The Top 3 Digital Banks in 2019
Most of us have gone through life using a local bank that friends and family members have used. Typically the only factor we put much thought into is how ideally located the bank is from work and home. While you may partake in mobile banking through your bank’s website or mobile app, chances are that you know very little about digital banks.
Welcome to 2019, where banks are running entirely over the internet! That’s right, there are banks that operate without a physical location. Interested in learning more? Want to know which online banks are top rated? We’ve got the inside scoop for you below.
What is a Digital Bank
As mentioned above, a digital bank is one that runs entirely online. These banks are also known as online-only banks. Without a physical branch location, you may be wondering how this type of banking works. In reality, it’s quite simple.
Digital banks function in the same way as traditional banks do. With traditional banks moving to the online world, odds are you already partake in digital banking. Do you check your account balances using a mobile app? Have you ever transferred funds using your bank’s website?
Using an online bank is no different than what you already do. The big difference is that everything is done online. From loan applications to opening new accounts to transferring funds, all financial activities are completed through the web. You can even deposit checks!
The Benefits of a Digital Bank
One of the biggest benefits of a digital bank is the high-interest rates that they’re able to offer on checking, savings, and CD accounts. Because online banks don’t have a brick and mortar location to maintain, the overhead expenses are much lower. In turn, account holders are able to reap the benefits of low overhead with high APYs. For instance, many digital banks offer APYs that are 10 times higher than the national average.
But what does a high APY mean for you? It means more money. The higher the interest rate you have on an account, the more growth you’ll see from the funds that you’re putting away each month.
Another perk of a digital bank is low loan interest rates. Have you ever applied for a personal loan only to be approved for a double-digit interest rate? Talk about highway robbery! Again because of the low overhead costs, digital banks are able to offer more reasonable loan rates. This saves you money now and in the long run.
If you’re considering opening an account through an online bank, you don’t want to willy-nilly choose a financial institution. Here are the top 3 digital banks of 2019.
1. Ally Bank
Ally Bank is your all-in-one online bank. It offers low fees, high-interest rates, and customer service that won’t make you miss talking to a bank representative in person. Ally Bank offers a wide variety of account types including checking, savings, CD, money market, and IRA accounts. You can also get loans through Ally Bank including auto loans, mortgages, and even credit cards. This digital bank is a 100% full-service financial institution.
What’s unique about Ally Bank is that they offer perks for many of their account offerings. For example, the checking account has no monthly fees, and a high-interest rate (0.60%) if you maintain a minimum $15,000 balance. This account also offers a $10 per statement cycle rebate for fees.
Like other digital banks, Ally is also known for its high-yield savings account. This account has no monthly maintenance fees or a minimum balance requirement. It also pays an APY that is 20 times the national average and includes daily compounded interest.
2. CIT Bank
CIT Bank is a company that you can trust to help you along your financial journey. In fact, it was ranked one of the Top 10 Best Online Banks of 2018 by GOBankingRates.
The bank is proud to be a top 50 U.S. bank that serves to empower people through their savings and business. CIT Bank serves personal, business, and commercial financial needs, so you can all but ensure that they have the right solution for you. Most importantly, CIT Bank is FDIC insured.
CIT Bank is most well-known for its Savings Builder account. This is an extremely high-yield savings account that offers up to a 2.45% APY. To open one of these accounts you must:
- Complete an account application
- Deposit $100 up front
- Deposit $100 each month or maintain a $25k balance
Another available solution is certificates of deposit (CD). CIT Bank CD’s also offer a rate, up to 2.50%. The bank offers several different CDs including term, jumbo, and a no-penalty 11-month CD.
Aside from banking solutions CIT Bank also offers home mortgage loans. You can learn more information about the bank by reading recent CITBank reviews.
3. Discover Bank
Discover Bank offers a variety of online banking products including checking, savings, money market, and CD accounts. You can also open an IRA account through this bank. No matter if you’re saving for retirement or looking for a way to grow your savings account, you can find a solid solution at Discover Bank.
Discover Bank’s savings account was named one of NerdWallet’s Best Savings Accounts for 2018. There’s no monthly fee or a minimum opening deposit associated with this account. It also offers a 2.10% APY and even offers daily interest compounded. Discover even offers first fee forgiveness, which means your first account fee will be waived.
As an added bonus, Discover has a huge network of ATMs. In fact, you can withdraw your funds from one of the more than 60,000 free ATMs across the U.S.
Digital banks are the future of banking. If you’re looking for a way to grow your money while also enjoying the convenience of online and mobile banking, now is a great time to consider the switch to a digital bank.