Online banks can provide the same services as traditional brick-and-mortar banks but with a much higher level of convenience. Digital banks allow you to pay your bills, deposit checks and transfer money directly from your online account. The only downside is if you regularly deal with cash since not all online banks accept cash deposits. 

Banking entirely online is far more common than it used to be, but you might still prefer having the option of a physical branch. Just keep in mind that online banks offer some of the most competitive rates on high-yield savings and certificate of deposit accounts, giving them an advantage over the rest. You can always open multiple accounts at separate institutions to help you reach your financial goals.

Compare the best online banks

CNET’s list of the best online banks includes some of the most popular financial institutions nationwide. However, there are also great banks that aren’t household names to consider.

Bank	Savings Account	CDs	Checking Account	Money Market	Accepts cash deposits?	ATM fee rebates
Alliant Credit Union	Yes	Yes	Yes	No	Yes	Up to $20/month
Ally	Yes	Yes	Yes	Yes	No	Up to $10/statement cycle
Bask Bank	Yes	Yes	No	No	No	N/A
Discover Bank	Yes	Yes	Yes	Yes	No	N/A
Laurel Road	Yes	No	Yes	No	No	N/A
Marcus by Goldman Sachs	Yes	Yes	No	No	No	N/A
My Banking Direct	Yes	Yes	Yes	No	No	N/A
SoFi	Yes	No	Yes	No	Yes	N/A
Synchrony	Yes	Yes	No	Yes	No	Up to $5/statement cycle
TAB Bank	Yes	Yes	Yes	Yes	No	Up to $15/month
Zynlo Bank	Yes	No	Yes	Yes	No	N/A

Note: APYs shown are as of Jan. 24, 2024. CNET’s editorial team updates this information regularly. APYs may have changed since they were last updated and may vary by region for some products.

What is an online bank?

An online bank, credit union or financial services firm lets you fully manage your money and accounts online via a website, mobile device or app. Most banking services can also be handled online, including transferring funds and depositing checks.

“More people are leaning toward online banking,” said Bola Sokunbi, founder of Clever Girl Finance and CNET expert review board member.

Though technology makes everything we do more accessible from a smartphone, there are some drawbacks to online banks. Online-only banks lack in-person assistance, and some might not accept cash deposits, making it tricky to bank there if you’re often paid in cash. On the other hand, if you’re comfortable managing your money online, digital banks are a convenient, low-cost option. 

“Just make sure the bank meets your needs and it’s not going to cost you a ton of money to keep your money there,” Sokunbi said.

Online banks typically offer higher interest rates than traditional banks, Sokunbi said. And one major advantage is that some let you earn interest on your checking account, a feature most big banks don’t offer.

Although online accounts generally have fewer fees, you can save a lot of money by taking note of any additional fees, Sokunbi said. An online checking account, for example, might charge an ATM withdrawal fee. And an online savings account might charge you an excessive withdrawal fee if you go beyond six transfers or withdrawals per statement cycle, said Shang Saavedra, founder and CEO of Save My Cents and CNET expert review board member.  

Transferring money out of an online account can also take time. Make sure you feel comfortable with how you can access your money -- including withdrawing or transferring funds and making deposits. If you need assistance, you’ll need to navigate the bank’s customer service line, email support or chat.

How do I deposit and withdraw money from an online bank account?

The way in which you deposit and withdraw money, and the transfer time, will depend on the specific bank you choose. 

Bank transfer

A bank transfer is one of the most common and seamless ways to transfer money online from one bank account to another. You can transfer money to or from an existing account using the account and routing numbers through your online account or mobile app. Some banks also let you transfer money through banking platforms like Plaid or Zelle. While some banks may transfer your money instantly or within two business days, some can take as long as seven -- which can make a big difference, Sokunbi said.

Mail or wire transfer

Even if the only bank you choose doesn’t have a physical branch you can visit, you may still be able to mail a paper check or wire transfer with the funds to deposit into your account. However, this route will likely take longer for your money to hit your account compared with other options.

ATM deposit and withdrawal

Many online banks offer an ATM network for fee-free deposits and withdrawals, and you may be reimbursed for out-of-network ATMs. Some online banks partner with brick-and-mortar financial institutions or offer ATM deposit access if you prefer to make transfers in person. Cash deposits are usually available instantly, but checks may take a few days. Not all online banks allow you to deposit cash at an ATM. And not all online accounts come with ATM access to withdraw your money.

Mobile check deposit

If your online bank offers mobile account access, you can deposit a paper check using the mobile app and your smartphone camera. Usually, there’s no fee, and the money is available in one to two business days, depending on the bank.

Pros and cons of online banks

Are online banks safe?

Like traditional banks, money stored at an online bank is safe as long as it is FDIC- or NCUA-insured to protect your deposits up to $250,000 per individual, per bank. 

But keeping your financial and personal data secure when banking online is also important. Choose an online bank with robust safety and security features to protect your account. Some essential features to look for include two-factor or biometric authentication, end-to-end encryption and no liability for unauthorized transactions. This can help keep your account more secure and protect it from data breaches and hackers. Before opening an account at an online bank, ask customer service about any safety features and be sure to enable them for your safety. 

How to open an account with an online bank

Opening an account with an online bank is usually straightforward. Once you’ve compared different bank options and are ready to open an account, follow these steps:

• Go to the bank’s official website.
• Narrow down which account(s) you want to open and review any requirements and fees.
• Complete the application with any required personal information and verification.
• Fund your account using the bank’s approved deposit methods.

From there, you can download the bank’s official mobile app and request a debit card (if available).

Methodology

CNET reviews online banks based on the latest APY information, fees charged and services offered from issuer websites. We evaluated online banks from among more than 50 banks, credit unions and financial companies. We selected the banks with the highest APYs that were insured up to $250,000 by the FDIC or NCUA.

Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Credit One Bank, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank and Wells Fargo.

This article includes some material that was previously published on NextAdvisor, a CNET Money sister site that was also owned by Red Ventures and that has merged with CNET Money. It has been edited and updated by CNET Money editors.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.