The benefit of online banking isn't just that you have 24/7 access to your accounts, but that you can typically earn a higher interest rate on your savings and checking accounts as well. You can pay bills online, too, and transfer funds with relative ease. Most online banking is free and there are different types of online banks, with varying features, service options, stability ratings and yields. But with many financial institutions failing and others merging, it can be difficult to find a reliable bank. We're here to help.
It's important to remember that even if a bank fails, as long as it's covered by the FDIC, your money is safe. Recently, the amount covered has been increased from $100,000 to $250,000 per account. Once you've determined a bank is covered by the FDIC, you can check their ratings at sites like BankRate.com, on of our top sources. There are a number of sites that track interest rates as well, in addition to monthly and other costs, such as ATM fees. It's lot of due diligence, but it's definitely worthwhile. And we've done much of the legwork for you. Based on the latest ratings, ING Direct is the top choice for an online savings account, while Charles Schwab offers the best online high-yield checking account. Both of these banks offer free access to ATMs and 24/7 tech support.
While many so called "free" accounts have steep requirements, such as direct deposit or even a minimum number of transactions each month, Charles Schwab and ING Direct do not. If you're looking for an online bank with traditional walk-in branches, Bank of America has the most flexible options, if not the best rates. Before you sign up, read our newly updated report on online banking, which details what you need to know when opening an account and how to keep your money safe.