What is an online checking account?
Checking accounts are designed for everyday use. They offer a place to keep the cash that you need for expenses such as groceries, gas, bills, etc. Traditionally, checking accounts are available through financial institutions with physical branches. However, you can now get checking accounts that are online-only, without a brick-and-mortar bank. You set the account up online, transfer money online, and manage everything... you guessed it... online. With online checking accounts, you still get a debit card to use in person, and you can still withdraw money from ATMs. Many people (especially young people) prefer the convenience of online banking. But how do you know which account to open? Let's look at the key factors to consider.
How to compare the best online checking accounts
Each online checking account is different, and many advertise unique features like an annual percentage yield (APY) or cashback rewards. It can be confusing to figure out which one is the best. To compare apples to apples, here's what you should consider.
Some of the common fees charged by banks include those for overdrafts, non-sufficient funds, monthly maintenance, out-of-network ATM use, transfers, and foreign transactions. The fewer fees you have to pay for your account, the better.
Most checking accounts come with debit cards that you can use to withdraw cash from an ATM. However, you will usually only be able to withdraw money from certain ATMs without paying a fee. So, it's a good idea to check the size of the ATM network. Obviously, the larger, the better.
Without physical branches, you'll need to transfer money into the account online. Further, you may need to transfer money out to other people. Find out the cost, ease, and processing time of transfers for each account you consider. If you need to send money overseas, this will be particularly important.
Minimum balance requirements
A minimum balance requirement is the amount of money you must deposit to open the account and keep it open. Some accounts have this requirement, while others don't.
You may be able to earn rewards for your spending, like cash back or points. Consider this perk when comparing accounts, as it adds value to your day-to-day spending.
Although it's more common to earn interest on savings accounts, many online checking accounts offer a small return on investment. Investigate the annual percentage yield (APY) to see how much you can earn back on your account funds.
Not all checking accounts are easy to get. You may have to pass a credit check (and Chex systems check) to get approved for an account. Find out what is required to open an account and confirm that you qualify.
Promotional sign-up offers
Check to see if you can take advantage of any incentives for opening the account. Attractive promotional offers can make one account stand out over another.
Many accounts offer unique features that add value. For example, some offer bill pay, overdraft options, budgeting tools, and automatic transfers to savings. Be sure to include these in your comparison. Now that you know the basics, let's look at the best online checking accounts on the market. Keep in mind, that there is no universal best account -- the right account for you depends on your lifestyle and unique needs. However, this guide will help you to see some of the leading accounts on the market today.
Which online checking account is best for you?
Now you know how to spot a good online checking account and some of the top picks for 2019. If you'd like to shop around for yourself, head over to SuperMoney's Checking Account Reviews page to see dozens of accounts side by side. Compare features and reviews to find the perfect fit for you.
What is online banking?