purchases with your debit card in the U.S. or abroad. Plus, with its strong fraud-alert systems, you no longer have to inform Capital One of your travel plans to use your debit card away from home.

If you open this checking account, which is part of Schwab's online banking arm, you'll get refunds of all ATM fees worldwide, including fees levied by the ATM owner. You won't pay foreign-transaction fees when you use the debit card, either. You'll need to open a Schwab One brokerage account along with the checking account, but both accounts are free to open and maintain, even if they sit empty. If you run into problems while you're traveling, you can get live help by phone or online chat around the clock, or you can use Schwab's two Twitter feeds (@SchwabService and @CharlesSchwab) and Facebook page.

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BEST HIGH-YIELD SAVINGS: Dollar Savings Direct Dollar Savings Account and BankPurely Saving Purely

Interest rate: 1.3% (both accounts)Minimum initial deposit: $1 (both)
HONORABLE MENTION: The Spring Savings account from CIT Bank costs $100 to open, but you earn 1.15% on all balances. If you can afford to deposit a large sum, jump on the limited-time sign-up bonus. If your average monthly balance from your first three statement cycles is at least $15,000, you'll earn $100. If you keep $100,000 or more you'll earn a $250 bonus; a deposit of $300,000 or more is rewarded with a $400 bonus. (Your account must be opened and funded by June 30.) There are no inactivity fees.

Dollar Savings Direct, an internet bank from Emigrant Bank in New York City, and BankPurely, an online product of Flushing Bank (headquartered in Uniondale, New York), both award generous rates of 1.3% on all balances. BankPurely makes it easier to access your cash though, with a free ATM card and free access to Allpoint ATMs (at BankPurely, you won't incur a fee for using other ATMs, but the ATM's owner may charge a fee). There are no inactivity fees, so you can park your cash for the long haul. One catch: These generous interest rates may not last for that long. Ken Tumin, of DepositAccounts.com, notes that both parent banks have launched other online divisions in the past, but they offer lower rates than these new accounts.

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BEST SAVINGS YOU CAN COUNT ON: Salem Five Direct eOne Savings

Interest rate: 1.25%
HONORABLE MENTION: Incredible Bank has offered a rate of 1% or higher for the past few years. Lately, the rate has risen to 1.21%, but you'll need to open your account with a deposit of $2,500 or more and you won't receive interest for any day of the month that your balance dips below that amount. (However, you won't be charged a fee.) Also note that unless you accept online statements, you'll face a charge of $5 per paper statement. If the account is inactive for two years, the bank will again begin issuing paper statements, triggering the $5 fee. GS Bank has offered a rate of 1.05% on its Online Savings account for more than two years, including a period when the account was under GE Capital Bank. Recently, the rate jumped even higher to 1.2%. Unlike Incredible Bank, you don't need a minimum deposit to open the account, and you’ll earn interest as long as you keep at least a dollar stashed away.

Yields of this savings account have held steady at 1% or higher since 2014. But from now until July 2018, a more-generous rate of 1.25% is guaranteed. Aside from the $100 needed to open the account, you won't have to deal with monthly fees or minimum-balance requirements. However, there is one restriction to be aware of: If you request Salem Five to initiate a funds transfer to an external bank account, there's a $3 fee and a limit of $5,000 per day. To get around the fee and limit, ask the other bank to initiate the transfer. This account is a great place to park your savings because an insurance fund sponsored by participating Massachusetts-based banks covers all balances above the $250,000 insured by the FDIC.

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BEST CDs: Barclays Online CDs and Ally Bank

Interest rate: 1.4% on a one-year CD at Barclays, 1.35% on a one-year CD at Ally; 2.25% on a five-year CD at both
HONORABLE MENTION: First Internet Bank of Indiana ($1,000 minimum deposit) offers slightly higher rates for one- and five-year CDs than our winners, at 1.47% and 2.27%, respectively. Synchrony Bank ($2,000) bests them with a rate of 2.35% on its five-year CD. However, early-withdrawal penalties are more onerous, particularly the 365 days' interest charge for Synchrony's five-year CDs.

Both online banks allow you to open CDs with any amount you wish. Although Barclays' rates edge higher than Ally's in the one year category and the three-year category (Barclays pays 1.65%, compared with Ally's sliding scale of 1.5% to 1.6%), Ally's early-withdrawal penalties are more forgiving: 60 days' interest for a one-year CD and 150 days' interest for a five-year. (Barclays charges 90 and 180 days, respectively.) Plus, Ally offers a couple of flexible options, including an 11-month no-penalty CD that pays up to 1.35% and a "raise your rate" CD that allows customers to increase their rates on two or four-year CDs.

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BEST OF THE REST: Northpointe and Consumers Credit Union

Some brick-and-mortar banks and credit unions offer even higher rates than nationally available internet banks. Even if you don't live near a branch, you can take advantage of this extra earning potential by banking online.

Michigan-based Northpointe Bank rewards customers with a 5% yield on balances of up to $10,000 -- twice the limit it offered last year. To qualify for this rate, you must make 15 or more purchases with your debit card and set up direct deposit or automatic withdrawal of at least $100 per month, as well as enroll in electronic statements. If you fall short of these requirements during the month, your balance will earn 0.05%. A $100 deposit is required to open the account. Fees charged by other ATMs are reimbursed up to $10 per month.

For higher balances, check out Illinois-based Consumers Credit Union. Balances of up to $20,000 earn 4.59% through the Free Rewards Checking account. You'll have to meet similar requirements and spend $1,000 or more on a CCU credit card. If you hold a lower balance in your account and spend less on your credit card –- or don't use their credit card at all -- you could earn 3.09% or 3.59%. Join CCU by paying a onetime fee of $5 to the Consumers Cooperative Association and depositing $5 into a savings account.

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The Best Banks and Credit Unions for You, 2017

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Miriam lived in Toronto, Canada, before joining Kiplinger's Personal Finance in November 2012. Prior to that, she freelanced as a fact-checker for several Canadian publications, including Reader's Digest Canada, Style at Home and Air Canada's enRoute. She received a BA from the University of Toronto with a major in English literature and completed a certificate in Magazine and Web Publishing at Ryerson University.