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TOC: Best Internet-Only Banks

Page Description: The best Internet Banks for checking and savings accounts are discussed in this ConsumerSearch report, based on an analysis of the reviews.

Internet banks benefit from anger at big banks

Online banks, sometimes referred to as direct banks, don't have the expenses involved with maintaining and staffing branch offices, so they can offer higher interest rates, free accounts with no minimum-balance requirements, few or no fees and other perks like interest checking with good rates or rewards checking. In researching reviews of online banks, we found some that get good reviews overall and others that get positive marks for specific services only.

Among online banks, ING Direct is recommended by more reviewers than any other, even though its savings account yields are usually a bit lower than those of some competitors. ING Direct has been around longer than most (since 2000) and has developed a strong base of loyal customers. ING earns particular praise for customer satisfaction and its easy-to-use website.

The bank offers two basic account options. Orange Savings account has no minimum deposit and no fees, and the interest-bearing Electric Orange Checking account is also free with no account minimum. The account includes free online bill pay and Paypal-style person-to person payments, or customers can request that checks be printed and mailed, with postage paid by the bank. You can also order an old-fashioned paper checkbook (*Est. $5 for 50 checks). Aside from the optional checkbook, there are no fees and no account minimums for this interest-bearing account. You can withdraw money from more than 35,000 ATMs, including those on the Allpoint network (found in gas stations, grocery stores and other retail locations).

In 2012, ING Direct was acquired by Capital One, causing some consternation among account holders. Time magazine's Brad Tuttle says that long-time customers have been "freaking out" over possible changes to their bank -- including the fact that the ING Direct name will disappear, to be replaced by Capital One. However, DepositAccounts.com notes signs that "Capital One is letting ING Direct operate like it has in the past." In the meantime, the merger has introduced some benefits for users, including access to Capital One ATMs (in addition to those on the Allpoint network) and CheckMate, a remote-deposit service that lets you scan (or photograph) and deposit checks electronically from your computer or mobile device

Though ING Direct gets the most overall praise, Ally Bank gets favorable attention, too. Formerly GMAC Financial Services, a provider of auto loans, Ally competes directly with ING for web-based savings accounts. Its hallmark is free checking and savings accounts with relatively high interest rates and low or no fees. For example, the no-fee Interest Checking account has free online bill pay, free unlimited check writing, unlimited free checks and unlimited ATM fee reimbursement nationwide. Ally has lower customer satisfaction levels than ING Direct does, though, with many complaints about its customer service.

USAA Federal Savings Bank has gotten notice from reviewers also. Unlike some of USAA's products and services, it is available to anyone, not just to members of the military and their families. USAA offers lots of freebies: free checking and savings accounts, free checks, free online bill pay, free unlimited transfers to any U.S. bank and a free money management tool, USAA Money Manager. ATM fees are reimbursed, but only up to $15 a month. You can make in-person deposits at UPS Stores (according to USAA's website there are 1,900 nationwide). Remote deposit options are offered, but some customers point out that you must qualify to use them; you must also qualify to buy some of USAAs insurance products that are generally available only to members of the military and their families, for example. If being able to make remote deposits is important to you, they say, you might want to check to see whether you'd qualify before you open an account at USAA Federal Savings Bank.

Best online checking and savings accounts

For online checking, reviewers point to Schwab Bank's High Yield Investor Checking account. It provides unlimited ATM reimbursements for cash withdrawals worldwide, plus free online bill paying and remote deposit options. The interest rate on the checking account isn't great, but there are no minimum balances or monthly fees. Even the checks are free. You also get a free Charles Schwab brokerage account, with no minimum balance or monthly fees.

Sallie Mae Bank is best known for offering student loans, but it also offers what reviewers say is one of the best online savings accounts available: the Sallie Mae Bank High-Yield Savings Account. It has no minimum deposit, no fees and what one reviewer calls a "respectable" interest rate. What some reviewers really like, though, is the Upromise bonus. Upromise is a rewards program in which people earn cash back when they buy from program partners or use the Upromise credit card. If you are a Upromise member and link your High-Yield Savings account to your Upromise account, Sallie Mae will pay you a bonus of 10 percent of the Upromise money you've earned over the course of a calendar year.

Special accounts integrate social networking to help people save money

Reviewers also recommend two online banking sites aren't operated by banks, per se, but in conjunction with them. PerkStreet Financial -- in partnership with Bancorp Bank -- offers an online rewards-checking account. It is free, save for a $4.50 monthly inactivity fee. Customers earn cash back (between 1 and 5 percent) for non-PIN debit card purchases.

PerkStreet makes extensive use of online and social media, including Facebook and Twitter, and hosts its own blog where customers share money-saving tips. Customers are also asked to suggest merchants and categories for PowerPerks (5 percent cash back); choices rotate monthly. In addition, even those who don't have an account with PerkStreet can sign up for free e-mail based courses on financial management.

SmartyPig, an FDIC-insured savings program offered in partnership with West Bank, is designed to save money for specific long-term goals. You can even set up separate accounts to save for several purchases at the same time. Unlike a traditional bank, it is designed to motivate people to save. The site integrates social networking by letting you share as much of your goal and progress as you choose with people whom you invite.

Reviewers caution that SmartyPig should not be used for emergency savings, however, as withdrawing money with a debit card, check or gift card can take more than a week. You can also transfer the funds back to your primary bank account, but that typically takes three to four days

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