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Best Online Checking Accounts

With the upsurge in new technologies, traditional brick-and-mortar banks may eventually go by the wayside. It’s really not surprising, considering the popularity of peer to peer lending programs such as Lending Club, Prosper or Upstart, which attract investors looking for 21st century lending models.

In addition, bitcoin and cryptocurrencies could replace traditional banks altogether. Once bitcoin gets to a point where hundreds of transactions can be settled per second, it could offer a more efficient, secure and cost-effective structure compared to traditional banks.

Therefore, as it’s a real possibility that your brick-and-mortar bank could be axed at some point in the future, online checking (not connected to a brick-and-mortar institution) might be a great move.

Quick look – Best online checking accounts

Best for no monthly fees: Capital One 360 Online Checking Account
Best for hIgh APY: Consumers Credit Union Free Rewards Checking
Best for no deposit minimum: Ally Interest Checking
Best business online checking account: EverBank Business Checking

What's an online checking account?

Online checking accounts are different from regular checking accounts at your bank/credit union and the number one reason they’re different is that they’re from banks that forgo a traditional branch structure. Ally Bank is a great example of this type of online-only option.

Types of online checking accounts

Interest-bearing checking accounts are similar to non-interest checking accounts. For both, customers can write checks, use debit cards and ATMs, etc. In the case of an interest checking account, however, the bank pays interest on the balance in your account.

Non-interest checking accounts, of course, don’t offer any interest at all. The bank only holds your money and can even charge a monthly maintenance fee.

While the interest-bearing checking account might seem like a steal, it’s also important to understand all terms and conditions to make sure unintended fees aren’t mounting. A few items you’ll want to consider include:

  • APY percentages
  • Minimum balances
  • ATM costs per use
  • Number of electronic deposits per month

Pros and cons

It’s easy to point to some of the pros regarding an online checking account, as online-only banks don’t have the overhead of traditional banks. To that point, they can often pass on these excellent advantages to customers:

  • Higher rates
  • Lower fees
  • New technology, including excellent app and user interface
  • Extensive ATM networks
  • Can do tech-friendly things such as remote check deposits
  • Convenience is a major factor (you don’t need to go to the bank to deposit a check, for example)

On the other hand, there are some cons, and those include:

  • No face-to-face interaction because it’s all online
  • Customer service in general and through other forms of communication (phone, email, etc.) could be a challenge
  • Identity theft and fraud can be a concern; you’ll want to make sure the bank is FDIC-insured
  • ATM fees can be more expensive (it might not be possible to always find a bank-owned ATM)

Is an online checking account best for me?

If you’re someone who likes to leave a lot of money sitting in an account, an online checking account wouldn’t be recommended for a couple of reasons, and one of them is security.

Fraud is a very real threat to all checking accounts, not just online checking accounts. If you’re the victim of debit card fraud linked to your online checking account, that’s way more unfortunate than credit card fraud. In the case of a checking account, someone has direct access to your actual money, which obviously isn’t the case with a credit card.

Also, another reason it’s best not to leave money sitting around in a checking account is that compared to certain other investments, checking accounts still don’t offer super-high returns. Checking accounts were never intended to be savings vehicles.

If you’d like to save money, an online checking account would not be best for you. It seems obvious that they wouldn’t be the best savings vehicles, but there are people who stash their paychecks in a checking account and never move excess money into a better savings vehicle.

Financial experts say that anywhere from three to six months of emergency expenses should be covered in case of a job loss, debilitating health occurrence, etc. If you have more than the requisite three to six months of emergency expense money lined up, you might be better off investing the rest in an account that will earn you more.

Best online checking accounts

Fortunately, Benzinga has done the hard work for you to help determine which online checking account could be best for you:

Best for no monthly fees

Capital One 360 Online Checking Account, while it requires no online or mobile checking fee, also offers the following:

  • Up to 1.00% APY (on amounts over $100,000 or more) and on amounts $0-$49,999.99, APY is 0.20%
  • No minimums
  • Free ATMs, which include over 39,000 Capital One or Allpoint ATMs at zero cost
  • Mobile deposit
  • Online bill pay
  • Overdraft protection options
  • Excellent, top-rated app

Best for hIgh APY

Consumers Credit Union Free Rewards Checking can offer a lot, but there are some requirements alongside the high APY:

4.59% APY requirements:

  • Complete 12 pinless debit/check card purchases
  • Make a direct deposit, debit or electronic bill pay
  • Access online or mobile banking at least once a month
  • Receive e-documents
  • $1,000 or more in Consumers Credit Union VISA credit card purchase transactions

3.59% APY requirements:

  • Complete 12 pinless debit/check card purchases
  • Make a direct deposit, debit or electronic bill pay
  • Access online or mobile banking at least once a month
  • Receive e-documents
  • $500 or more in Consumers Credit Union VISA credit card purchase transactions

3.09% APY requirements:

  • Complete 12 pinless debit/check card purchases
  • Make a direct deposit, debit or electronic bill pay
  • Access online or mobile banking at least once a month
  • Receive e-documents

Best for no deposit minimum

Ally Interest Checking is a great choice for a number of reasons, including requirements for opening deposits.

  • 0.10% APY with a less than $15,000 minimum daily balance
  • No monthly maintenance fees, either
  • Good customer service 24/7
  • Allpoint ATMs are free, plus you’ll be reimbursed $10 per statement cycle for fees charged at other ATMs nationwide
  • Ally eCheck Deposit offers the option of depositing checks remotely
  • Send or receive money using Zelle.

Best business online checking account

EverBank Business Checking offers something that doesn’t exist too in too many other locations: business checking with an online account. Here are the features:

  • $14.95 monthly fee
  • $5,000 minimum to waive fee
  • $0.25 transaction fee for transactions over 200
  • Up to 200 transactions and 10 online bill payments free

Final thoughts

Unlocking all the possibilities can seem like an overwhelming task, but if you strategically consider your needs and preferences, you’ll almost always be able come up with an online banking solution.

In addition, if you aren’t so into the process of driving to your bank, walking into the bank, talking with the teller, getting what you need (and maybe having to stand in line) then you’re probably ready for something different. If you’re just as happy doing all that on your device, then online banking is a great option for you.

If you’re having trouble getting approved for a checking account, see Benzinga’s Second Chance Checking article.