Best Deals in Online Banking

online banksMany customers are saying bye-bye to national and large regional banks. Among those who switched banks over the past year, more left the big banks than joined them, with the banks suffering a 15% loss in customers, according to a recent survey of consumers in the U.S. and Canada by consulting firm Accenture. Where are they going? Credit unions and community banks had a small bump in business, but online banks saw the biggest benefit, scooping up 11% more customers.

What’s the attraction of internet banks? Because they don’t have the overhead costs that come with full-service branches, they tend to have lower fees and higher interest rates. Online banks are upping their customer-friendly features, too. Some have jumped on the mobile-wallet bandwagon; Ally Bank, Bank of Internet USA, Charles Schwab Bank and EverBank now offer debit cards with Apple Pay compatibility. Online banks often have kinder overdraft policies than those of traditional banks, too, with some letting you borrow from a line of credit for a low fee. And with mobile-deposit capability and refunds of ATM fees now common among the online banks, customers can do without tellers or a dedicated network of ATMs.

We’ve picked top accounts from online banks in a variety of categories. We also give honorable mention to runners-up in each category. Except where noted, the accounts don’t charge monthly maintenance fees or require you to keep a minimum balance (though some ask for a minimum initial deposit). And all but one of the checking accounts include free bill-paying services, as well as mobile check deposit.

High-Yield Checking

Our pick: Redneck Rewards Checking

Interest rate: 1.5% on up to $10,000; 0.5% on the portion of your balance higher than $10,000

Minimum initial deposit: $50

ATM fees: Reimbursed up to $25 per month

Overdrafts: Free automatic transfers from a linked account or a $25 fee per item if the bank covers the overdraft.

Despite the unconventional name, this account from the internet division of All America Bank is the real deal. If you receive electronic statements and use your debit card to make at least 10 purchases a month, you’ll qualify for the maximum yield (otherwise you’ll earn 0.25%), as well as for reimbursement of fees that other institutions charge to use their ATMs, both in the U.S. and abroad. Because the bank’s network of ATMs is limited to Oklahoma, it charges 75 cents per ATM withdrawal at other ATMs. But that’s covered by the $25 monthly refund. Bill-paying is free up to 10 payments a month (then it’s 50 cents a payment).

HONORABLE MENTION: Bank of Internet USA Rewards Checking pays 1.25% interest if you have a monthly direct deposit of at least $1,000 and make 15 or more monthly debit card purchases of at least $3 each. Regardless of whether you meet those requirements, you’ll get unlimited reimbursement of surcharges for U.S. ATM withdrawals.

Hassle-Free Interest Checking

Our pick: Bank5 Connect High-Interest Checking

Interest rate: 0.76%

Minimum initial deposit: $10

ATM fees: $15 reimbursed per statement cycle

Overdrafts: Free automatic transfers from a linked account or $15 per item

You earn a respectable interest rate with just one string attached: You must maintain a $100 balance. Enroll in the debit rewards program and you’ll also get one point per $2 spent on your debit card when you sign for transactions (rather than enter a PIN). You can use the points for vacation packages, gift cards and other items. Cash withdrawals are free from the thousands of ATMs in the SUM network. Bonus: Your entire checking account balance is protected if the bank fails, even if your account is larger than the Federal Deposit Insurance Corp. coverage limit of $250,000 per depositor, because the bank is a member of a consortium of Massachusetts-based banks. The account is not available to residents of Massachusetts and Rhode Island, which are home to the bank’s brick-and-mortar counterpart, Bank5.

HONORABLE MENTION: EverBank Yield Pledge Checking ($1,500 opening deposit) pays a bonus yield of 1.11% on up to $100,000 the first year the account is open, then pays from 0.25% to 0.61%, depending on your balance (you’ll need $100,000 on deposit to get the maximum yield). You’ll get unlimited ATM fee rebates if you keep at least $5,000 in the account. Capital One 360 Checking yields from 0.2% (on less than $50,000) to 0.9% (on $100,000 or more), and ATM withdrawals are free from about 40,000 machines in the AllPoint and Capital One networks.

Traveler-Friendly Checking

Our pick: Schwab Bank High Yield Investor Checking

Interest rate: 0.06%

Minimum initial deposit: None

ATM fees: Unlimited reimbursement

Overdrafts: Free automatic transfers from a linked account or $25 per item

High yield is an exaggeration, but this account from Charles Schwab’s online bank has a lot of appeal–especially for travelers. Schwab refunds all ATM-withdrawal fees, both domestic and international, and you’ll pay no foreign-transaction fee when you make purchases outside the U.S. with your debit card. You must open a Schwab One brokerage account, too, but there’s no minimum initial deposit and you don’t have to pay maintenance fees.

HONORABLE MENTION: The Aspiration Summit checking account refunds all fees from ATMs worldwide, charges a reasonable 1.1% foreign-transaction fee for debit card purchases, and pays 1% interest on your entire balance if you have $2,500 or more in the account (0.25% on smaller balances). You have to sign up for an invitation to open an account (click on “Secure Your Spot” and enter your e-mail address). You should get the invitation in less than a week. Summit currently doesn’t offer bill-paying or remote check deposit.

Hassle-Free Savings

Our picks: GS Bank Online Savings and Synchrony Bank High Yield Savings

Interest rate: 1.05% (both accounts)

We awarded a tie in this category. Goldman Sachs recently acquired GE Capital’s online savings business, but GS didn’t change the savings account’s best features: no minimum balance or deposit requirement, no fees for inactivity (helpful if you want to park your emergency fund in the account) and one of the highest yields available. Synchrony offers the same perks. If you need access to cash directly from savings, though, Synchrony is your better bet–it provides an ATM card upon request, with a $5 refund of ATM fees per statement cycle. (If you want to write checks, consider putting your savings in a money market deposit account, such as the one from Ally Bank.)

HONORABLE MENTIONS: At 1.06%, the yield on the SFGI Direct Savings Account is a hair higher than the yields of GS Bank or Synchrony, but you have to make a $500 deposit to open the account (and maintain a $1 balance to earn interest). The AloStar Bank of Commerce Savings Account yields 1.05% and requires $50 to open but has no ongoing minimum-balance requirement. It also comes with a debit card.

Savings Accounts for Big Balances

Our pick: Salem Five Direct eOne Savings

Interest rate: 1.1%

Earn 1.1% on balances up to $500,000–and get unlimited deposit insurance coverage. The Federal Deposit Insurance Corp. insures up to $250,000 per depositor in case the bank fails, and an insurance fund sponsored by participating Massachusetts-based banks covers all balances above that. You’ll need to deposit $100 to open an account, but no minimum balance is required after that.

HONORABLE MENTION: The Incredible Bank Savings Account ($2,500 minimum deposit) yields 1.11% on balances of less than $250,000, but you’ll pay a $15 monthly maintenance fee if the balance falls below $2,500. You have to agree to get electronic statements to avoid a $5 fee for each paper statement. If the account is inactive for two years, the bank will begin issuing paper statements, triggering the $5 fee.

Certificates of Deposit

Our pick: Barclays Online CDs

Interest rate: 1.25% on a one-year CD; 1.75% on a five-year CD

Besides competitive rates, Barclays CDs have no minimum, and early-withdrawal penalties aren’t overly punitive–from 90 days’ interest on a one-year CD to 180 days’ interest on a five-year CD.

HONORABLE MENTIONS: Synchrony Bank ($2,000 minimum deposit) pays 1.25% on a one-year CD and 1.8% on a five-year CD. Colorado Federal Savings Bank ($5,000 minimum deposit) pays 1.25% on a one-year CD and 2% on its five-year maturities.

Do-It-All Online Bank

Our pick: Ally Bank

Ally Bank has consistently offered a strong combination of minimal fees and solid yields on its accounts. The checking account reimburses up to $10 per statement cycle in ATM surcharges and yields 0.6% on balances of $15,000 or more (0.1% on smaller balances). For savings, you can choose a money market account (0.85% yield), which comes with a debit card and checks, or a savings account (1%). The bank’s CDs (one-year, 1.05%; five-year, starting at 1.65% with less than $5,000 deposited) require no minimum deposit, and early-withdrawal penalties are reasonable. Ally also offers the no-annual-fee CashBack credit card, which pays 2% back at gas stations and grocery stores and 1% on all other purchases.

HONORABLE MENTION: Discover Bank has a checking account that pays no interest, but you earn 10 cents each time you make a purchase with your debit card, pay a bill online or write a check (up to 100 transactions a month). Cash withdrawals are free at a network of more than 60,000 ATMs. Discover’s savings account yields 0.95%, and the money market deposit account ($2,500 minimum balance to avoid a $10 monthly fee) comes with a debit card and checks; it pays 0.8% on balances below $100,000 and 0.85% for higher balances. CDs require a $2,500 minimum.

Best Online Accounts From Brick-and-Mortar Banks

Some traditional banks and credit unions offer great accounts that you can manage online from anywhere in the country.

Michigan-based Northpointe Bank, for example, recently paid an almost unheard-of 5% yield on balances up to $5,000 in its Ultimate checking account, available nationally. To earn the rate, you must make at least 15 debit card purchases totaling $500 or more a month, receive electronic statements, and set up a monthly direct deposit or automatic withdrawal of $100 or more. Fees that other institutions charge you to use their ATMs are reimbursed up to $10 monthly. The Free Rewards Checking account from Illinois-based Consumers Credit Union yields 4.59% on up to $20,000 if you meet similar requirements, plus spend $1,000 or more monthly on a CCU credit card. All ATM surcharges are refunded. (Join the credit union by paying a onetime, $5 fee to the Consumers Cooperative Association.)

(Source: TCA)