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If you’re considering trying an online bank, there’s no reason not to give one a shot. Reputable online banks are safe and FDIC-insured just as traditional banks are, and the top online banks have no fees or minimum deposit requirements.
Here are five of the top benefits of online banking.
1. You can do your banking from home
Online banks make it easy to open an account online, and you can even transfer money from another account to get your new account started. Information you’ll need to open an online checking or savings account includes your name, residential address, Social Security number, birthday and a bank account number you can use to make your initial deposit or transfer (see Bankrate’s checklist for documents needed to open an account).
If you’re considering an online bank online bank, getting started is simple. Compare online checking accounts and savings accounts based on their interest rates, features and fees. Once you find a bank that suits your needs, you can apply online and open your new account in a matter of minutes.
Many online banks provide the same type of loans you can find at a brick-and-mortar bank — home equity loans, personal loans and auto loans, for example. If you need to borrow money, you can compare banks online and apply for a loan from the comfort of your home.
2. You will earn more interest
The main reason to consider an online bank is the interest you’ll earn. While most big banks offer yields around 0.01 percent, online banks typically pay yields that are much higher. For example, Marcus by Goldman Sachs pays 0.5 percent APY on its savings account. The account charges no fees and doesn’t have a minimum deposit or balance requirement. Marcus also offers a no-penalty high-yield CD that pays 0.55 percent APY for 7, 11 or 13 months.
There are a number of online banks paying up to 0.6 percent APY on their savings accounts, so be sure to compare high-yield savings accounts to find the right online bank account for you.
3. Some online banks pay higher rates for regular contributions
Some online banks will even offer higher returns if you contribute regularly or maintain a minimum amount on deposit. The CIT Bank Savings Builder account is a good example. It pays 0.4 percent APY for customers who keep $25,000 in their account or deposit at least $100 per month. There are no fees on this savings account.
4. Sign-up bonuses can entice you to save more
Some online bank accounts will even pay you to sign up — well, in a way. With a bank account sign-up bonus, you can normally earn $150 to $400 just for opening a checking or savings account and meeting a minimum deposit requirement or setting up automatic direct deposit.
Keep in mind, however, that bank accounts that offer sign-up bonuses rarely offer the most interest on your deposits. You can use them to earn a big bonus, but they may not work best over the long run.
5. Mobile and online banking makes managing your money a breeze
Imagine moving money from your checking and savings accounts to your emergency fund without ever leaving your home. That’s the reality these days thanks to online and mobile banking features like mobile deposit and ACH transfers. Most reputable online banks don’t even charge any fees for transfers each month.
Banks with mobile apps also make staying in touch with your money the easiest thing ever. Depending on your bank, you may gain access to features like mobile check deposit, banking and deposit alerts, savings and debt repayment tools, automatic payments and ATM locators. The most savvy mobile banks also let you track your spending on your smartphone, or the rewards you earn when you use a cash-back or rewards credit card that’s attached to your account.