Credit & Money Management
7 Great Online Bank Deals
With high-interest checking, low fees and reimbursements for ATM withdrawals, these financial institutions are gunning for your business.
By Laura Cohn, Associate Editor, Kiplinger's Personal Finance
June 17, 2009
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If you're looking for a little extra return on your cash (and who isn't?), online banks are a good place to start. You can find checking accounts with 2% to 3% yields -- well above the average bank yield of 0.94% and way above what you get at Bank of America (0.01%) or Citibank (0.1%). Likewise, you can get a yield as high as 2.05% on your savings, a lot better than the bank average of 1.37%.
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Online banks tend to charge lower fees than money-center financial institutions, which are slamming consumers with higher monthly maintenance charges, not to mention ever-rising fees for overdrafts, balance transfers and overseas transactions.
An online bank may also be a good choice if you travel a lot or tend to stray from your bank's ATM network. Most reimburse you for using another bank's ATMs, at least up to a certain dollar amount.
We asked Informa Research Services to scour its database to find the best deals at online banks. Using their analysis as a starting point, we did our own digging and came up with the following list of favorites. Banks can change their rates at will, so double-check the details before you dive in.
You can compare rates on bank accounts, certificates of deposit, mortgages and other products at Bankrate.com. If you find a rate you like but aren't familiar with the bank, make sure it's covered by the Federal Deposit Insurance Corp.
BEST FOR LOW-MINIMUM CHECKING: KeyDirect
You don't need to worry about a minimum balance to earn interest on a KeyDirect checking account. A balance of less than $2,500 earns 1.25%, and a $5,000 balance gets a still-competitive 1.75%. High rollers with balances of more than $100,000 earn 2%. But watch the monthly maintenance charges. While KeyDirect will waive the fee for the first three months for new account holders, a monthly charge of $15 kicks in after that unless you keep a combined balance of $10,000.
Amount to open account: $50
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: Combined balance of $10,000; otherwise, monthly charge is $15
Reimbursement for ATM withdrawals: $12 a month
BEST FOR HIGH-MINIMUM CHECKING: EverBank
EverBank is offering a 3% yield on new checking accounts. The catch: The bank promises that rate for only three months, after which it could default to the current rate. For those with accounts holding less than $10,000, the current rate is 1.52% for the first year. However, EverBank pledges to keep its yields in the top 5% of those surveyed by Bankrate.com.
Amount to open account: $1,500
Minimum to earn interest: None
Savings rate: 2%
Minimum to avoid maintenance fees: None, unless you use online bill-paying. If you do, you must maintain a balance of $5,000 or else pay an $8.95 fee.
Reimbursement for ATM withdrawals: $6 a month if you maintain a $5,000 balance
Reader Comments (10)
Posted by: Andrew at 06/18/2009 03:02:46 PM
Also check out Charles Schwab bank at Schwab.com for Best for ATM Refunds, the reimburse all ATM charges with no cap on amount reimbursed.
Posted by: Chad at 06/18/2009 03:33:26 PM
...You will want to Read the FINE print. I have a mortgage with ING) after two years with no early payoff, they asked me to do a rate modification. I paid a fee of $750.00 to do this but in the fine print was a early payoff fee. I recently went to refi my mortgage with someone else because they had a better rate, and ING was charging me a $5,600 early payoff fee. When I originally took the loan out there wasn't a early payoff fee but now there was...
Posted by: Ann at 06/20/2009 09:35:17 AM
I use Hudson City Savings Bank for CDs. They presently offer 2% on 6-months CDs.
Posted by: Jay at 06/21/2009 01:43:35 AM
Yes, I agree with Chad: read ALL the fine print and consider other alternatives to ING(Sharebuilder)...
Posted by: Art at 06/22/2009 11:03:41 PM
Laura, did you actually make these picks? Let's see, the min bal pick provides a free account for 3 months then $15/mo for less than $10k? Pathethic. How does ING tie with Salem for low fees with an under $50k rate of .25% vs. Salem's 1.4%? Ally?...If the info on Salem is accurate, it might be the best pick for every category, assuming I really want to bank online in the first place. Perhaps research credit unions for better options without (as much) fine print.
Posted by: Roy at 06/23/2009 08:47:20 PM
Ally Bank Moneymarket with checkwriting - no minimum, no fees, refundable ATM fees with 1.85% rate. Only 6 withdrawals or transfers per month though. 1 year CD with no minimum at 2.30%. On-Line Savings with no minumum or fees at 2.00% I'm not an employee, I'm a customer.
Posted by: Leslie at 06/26/2009 02:03:52 PM
I did a rate renewal with ING DIRECT and it was told to me from the start there was an early payoff charge. They have great customer service as well.
Posted by: celeste at 07/18/2009 10:30:55 AM
I moved my money from ING (1.5%) and am currently with a bank with a much higher rate of 4.5%. Although I had to set up online banking. receive e-statements, and make at least 10 debit purchases a month, its so worth it...especially when there is no min/max dollar amount required on those purchases. So I use my debit card to purchase little items like gum and water- things I buy anyway(adds up to around $15/month) But im getting back nearly $100/month in return.It works great for me.
Posted by: Todd at 07/22/2009 02:31:23 PM
I signed up with Ge interest plus..2%, no minimum, no fuss. Rate can change weekly and looking at history, it was at 2.3% recently. Also use ING and others that offer good deals, i can move money around for more money.
Posted by: casey at 10/11/2009 08:32:05 PM
Another online bank to consider is smartypig.com. Once your account is set up and you've met your savings goal, the money will sit and collect ~2% interest rate. One of the downsides is that you have to withdraw the money in a lump sum, so set up small individual savings goals. Also, I want to comment about Ally and Everbank. I currently have an account with Ally and really like it. Great bank. Everbank - STAY AWAY!!...