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If you want to save money on fees or earn higher interest rates from your financial institution, online banks often outshine traditional brick-and-mortar banking solutions. Yet, in light of recent bank failures and general economic uncertainty, it’s understandable that some banking customers might have concerns about where they keep their money. In fact, some depositors may wonder whether online banks are safe.

The good news is that online banks are just as safe as traditional banks as long as they are insured by the FDIC. Here’s how you can make sure you’re working with a reputable bank, along with some tips on how to choose the best online bank for your situation.

Recommended Online Bank Accounts

CIT Bank Savings Connect Account

Open Account

Member FDIC.

  • Our Rating 4.5/5 How our ratings work Read the review
  • APY4.60% More Info

    Annual Percentage Yield is accurate as of May 9, 2023. Interest rates for the Savings Connect account are variable and subject to change at any time without notice.

  • Minimum
    Deposit Required
  • Intro Bonus N/A

CIT Bank's Savings Connect account is one of our top picks for high-yield savings accounts. Featuring a competitive flat APY on all balances, it can go head-to-head with most of the top savings accounts available. What's more, you don't have to do anything special to earn this high interest rate; many similar accounts (including some offered by CIT) only offer their highest interest rates to customers who complete certain requirements.


With extremely competitive interest rates and a host of convenient features, the CIT Bank Savings Connect account can go head-to-head with nearly any other savings account in the U.S.


  • Competitive APY
  • No monthly service fee
  • Free electronic bank transfers to checking accounts (even if it isn't a CIT checking account)


  • No fee-free ATM network
  • Minimum opening deposit required

Axos Rewards Checking Account

Open Account

at Axos

  • Our Rating 5/5 How our ratings work Read the review
  • APYUp to 3.30% More Info

    Earn up to 3.30% APY for completing qualifying activities.

  • Minimum
    Deposit Required
  • Intro Bonus $100Expires June 30, 2023 More Info

    Use the promo code RC100 when you apply for a Rewards Checking account by 6/30/2023. Then have qualifying direct deposit(s) to earn a $100 welcome bonus!

Axos Bank Rewards Checking gives customers the chance to earn up to a 3.30% APY on their deposits with no monthly fees. These are all terrific features for a checking account, but Axos is digital-only, so if you deal with cash regularly it’s probably not the best fit for you.


While it takes a bit of work to unlock the maximum interest rate, Axos Rewards Checking customers can potentially earn an impressive 3.30% APY. This account also does not include any monthly fees.


  • Strong APY compared to similar accounts
  • No monthly maintenance fee or monthly minimum balance
  • No overdraft or non-sufficient fund fees
  • Unlimited domestic ATM fee reimbursements


  • Minimum deposit required for account opening
  • Several qualifying activities required to earn maximum interest
  • No physical branch locations

What Is an Online Bank?

mobile deposit


An online bank is a financial institution that does not have any physical branches its customers can visit. Instead, the bank provides its customers with services via the internet. As a customer, you typically manage your accounts and the cash you deposit and withdraw from an online bank through your phone, tablet, or computer.

You can generally access cash through ATMs as well, either for free or for a fee, depending on the terms of your account. And just like traditional bank accounts, you may be able to access the money in your bank account via a debit card or checks, based on the type of deposit account you open.

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How Online Banks Keep Your Money and Information Safe

Individual financial institutions may take different approaches when it comes to keeping your money and information safe. So, if you’re shopping for a new online bank, keep an eye out for those that take adequate safety measures, such as the following.

FDIC Insurance

No matter what type of bank account you open, it’s important to make sure your financial institution is a member of the Federal Deposit Insurance Corporation (FDIC). FDIC deposit insurance ensures that your deposits are protected for up to at least $250,000 (per ownership category) in case of bank failure.

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Multi-Factor Authentication

Another way your bank can keep you safe is by implementing a login process that requires at least two-factor authentication. A multi-step login process may require you to enter a password and a security code or PIN to log in to your account, making it harder for hackers to access your bank account without your knowledge.


No matter what type of bank or credit union you use, data breaches and identity theft are more common threats than they were in years past. More than 422 million Americans were the victims of data compromises in 2022 alone, according to the Identity Theft Resource Center.

While you can’t keep your personal and financial information totally safe from people with bad intentions, it is wise to choose a financial institution that does everything in its power to protect you. One way to accomplish this goal is to choose a bank that uses at least 256-bit Advanced Encryption Standard (AES) to secure your information.

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Benefits of Online Banks

sitting down and using a device


Depending on your banking needs and preferences, online banks have numerous benefits. Here are some of the top perks that online banks may offer.

Lower Fees

Online banks don’t have the same overhead costs as traditional financial institutions. Therefore, they’re able to pass along some of that savings to their customers. Online banks often charge low fees (or no fees) for deposit accounts. If landing a free checking account or another type of deposit account with no bank fees matters to you, online banks may be one of the first places you want to look.

Higher APYs

Another common perk of online banks is that their accounts frequently feature higher annual percentage yields (APYs). If you’re looking to earn more interest on your savings, you may be able to find some of the best high-yield savings account rates, best CD rates, best money market account rates, and more with online banks.


Many online banks have highly rated mobile apps that make it easy to deposit checks, transfer funds, manage your cash, and send money to others 24/7. The ability to handle all of your banking needs with a few swipes on your smartphone can be far less time-consuming than a visit to your local bank branch.

How to Choose an Online Bank

Unless you’re someone who needs to make frequent cash deposits or you prefer an in-person banking experience, an online bank could be a great fit for you. Here’s how to find the best online bank if you decide you’re ready to open a new account.

Know Your Priorities

Everyone should look for a financial institution with core benefits like FDIC insurance and adequate security. However, different banks offer different services and perks, and some might matter more to you than others. For example, if a free or low-cost checking account appeals to you, focus on searching for online bank accounts that offer these advantages. On the other hand, you might prefer an online bank with the highest rates available, a generous bank bonus for new customers, or a robust ATM network.

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Customer Service

You’ll complete many of your online banking transactions via a mobile app or your computer. But there are times when you may need to speak to a live person. So, it’s wise to check out the customer service options an online bank offers, and the times that speaking to a live representative is an option—either via phone, chat, or both, depending on your preferences. You may also want to check out the bank’s reputation and how current and former customers feel about the customer service they receive from their financial institution.

Take the time to do your research before you choose an online bank. It may require a little work on the front end, but you’ll be happier with your choice in the long run if you feel confident that you selected one of the best online banks available for your financial needs.

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Michelle Lambright Black

Michelle Black is founder of and Michelle is a leading credit card journalist with over a decade and a half of experience in the financial industry. She’s an expert on credit reporting, credit scoring, identity theft, budgeting, small business, and debt eradication. Michelle is also a certified credit expert witness and personal finance writer.