The Best Online Checking Accounts for February 2020

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice, and in 2017 he received the SABEW Best in Business Award.

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Online banking has really come into its own, not least because the lack of brick-and-mortar branches saves on costs and lifts rates for customers. Clever and prudent online banks can compete not only on rates, but services as well, edging past their more traditional competitors.

Rates as of Feb. 13, 2020
Offer APY Best For Next Steps
APY: Up to 1.25% Best For: High APY and unlimited ATMs
APY: 0% Best For: Cash back on $3,000 of spend monthly
Chime Member, FDIC
APY: 0.01% Best For: Early direct deposit and online check payments
APY: Up to 0.50% Best For: No monthly maintenances fees
Simple Member, FDIC
APY: Up to 1.90% Best For: Budgeting tools
APY: 0.45% Best For: High APY and monthly ATM reimbursement
APY: 0.15% Best For: No foreign transaction fees
APY: 1.00% Best For: High APY and no ATM fee's
APY: 0.76% Best For: High APY
APY: 0.20% Best For: APY and low to no fees
APY: 1.01% (intro rate) Best For: High intro APY and ATM fee reimbursement
Axos Bank Rewards Checking -- Up to 1.25%
Good for: High APY and unlimited ATMs Logo for Axos Bank Rewards Checking

The refreshing lack of monthly maintenance fees and no minimum balance requirement make this account a winner. You can also earn a high APY when meeting two conditions:

1.) Make deposits at least once per month totaling $1,000 or more into the account

2.) Use a linked Visa debit card at least 15 times per month, for at least $3 per transaction.

Other advantages are the unlimited domestic ATM reimbursements, overdraft protection, and online bill pay.

Read our full review to learn more.

Discover Cash Back Debit -- 0%
Good for: Cash back on $3,000 of spend monthly Logo for Discover Cash Back Debit

It’s common for credit cards to offer a cash back feature, not so much for traditional checking accounts. Discover Cashback Debit earns 1% on each and every debit card transaction, for up to $3,000 in spending every month. This account also has a long list of $0 fees. For example, Discover won’t charge a dime for monthly maintenance, bill pay through its system, a replacement debit card, outbound ACH fees, and a raft of other activities. Account owners also have access to their cash at more than 60,000 ATMs throughout the U.S.

Read our full review to learn more.

ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal™, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.

Chime -- 0.01%
Good for: Early direct deposit and online check payments Logo for Chime

Chime goes largely without fees, and offers the uniquely termed “spending account.” Chime may bring the most value for people wanting to build up their savings, as you can round up every debit card purchase to the nearest dollar as a deposit to your savings account. Another valuable feature is early direct deposit, which allows account holders to access funds from two days earlier than a standard check deposit.

Read our full review to learn more.

Ally Interest Checking -- Up to 0.50%
Good for: No monthly maintenances fees Logo for Ally Interest Checking

Online-only lender Ally offers a high APY on its Interest Checking account for those who can maintain a $15,000 minimum daily balance. Ally also offers your wallet some reprieve by not charging monthly maintenance fees or for checks.

Read our full review to learn more.

Simple -- Up to 1.90%
Good for: Budgeting tools Logo for Simple

Simple blends the best of checking and savings accounts to offer something quite unique. Its high APY is better than what many savings accounts offer, plus there's no restrictions on transfers or withdrawals. But what really sets it apart are its budgeting tools and envelope-style savings goal system that can help you reach your financial dreams more quickly. There are no monthly maintenance fees or minimum balance requirements, but you do need at least $10,000 in your account to earn the highest APY.

Read our full review to learn more.

Alliant High Rate Checking -- 0.45%
Good for: High APY and monthly ATM reimbursement Logo for Alliant High Rate Checking

Alliant’s marquee checking account kicks back at a decent rate. The bank’s competitive APY is returned in what it calls its “monthly dividend” and the requirements are extremely modest -- a customer need only opt into e-statements for their account, and have one direct deposit made every month. There is no monthly service fee or minimum balance requirement, and the bank will reimburse up to $20 per month in out-of-network ATM fees incurred by its clients on top of its network of 80,000 surcharge-free ATMs customer can use.

Read our full review to learn more.

Charles Schwab High Yield Investor Checking -- 0.15%
Good for: No foreign transaction fees Logo for Charles Schwab High Yield Investor Checking

The feature-packed Schwab High Yield Investor Checking's are its lack of fees. There are no service fees, and there is no minimum required balance. Customers using their account’s Visa Platinum debit card have their ATM fees fully refunded, even those incurred abroad. Speaking of that, Schwab High Yield Investor Checking incurs no foreign transaction fees on debit card purchases.

Read our full review to learn more.

Aspiration Spend & Save -- 1.00%
Good for: High APY and no ATM fee's Logo for Aspiration Spend & Save

Another high yielder is Aspiration Summit’s checking account, which offers a high APY for qualifying balances. This is a rather set-it-and-forget-it account, with no minimum monthly deposit or balance, no monthly service fees, and a minimum opening deposit of only $10. The biggest perk may be that there are no ATM fees, both domestic and abroad. That’s rare among our top picks.

Read our full review to learn more.

Bank5 Connect Checking -- 0.76%
Good for: High APY Logo for Bank5 Connect Checking

Bank5 Connect’s key checking account advertises its big attraction in its title. The account clocks in one of the highest APYs we’ve seen in this space on balances over $100 (minimum deposit to open an account is just $10). The numerous other advantages of the Bank5 Connect High-Interest Checking account include a $0 monthly maintenance fee and counterparty bank ATM fee reimbursements for up to $15 per statement cycle.

Read our full review to learn more.

Capital One 360 Checking -- 0.20%
Good for: APY and low to no fees Logo for Capital One 360 Checking

Capital One emphasizes the words “Fee-free” in its literature and for good reason. Very few activities with this account incur a fee (exceptions are overdraft on credit, overnight check or replacement card delivery, stop payments, and bounced checks). The goose eggs also include $0 minimums to open and/or maintain the account and this continued fee free theme makes up for the competitively lower APY.

Read our full review to learn more.

TIAA Bank Yield Pledge® Checking -- 1.01% (intro rate)
Good for: High intro APY and ATM fee reimbursement Logo for TIAA Bank Yield Pledge® Checking

TIAA Bank offers a very generous one-year introductory APY on qualifying balances. The account doesn’t turn into a pumpkin after that year is up; the bank promises to keep it in the top 5% of what it terms “Competitive Accounts” for as long as a customer maintains it. There are also unlimited ATM fee reimbursements as long as the customer keeps at least $5,000 (also the minimum opening deposit required) in the account.

Read our full review to learn more.

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If you're new to the world of checking accounts, this is a good overview of how checking accounts work in the age of technology. From understanding interest and fees to the difference between online and traditional checking accounts, this guide will help you make the right banking decisions for you.

What is a checking account?

The checking account is essentially a basic bank account for spending. This contrasts with a savings account, which is intended for -- yes -- saving. In the old days, when checks were a primary payment method for Americans, this was the type of account that was most easily utilized for purchases.

That isn’t necessarily the case anymore, but those little paper checks are still the foundation of the checking account. Remember, though, that this is a spending account so there are numerous other ways to use the funds from it. Most checking accounts come with a debit card, for example, and account holders can also take advantage of online bill pay services.

Do checking accounts pay interest?

Out of the standard bank account types, the checking account is the most flexible in terms of spending. In contrast to savings accounts, checking accounts have few if any restrictions -- spend as much as you like, as often as you want, if you’ve got the funds to cover it.

What you gain in flexibility, however, you lose in earnings potential. In contrast to fellow banking products like money market accounts and certificates of deposit (CDs), checking accounts very often don’t earn interest -- or, at best, they earn at extremely thin interest rates.

This is particularly true of traditional banks with brick-and-mortar operations. Keeping branches open is expensive and resource-draining, and the prevalence and ubiquity of checking accounts make them a prime target for cost cutting.

There are, of course, exceptions to this no-interest standard. Interest-bearing checking accounts exist, but they tend to have relatively high opening and/or minimum ongoing balance requirements. The effort it takes to hit those marks, plus the funds they tie down, often don’t make them worthwhile for many customers.

Online-only banks, since they don’t bear those brick-and-mortar costs, have a little more wiggle room to pay out for accounts. It’s not unusual to see offers from them for interest-bearing checking accounts. Yet we’re still in a low-rate environment; these rates might be higher than 0%, but they’re still rather minimal.

Checking account fees

Checking accounts are wonderfully convenient. You pay for this, though, and not only with razor-thin or non-existent interest rates. Checking accounts are known for the numerous fees banks impose for maintaining them.

There are a host of these charges; what follows are three of the more common ones.

Monthly maintenance fee (also known as the service charge, among other names) -- This is the most prevalent type of recurring checking account charge. It tends to range from $5 to $15 or so but can vary widely.

Fortunately, banks often waive this charge if a customer meets a certain standard or standards. These can include a minimum number of transactions on the account’s debit card, the establishment of a recurring direct deposit from an employer, or meeting a minimum ongoing balance amount.

Overdraft fee -- This classic charge has been a staple of the checking account for many years. Should you spend more money than what you’ve got in the account, you’ll be slapped with an overdraft fee. $35 per incident is roughly the going rate. Banks don’t typically waive overdraft fees.

ATM fee -- Here’s one to be careful about when using the payment card linked to your checking account. Banks like to charge ATM fees if you draw funds from cash machines that aren’t theirs; a standard hit is $2 or $3 per transaction, but these can be much higher in certain locations.

Meanwhile, that outside entity from whose ATM you’re drawing money will also charge you, as a non-customer using their facilities. So you might end up paying two ATM fees for the same transaction -- one from your own bank, and one from the company that owns the ATM.

These fees can be tough to waive but easy to avoid -- simply discipline yourself to only drawing money from your bank’s ATM. Alternatively, choose a checking account from a bank that either doesn’t charge such fees, or reimburses them (online-only banks are known for this).

Types of checking accounts

One nice facet of checking accounts is that they’re fairly simple to understand. The waters get a bit muddy with the adjectives banks like to put in front of some of them. Ultimately, however, their core functionality as a spending facility is the common glue clumping them together.

Bearing that in mind, here are brief descriptions of some of these types:

Joint checking -- An account shared by two or more people, all of whom have the same access and privileges. This usually functions as a family account, as quite often the holders are married or in some form of domestic union.

Student checking -- As it says on the label, this form of checking account is designed for students. The exact features depend on the bank; many student checking accounts give their holders breaks on fees and balance requirements, in addition to other perks useful to their target audience (which often is quite cash-strapped).

Express checking -- An Express checking account is aimed at keeping you out of the bank’s branches. It tends to charge lower (or even no) monthly maintenance fees and imposes comparatively modest balance requirements… as long as you conduct your account business online, via ATM, or phone. Stopping by the bank to get help from a teller generates a fee.

Second chance checking -- Once you get out of the system, it’s hard to get back in. People who have had their bank accounts terminated due to their bad finance habits -- such as excessive check bouncing -- struggle to find lenders willing to take a new chance on them.

Fortunately, the second chance account exists to help them get back on their financial feet. This facility features very low fees and balance requirements. If managed well for quite some time, the customer will likely get the chance to open less restrictive types of accounts.

Advantages of checking accounts

There are plenty of reasons why a checking account is the go-to banking financial instrument of the American public, despite its disadvantages (like the aforementioned fees, and 0% interest). Here are just a handful of them:

Liquidity -- This is a financial term that basically means “ease of accessing and utilizing assets.” With the numerous ways you can deploy funds from a checking account, it’s extremely liquid for spending. On the credit side of the ledger, thanks to instruments like direct deposit, it can be quite fast in receiving money too.

Flexibility -- Checking accounts have few, and often no, restrictions on spending. If you put your funds in a savings account instead, you’d be limited to a handful of withdrawals every month. If that money’s in a CD you’d be penalized for taking money out of it. Also, checking accounts typically provide different ways to transact -- checks, debit card, online banking, mobile wallets, etc.

Protection -- All checking accounts up to $250,000 in deposits are fully insured by the FDIC, so in the unlikely event your bank melts down you won’t lose one cent of your money. Also, consumer fraud protection services are now standard and free of charge in a great many checking accounts at both nationwide and local banks.

The checking account vs. other bank products

With the seemingly endless expansion of the financial sector, a host of bank financial products have made their way to your local lender over the decades. These days, there are plenty of different places to park your hard-earned funds.

Let’s take a quick look at three of them -- the aforementioned savings accounts and CDs, plus a sort of checking/savings hybrid called the money market account. We’ll explore the advantages the trio have over checking accounts, plus a few disadvantages.

Account type Key advantages Key disadvantages
Savings Generally, higher interest; better instrument for saving Strict restrictions on fund disbursement; oftentimes, fewer payment methods
CD Some of the best interest rates among standard account types; good choice of terms (typically from one month up to five years); solid wait-and-profit option Penalties for withdrawing funds before contracted term; commitment to tie up all funds for the term
Money market Higher interest; nearly as flexible as checking account while more so than savings or CD Possible “unhappy medium” for some customers; current interest rates not compellingly higher than 0%

Considering the pluses and minuses, it’s a smart move to divide your money among two or even more of these account types -- some checking accounts even give you the option of opening a savings account at the same institution, at the same time.

Are online-only checking accounts better?

Online-only banks have become popular options in the last few years, and it’s hardly a surprise. Some of what they save on brick-and-mortar operations gets redirected back to the consumer in the form of higher interest rates and/or lower fees.

That would seem to indicate online banks are better. Why bother going to a traditional lender if you can save and earn more with an e-rival? But it’s not so simple -- there are advantages and drawbacks to both:

Checking account type Key advantages Key disadvantages
Online-only Lower fees; many pay interest; easier compatibility with budgeting/tax software (Intuit, TurboTax, etc.), No face-to-face consultation with banker in case of problems or special requests; documents requiring signature must be sent through the mail; harder to deposit checks and cash
Traditional Easier to deposit funds; more personal customer service; wide ATM and branch networks in the case of big regional and nationwide banking groups Higher fees; lower (or non-existent) interest; online banking might not integrate well with latest finance software

So neither type of lender is the clear “best.” It comes down to your personal requirements, basically the level of direct contact -- and convenience -- you’ll want and need with your bank.

Is a checking account right for you?

I would say that a checking account is right for nearly everyone who earns a wage, however erratic, and has expenses -- in other words, the vast majority of us. There’s a reason that nearly 100% of “banked” households maintain this type of account.

Although modern technology has brought much innovation in the world of finance, the checking account remains the anchor spending facility of our age. It’s hard to beat its convenience and flexibility; if you’re diligent and disciplined, you might even be able to take advantage of one that pays a sliver of interest.

That said, the checking account should also be paired with a product that allows you to profit from the money you’re able to save (assuming you’re in a saving situation, that is). Again, the classic combination is a checking and savings account. Those with considerable savings they can deploy for some time might consider higher-yielding instruments, such as a CD, instead.

Offer APY Best For
Axos Bank Rewards Checking Up to 1.25% High APY and unlimited ATMs
Discover Cash Back Debit 0% Cash back on $3,000 of spend monthly
Chime 0.01% Early direct deposit and online check payments
Ally Interest Checking Up to 0.50% No monthly maintenances fees
Simple Up to 1.90% Budgeting tools
Alliant High Rate Checking 0.45% High APY and monthly ATM reimbursement
Charles Schwab High Yield Investor Checking 0.15% No foreign transaction fees
Aspiration Spend & Save 1.00% High APY and no ATM fee's
Bank5 Connect Checking 0.76% High APY
Capital One 360 Checking 0.20% APY and low to no fees
TIAA Bank Yield Pledge® Checking 1.01% (intro rate) High intro APY and ATM fee reimbursement

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