Traditional Banks Online

Four big banks dominate nationwide banking

Big national banks are one option for online banking, usually offering free checking, mobile banking (by cell phone) and huge national networks of branches and ATMs. The drawback is that often, they pay very low interest rates or even none at all. If you travel a lot, however, the convenience might be more important than the low yields. Bank of America, for example, has 18,700 ATMs across the United States. Wells Fargo has more than 12,000 ATMs and 6,650 branches -- more than any other bank -- now that it has bought Wachovia. For now the two banks continue to operate separately, though customers have free access to both banks' ATMs. Four big banks dominate online banking in the United States: Bank of America, Chase, Citibank and Wells Fargo.

Among the big online banks, customer satisfaction varies

With a few exceptions, terms and interest rates at these big banks don't differentiate them very well. Instead, it's their customer satisfaction ratings plus extra services and features that set them apart. The two banks that were absorbed into Chase and Wells Fargo -- Washington Mutual and Wachovia, respectively -- had consistently earned better scores for customer satisfaction than their new owners. The mergers expand the ATM networks, but some customers complain that service has suffered, and credit card interest rates have ballooned.

At Chase, you must register online before they will show you any details about their online accounts. Checking (*Est. $6 per month) becomes free only if you set up a direct deposit or use your debit card five times a month. The basic savings account pays next to nothing, and comes with lots of restrictions and potential fees on withdrawals. Chase does have a good reputation for stability. But customer service is less impressive, as Chase has dropped nearly 7 percent, year-over-year in the 2009 ratings at The American Customer Satisfaction Index (ACSI). The 2010 ComScore report shows a similar decrease, with Chase dropping six points.

Wachovia (now part of Wells Fargo but still operating under its own name) offers free checking with some special savings incentives. For each online bill payment, debit card use and automatic withdrawal, the bank adds $1 to your Wachovia Way2Save savings account. However, there are some drawbacks to online banking at Wachovia -- including fees for transfers to non-Wachovia accounts (*Est. $3, or $10 for next-day service), plus fees for using non-Wachovia ATMs.

Wachovia's owner, Wells Fargo, has trailed behind the other big banks in several surveys of customer satisfaction. However, the 2010 ComScore report shows customer satisfaction with Wells Fargo rising, and with a modest bump over last year, the bank earns the top spot on the ACSI as well. As another plus, Wells Fargo offers free online money-management software. Like Wachovia, it offers phone support 24/7.

Drawbacks to checking at Wells Fargo include a monthly fee (*Est. $5), waived only if you arrange a monthly direct deposit or maintain a balance of at least $1,500. To get free bill payment requires stepping up to a combined checking and savings account (*Est. $8 per month), with the same conditions or the option of automatic savings deposits. The savings account APY is low compared to online-only banks, and a major drawback is the fee ($2.50 in the United States, $5 abroad) for using a non-Wells-Fargo ATM -- that's on top of the fees charged by the ATM owner.

Bank of America also charges a fee for using another bank's ATM ($2 in the United States, $5 abroad) on top of the fees charged by the ATM owner. Its network of more than 18,500 ATMs is bigger than the 12,000 or so ATMs of Wells Fargo/Wachovia. Bank of America usually gets better ratings for customer service, though in the latest ACSI and ComScore reports, it trails Wells Fargo by a few percentage points. Checking is free, with no minimum balance or strings attached. Accounts opened online have their monthly maintenance fee waived, and you get free online money-management software. Phone support is provided seven days a week, but not at all hours.

Citibank does provide 24/7 phone support, but has far fewer ATMs in its network (about 3,200 at bank branches). If you open an online account and don't live near a Citibank branch, however, ATM fees from other banks are reimbursed (up to $5 a month), though you have to meet minimum balance requirements. At the time of publication, Citibank's Ultimate Savings account exceeds the miniscule APY at Bank of America. The main drawback is that Citibank online checking is free only if you meet any of several terms: a monthly direct deposit, two online bill payments a month, or a combined savings and checking balance that stays above $1,500. (The exact amount of the monthly checking fee varies by geographic area.)

There are tradeoffs for all these banks, so your best choice depends on your priorities. If you want your savings at the same bank as your checking, then Wachovia and Citibank offer the best yields. (Keep in mind that these are flexible rates, so they change all the time.) Both Wells Fargo and Bank of America offer money management software, and get good ratings for their websites. If you don't want to arrange a direct deposit or keep a big balance in your checking account, consider Bank of America, which has the most flexible options overall.