There are a lot of options out there when it comes to online banks. So how do you know which one is right for you? In this blog post, we’ll share our process for how we select the best online banks. We’ll cover everything from fees to customer service to security and more. By the end of this post, you’ll know exactly what to look for in an online bank so that you can make the best choice for your needs.
When it comes to choosing an online bank, there are a lot of factors to consider. With so many options out there, it can be hard to know where to start. But don’t worry – we’re here to help. In this blog post, we’ll walk you through how we select the best online banks.
We’ll discuss the criteria we use to evaluate banks, as well as the pros and cons of different types of online banking platforms. By the end, you should have a better understanding of what to look for in an online bank and how to choose one that’s right for you.
Available Account Types
We looked at six different account types: savings, checking, money market, certificate of deposit (CD), brokerage, and retirement. Here’s a breakdown of what we considered for each.
Savings: We looked for high-interest rates, low fees, and ease of use.
Checking: We looked for features like online bill pay, mobile check deposit, and ATM access. We also considered whether the account had monthly maintenance fees and if there was a minimum balance required.
Money Market: We considered the same factors as we did for savings accounts, plus we looked for features like check-writing privileges.
Certificate of Deposit (CD): We looked for terms ranging from 3 months to 5 years, with no early withdrawal penalties. We also considered the interest rate and whether the bank offered a bump-up rate if rates increased during the term of the CD.
Brokerage: We considered whether the account had fees associated with it and what kind of investment options were available. We also looked at whether there was a minimum balance required and what kind of customer service was offered.
Retirement: We considered whether the account had fees associated with it and what kind of investment options were available. For example, some accounts may have mutual funds while others may have only index funds. We also looked at whether there was a minimum balance required and what kind of customer service was offered.
Interest Rates
The Federal Reserve sets interest rates, which generally determine the rate that banks charge consumers for loans. The prime rate, or the rate at which banks lend to their best customers, is often used as a benchmark for other loan products. Rates can vary significantly from one bank to another, so it’s important to compare rates before selecting a bank.
When considering an online bank, pay attention to both the savings account and money market account rates. Some online banks offer higher yields on these accounts than traditional brick-and-mortar banks. However, keep in mind that these rates are variable and subject to change. In addition, some online banks may require a higher minimum balance to earn the advertised rate.
Be sure to also compare APYs (annual percentage yields) when shopping for an online savings account. The APY is the amount of interest you’ll earn on your balance over the course of a year, taking into account compounding interest. Compounding interest means that you earn interest not only on your initial deposit but also on the interest that has accumulated over time.
Account Minimums
When it comes to finding the best online bank for your needs, one of the key factors to consider is the account minimum. Many online banks require a minimum balance in order to open an account, and this can vary depending on the bank and account type.
For example, some online savings accounts may have a $500 minimum balance requirement, while others may have no minimum balance requirement at all. Similarly, some online checking accounts may have a $1,000 minimum balance requirement, while others may have no minimum balance requirement at all.
When considering an online bank, be sure to check what the account minimums are so that you can be sure you’ll be able to meet them. Otherwise, you may end up being charged fees or losing out on potential interest earnings.
Monthly Maintenance Fees
When it comes to online banks, one of the most important factors to consider is monthly maintenance fees. After all, you don’t want to be nickeled and dimed every month just for having a checking account.
That’s why we only recommend online banks that either don’t charge monthly maintenance fees or offer ways to waive them. For example, some banks will waive the fee if you maintain a certain balance in your account or if you set up direct deposit.
So when you’re comparing online banks, be sure to take a close look at the monthly maintenance fees. It could make a big difference in how much money you save over time.
Other Account Fees
There are a few other account fees to consider when selecting the best online bank for you. These include things like overdraft fees, international transaction fees, and returned item fees.
Overdraft Fees: Many banks will charge you a fee if you try to withdraw more money than you have in your account. This fee can vary depending on the bank, but it is typically around $35.
International Transaction Fees: If you plan on using your account to make purchases in another country, you will want to make sure that your bank does not charge a foreign transaction fee. This fee is typically around 3% of the total purchase price.
Returned Item Fees: Some banks will charge a fee if an item that you have deposited is returned by the recipient. This fee can vary depending on the bank, but it is typically around $30.
Investment and Tax-Advantaged Options
There are a number of investment and tax-advantaged options available to individuals when selecting an online bank. These include traditional IRA and Roth IRA accounts, as well as 401(k) plans. Online banks also offer a variety of other investment options, such as mutual funds, exchange-traded funds (ETFs), and index funds.
When it comes to saving money, there are a number of investment and tax-advantaged options available to consumers. These include traditional savings accounts, certificates of deposit (CDs), money market accounts, and individual retirement accounts (IRAs).
Savings Accounts: A savings account is a great option for those who want to earn interest on their deposited funds while still having access to their money. Many online banks offer high-yield savings accounts with competitive interest rates.
Certificates of Deposit: CDs are another option for consumers looking to earn interest on their deposited funds. With a CD, consumers agree to leave their money in the account for a set period of time, typically anywhere from six months to five years. In exchange for this commitment, CDs offer higher interest rates than savings accounts.
Budgeting and Money Management Features
When it comes to budgeting and money management, online banks offer a variety of features that can be very helpful.
Here are some of the things we look for when choosing the best online bank for our readers:
-Automatic bill pay: This is a great feature for busy people who don’t always have time to remember to pay their bills on time. With automatic bill pay, you can set up your bills to be paid automatically from your account, so you’ll never have to worry about late payments again.
-Budgeting tools: Many online banks offer budgeting tools that can help you track your spending and stay on top of your finances. This can be a great way to stay organized and make sure you’re not spending more than you can afford.
-Money transfer options: If you need to send money to friends or family members, it’s important to choose an online bank that offers convenient money transfer options. Look for banks that let you transfer money quickly and easily, without any hassle.