Online banks offer a number of benefits over traditional banks, including lower fees, access to low-APR loans and more options than ever before. In addition, they offer 24/7 access from your laptop or smartphone.
Never used an online bank before? We’ve created a quick guide to help you compare online banking options and choose the one that fits your needs.
Types of Accounts
Most online banks feature three main types of accounts. Make a list of your must-haves and consider the following categories before you commit to a particular bank.
Checking accounts are the most basic type of bank accounts. When you open a checking account, your bank will issue you a debit card for making purchases. Checking accounts typically don’t build interest.
Online checking accounts also offer instant access to all the money you deposit and often don’t have minimum account balances. You only need to have enough money in your account to cover your purchases, but if you spend more money than you have, you overdraft on your account.
Savings accounts build interest on the money you deposit and may require you to have a minimum balance. However, unlike checking accounts, savings accounts don’t offer day-to-day access to your money.
There may be a limit on the number of times you can deposit or withdraw money each month. Some online banks only offer checking accounts.
Investment accounts use the money you deposit to buy stocks, bonds and funds. Investment accounts build value faster than savings accounts, but you may not have complete access to your money. For example, if you open an individual retirement account (IRA), you can only withdraw your money under very specific circumstances.
You may also have limitations on the amount of money that you can contribute. MoneyLion offers managed investing accounts with no minimum investment.
Loan and Credit Products
Similar to a traditional bank, online banks offer more than just accounts. Here are some other common products offered online banks may offer.
Do you occasionally find yourself a bit short on cash? Cash advances give you access to some money to cover your expenses. MoneyLion’s 0% APR $250 cash advances save you from having to get an expensive and predatory payday advance loan or take a hit on your credit.
Credit builder loans
One of the best ways to build your credit score is by taking out a low-interest loan and making regular, on-time payments.
Credit builder loans like the loan offered by MoneyLion are low-interest personal loans you can use to start boosting your credit.
Credit score monitoring
Did you know that you don’t need to pay to see your credit score? MoneyLion’s app allows you to view and monitor your credit score without buying an expensive subscription.
You can monitor your credit score, payment history, age of credit, credit utilization rate, credit inquiries, loans, debt and more.
Credit report pulls
Your credit report is different than your credit score. Each of your three credit reports list all of your credit activity, including lines of credit you have open and accounts you’ve paid off.
Viewing your credit report once a year is one of the best ways to fight against identity theft and fraud. Online banks may offer access to your credit report for an additional fee. You can also purchase a full credit report from TransUnion and Equifax through MoneyLion.
Other Special Features
Online banks have more freedom to offer extra products and services, and MoneyLion offers even more.
Check out a few of these special options, including personal financial management tools: spending/budgeting trackers, free personalized advice, curated loan offers from other partners and rewards for referrals to friends and family.
Here are a few more.
Because online banks are entirely online, they can approve requests faster than traditional banks. Online banks may even offer instant approvals.
This can be important if you need a cash advance or loan to cover a bill and you don’t have days or even weeks to wait for underwriting.
Cashback and rewards
Traditional banks rarely offer rewards for checking account holders. However, a new wave of online banking bucks the old model and introduces rewards for debit card users. From cashback on purchases to gift cards, online banks can offer you exclusive rewards.
When you choose MoneyLion, you enjoy instant approvals for cash advances and loans. You’ll see money deposited into your account with the click of a button.
Account Minimums and Fees
You may not realize just how many fees traditional banks charge — and how much you can save by switching to an online bank.
Some of the most common fees charged by traditional banks include:
- Monthly service fees: Fees you pay to maintain your account.
- Monthly account minimum fee: If you have less than the required minimum in your account at the end of the month, your bank might charge you.
- Inactivity fees: If you don’t make a certain number of transactions on your account each month, your bank might charge you an inactivity fee.
- Overdraft fees: If you overdraft on your account, your bank might automatically charge you a fee of up to $35.
- Loan request fees: Traditional lenders often charge fees when you request a loan or cash advance.
- Credit check fee: Some banks charge you to view your credit score.
One of the biggest benefits of choosing an online bank is lower account minimums and fees. Online banks don’t need to spend money maintaining their physical branches, so they can pass those savings on to you.
The best online banks don’t have account minimums and they don’t have the fees that traditional banks often do.
MoneyLion has eliminated the hidden fees and minimums charged by both online and traditional banks. There’s no minimum deposit required to open an account with MoneyLion, and you don’t need to maintain any amount of money in your RoarMoney account.
Mobile and Web Experience
Online banks spend time perfecting their web and online experience. Most online banks allow users to check their account balances and request services through both an online platform and a mobile app. However, not every online bank offers both Android- and Apple-compatible apps.
Before you commit to a certain online bank, make sure it has a platform that’s compatible with your device of choice.
Whether you bank from your desktop or prefer the convenience of an app, MoneyLion has a solution for you. You can download the MoneyLion app from either the Google Play or Apple App stores. All MoneyLion platforms offer a clean user experience with simple layouts that anyone can master.
Number of ATMs
Online banks don’t have branches like traditional banks, so a large ATM network is especially important. Plenty of fee-free ATMs allow you to deposit and withdraw cash from your account as well as check your balances on the go.
Most online banks have partnerships with physical banks or their own line of free ATMs. The average online bank has up to 43,000 ATMs that you can take advantage of. Traditional banks, on the other hand, usually only offer free service on their own line of in-network ATMs. The average traditional bank has about 16,000 fee-free ATMs.
MoneyLion account holders have access to over 55,000 ATMs worldwide. MoneyLion also doesn’t charge you to use them, which can be a huge money-saver.
A reliable customer service team is crucial for an online bank. Because you can’t walk into a branch and request service, these digital services put extra emphasis on providing fast online responses.
Your online bank might provide support over email, via a customer service phone number or through an internal help desk system. When you search for an online bank, look for one that has a robust FAQ and quick tools to help you access a representative quickly.
MoneyLion offers an online service desk and in-app chatbot when you need it. When you fill out a help request, you’ll likely have an answer in your inbox within 24 hours. You can also contact MoneyLion’s customer service team.
Many consumers worry that they might lose their money when they use an online bank. This actually isn’t the case. Online bank accounts have insurance from the Federal Deposit Insurance Corporation (FDIC), just like traditional banks. FDIC insurance protects and insures your money up to $250,000.
The FDIC will reimburse you for anything lost — exactly like a traditional bank. Online banks also use enhanced security methods to keep your money safer, like encryption and two-factor authentication.
MoneyLion checking accounts have insurance up to $250,000, and MoneyLion uses the latest in online security methods to keep your money and data out of hackers’ hands.
Pick the Right Bank for You
When you choose an online bank, think carefully about what you need. Look for a bank that offers low fees, no account minimums and extra rewards. Make sure the bank you choose is FDIC insured and offers more than one method for contacting customer service. Your money is worth protecting — make sure you’re putting it in good hands!
Download MoneyLion’s app to open your account and take advantage of everything MoneyLion has to offer.