In its July 2009 issue, Consumer Reports Money Adviser published a brief overview of the best online banking options according to their research. “Online banking, despite a rocky start, is becoming the rule rather than the exception,” the article says, noting that online banking can net savers better interest rates and increased security.
I’d love to be able to point you to an online version of this article, but none exists. And I’m not about to reproduce large chunks of the text here. (Consumer Reports doesn’t like that.) But I can highlight their main points about online banking, as well as list the results of my own research into online banks.
Some of the article’s main points:
- Traditional banks that have moved into online banking (such as Bank of America and Wells Fargo) generally offer lower rates and impose higher fees than established online banks like Capital One 360 and HSBC Direct.
- If you’re worried about bank failures, remember that the FDIC currently insures deposits of up to $250,000. (This limit has been extended through the end of 2013.) You can research the financial safety of online banks (and traditional institutions) using BauerFinancial’s bank safety ratings.
- The biggest thing that holds people back from online banking is concern over security. Via Twitter yesterday, @thenonconsumer told me, “My husband is very skeptical about using an online bank like ING Direct (now Capital One 360) for savings.” He’s not alone. But according to Consumer Reports Money Adviser, online banking can be safer than traditional methods because there’s less of a paper trail, and your transactions are digitally encrypted.
Here’s a table of current interest rates, updated weekly. Below that is a list of online banking options I originally compiled in four hours of research but these have become out of date and I unfortunately don’t have the ability to update them regularly, so the table will let you see some of the most current rates. You can also see a full list of over 200 banks’ savings rates and an almost-as-long list of certificate of deposit returns by following the links.
I haven’t tried to be comprehensive here (a comprehensive list would be huge), but have based my research on my own interests and the requests of my Twitter followers. I’ve made no attempt to rank these banks. They are listed in alphabetical order. Rates are annual percentage yields (APY). All accounts are FDIC insured.
|Savings||12-month CD||Money market||Bill-pay|
|Notes: No fees, no minimums. Money-market account appears to act as a checking account and has no ATM fee. Ally Bank is the renamed GMAC Bank. Rates as of October 17, 2014.|
|up to 0.85%||0.15%||up to 0.40%||Free|
|Notes: No fees. There is a $500 minimum balance for certificate of deposit accounts. You can open the High Yield Free Checking account with no minimum balance, there are no monthly service fees and the APY is for balances up to $100,000. Capital One does not charge for ATM withdrawals or balance inquiries, but the owner of the ATM may. Rates collected within: 10025 (NY). Rates as of October 15, 2014.|
|Notes: $1,000 minimum deposit for certificate of deposit and no minimum deposit for checking. Day-to-Day Savings no fees, $100 minimum for savings. ATM access for checking. Citibank rates may vary by state, rate collected within NY. Rates as of October 15, 2014.|
|Notes: No fees. $1000 minimum. No ATM. DollarSavingsDirect is an online banking division of Emigrant Bank. Rates as of October 15, 2014.|
|Notes: No fees, no minimums for savings account. $1000 minimum for certificate of deposit. No ATM. Sibling to Dollar Savings Direct. Rates as of October 15, 2014.|
|—||—||0.01% – 0.05%||Free|
|Notes: Checking has minimum balance of $5,000 to avoid monthly fee. No ATM fees. Minimum deposit to open is $100. Rates as of October 15, 2014.|
|Money market||12-month CD||Checking||Bill-pay|
|0.61%*||0.70%||0.46%**||Free with minimum balance|
|Notes: *For first time account holders, new account bonus rate for Yield Pledge Money Market Account – 1.40% for the first six months, first year APY currently 1.01% for account balances up to $50K and an ongoing APY currently at 0.61%. $1500 minimum to open accounts. Low-balance fees may apply. **For first time account holders, new account bonus rate for Yield Pledge Checking Account holders – 1.40% for the first six months, first year APY currently 0.93% and an ongoing APY currently at 0.46% for account balances of $25,000 – $49,999. Rates as of October 15, 2014.|
|Notes: $500 minimum balance required to open CD. No fees, no minimums for Savings. Savings has a maximum principal balance: $1,000,000. Checking is actually an “Online Billpay” account. GRS readers report fees are vaguely defined. The FNBO site used to be more informative; I had trouble finding the data I needed for this article and, in fact, had to rely on reader comments to fill in gaps. Rates as of October 15, 2014.|
|Notes: No fees, no minimums. No ATM fees for checking. ATM available for savings, but I can’t determine fee structure. HSBC Advance Online Savings Account ** APY for balances between $.01 – $9,999.99. Certificate of deposit $1,000 minimum. Rates as of October 15, 2014.|
|0.75%||0.40%||0.20% – 0.80%||—|
|Notes: Easy to set up multiple accounts. No fees, no minimums. Checking allows ATM access. Rates as of October 15, 2014.|
|eMoney Market||12-month CD||Checking||Bill-pay|
|0.65% – 0.78%*||1.00%||0.25% – 0.65%*||Free with minimum balance|
|Notes: $100 minimum to open eMoneyMarket. Minimum of $10,000 to open certificate of deposit. $500 minimum for checking. Free bill pay for 90 days. Free bill pay if you maintain an average $10,000 balance in checking. ATM card available on some accounts. *APY is based on account balance. Rates as of October 15, 2014.|
|Notes: Internet Only- Internet Savings APY is for Non-Relationship account. $100 minimum to open savings, $1,000 minimum to earn APY. Internet CD 1 year APY, $1,000 minimum for certificate of deposit. “Nationwide network of surcharge-free ATMs,” which seems vague. Rates located in Alabama. Rates as of October 15, 2014.|
To compile this list, I pulled information directly from bank websites. I also used the tools at Money Rates to fill in gaps. Note that many of the checking accounts above are simply online bill-pay accounts — you can’t use paper checks with them. Please let me know if you spot errors.
The Consumer Reports Money Adviser article about online banking included a handful of brick-and-mortar institutions. My list leaves most of them out. I visited every website that CR mentioned, but I have to say, a lot of traditional banks have terrible web presences. Bank of America? Wells Fargo? Chase? Good luck trying to figure out how online banking with any of them or what rates you’ll receive. They’re still marketing to the pre-Internet generation.
For more info, you may want to visit Money Rates or check out some previous GRS articles about online banking:
- Here’s the ever-popular Get Rich Slowly list of high-yield savings accounts.
- Don’t forget that certificates of deposit are a great way to put your savings on steroids. Here’s my list of current CD rates.
- Finally, be sure that you’re making the most of your checking account. In many places, a rewards checking account actually offers better interest rates than any other option.
One final note: The Money Adviser article emphasizes that rates are low right now. It might seem silly to worry about the difference between 1.50% and 1.65%, but eventually rates will rise and there will be more differentiation between online banks.
If you have thoughts about any of these online banks (or about online banking in general), please leave a comment.