With the rise of the internet and digital, mobile technology, online banks have increased in popularity given their accessibility and convenience. Of course, not all online banks are the same and each has its advantages and disadvantages. Interest rates remain a prime area of interest for anyone looking to increase their savings. Below, we’ll tell you more about the 7 online banks with the best interest rates.
Why use an online bank?
An online bank or internet-only bank differs from online access to direct banks. Direct banks are conventional banks with brick-and-mortar offices that allow account holders to withdraw and deposit funds or speak with bank affiliates regarding loans or other credit-based instruments. An online bank is entirely digitized, meaning that you are only able to access your funds digitally and there’s no personal interaction.
Online banks are can be advantageous and disadvantageous depending on the situation. Disadvantages include the lack of personal interaction, which may be a challenge with regard to troubleshooting or making decisions regarding loans or other assets. Likewise, some financial transactions, such as depositing a check, become very tedious.
However, the lack of physical infrastructure means that online banks have lower costs and offer interest rates that compare favorably or exceed the high-interest savings accounts some banks offer; online banks typically offer their interest rates with non-savings accounts, providing even greater utility.
Likewise, online banks are inherently mobile, meaning you always have access to your banking information and account to make payments, acquire loans or resolve other financial matters.
For those looking for maximum mobility and higher interest rates, online banks are a good option for storing your money until you need it.
7 online banks with the best interest rates
- Varo offers the highest APY of any online bank. Account holders start off at 1.20% APY. With a minimum direct deposit of $1,000 and an account not exceeding $5,000, account holders can earn up to 5% APY. Additional benefits for Varo members include no hidden fees, early direct deposit (up to two days earlier for bill payment and paycheck access compared to traditional banks), and up to 6% cash back on purchases from select brands such as Levis and Panera.
2. SoFi is another great online banking option for savers. With an APY of 1.25% for members using a direct deposit as well as the opportunity to earn points that can be integrated with other SoFi components such as credit cards and lending options, SoFi offers a comprehensive banking experience with a variety of additional perks such as financial consulting, estate planning and even VIP access to SoFi stadium.
3. LendingClub offers a 1.05% APY on its savings accounts as well as 1% cash back, a financial toolkit to keep track of finances, a mobile check deposit feature to deposit checks from any place and at any time, and ATM rebates.
4. With Quontic, account holders are eligible for a 1.01% APY for only a $100 minimum deposit with no annual fees. Account holders have complete mobile banking accessibility and compatibility through such platforms as Zelle.
5. CIT bank offers a .9% APY that also only requires a $100 deposit and without ATM fees while enabling remote check depositing and access through remote transfer and payment platforms.
6. For those looking for larger account ceilings, Marcus by Goldman Sachs offers an APY of .85% for accounts with a minimum balance of $2,500 and the ability to transfer up to $100,000. As with other online banks, 24/7 access and remote compatibility are key features.
7. CapitalOne is one of the leaders in online banking and offers accounts with a .7% APY. Accounts require no minimum balance and no monthly service fees while allowing multiple accounts, simplified online account transfers, automatic savings plans, and digital check deposits.
For those looking for a convenient way to keep your funds digitized and accessible while earning considerable interest on your assets, the above banks provide justification to be considered the 7 online banks with the best interest rates.
