I ditched my brick-and-mortar bank years ago for a higher yielding online savings account. A few years ago, I moved my checking online too. I still kept a checking account open that wasn’t online because of the issue with mailing in checks. But with online banks now accepting mobile deposits, there is no need.
While you cannot earn the interest rates online that you could 10 years ago, the benefits to online banking (in most cases, absolutely free) are still a perfect reason to switch. If you are unsure, do as I did and “dip your toes in”. Once you see how great it is, you can jump in all the way.
Before I get into the various online banking options, I need to take minute to talk to you about budgeting. I know, budgeting isn’t sexy. But, it is all about your outlook. Most people that hate budgeting look at a budget in terms of restricting spending. Learn to look at it as a tool to help improve your finances. If you can do this, you an enjoy budgeting and dare I say, look forward to it.
Thanks to technology, there are various options for you when it comes to budgeting:
- If you like a manual approach, here are 9 free spreadsheet budget templates to try out.
- If you want a more automated approach, look into Power Wallet. It’s a great free option to try.
- If you want an in-depth automated approach to budgeting, you have to try You Need A Budget.
Now we get to online banking. Below are a few options to consider, each having their own benefits. Take the time to make sure you choose the online banking option that makes the most sense for your needs.
Capital One 360: This is formerly ING Direct. You might find articles online about how Capital One was going to destroy ING, but so far that hasn’t happened. In fact, they have made the bank even better. I was one of those that was cautious of the potential issues with the switch, but it’s been over a year now without any issues.
If things do change, I will be sure to update you. To get a full analysis, read my Capital One 360 review. If this bank sounds like an option for you, be sure to sign up here to get a referral bonus when you open your account.
Elements Financial: This used to be called Eli Lilly Credit Union. It’s still the same company, just a new name. I use them for my HSA account. They do charge a $3/month if you have less than $2,500 in the account. The great thing though is that they pay 1.00% interest right now. They also partner up with TD Ameritrade for investing your HSA money.
With most investment options of HSA accounts charging fees, the only one here is a $24 wire fee. So if you only make one large investment a year, you come ahead because other online banks charge $5 a monthly or more for the investment option. You can click here to learn more/sign up.
If you would like, you can contact me and I can personally refer you as well. (Note that if I refer you, I will get a commission from Elements. If you just click the link above to sign up, I will not receive a commission. There is not difference for you regardless of which way you sign up.)
Ally Bank: I use them for my business accounting. I wanted to keep my personal accounts and business account separate, so after some research, I ended up with Ally. They have been nothing but super. The interest rate on their savings account is currently higher than Capital One 360. Transfers are super easy. The site layout is great. Really, I have nothing bad to say about them.
Digit: This isn’t really a bank, but it goes along with the theme and I absolutely love it. So what is Digit. It’s a free service that analyzes your bank account – both income and expenses – and transfers money automatically to a savings account every few days. On average, the service transfers around $5. In the time I’ve had it, it has saved me an additional $500! I can’t stop recommending it. You can read my full review here.
If you would rather shop around for the best rate, below is a table provided by Bankrate that will let you search for the best savings account for your needs. Note that this is a mix of both brick and mortar and online banking options.