The Top 10 Non-traditional online banks in the USA

as of October 2023.

woman with non-traditional online banking app

 

 

Below is the out list of the top ten online banks in the United States. We have created this list for those thinking of making the move to a non-traditional banking system. Read till the end to find out which bank took the number one spot and all its pros and cons.

10. Aspiration:

Aspiration offers a unique “Pay What Is Fair” fee structure, allowing users to choose how much they pay for banking services while emphasizing sustainability and social responsibility.

As with all financial institutions, there are pros and cons to consider when determining if Aspiration is the right choice for your banking needs. Below are some general pros and cons associated with Aspiration:

Pros

  • Eco-Friendly Focus: Aspiration offers features such as a “Plant Your Change” program, where purchases can be rounded up to the nearest dollar to plant trees. Their emphasis on sustainability is a big draw for eco-conscious consumers.

  • Pay What is Fair Fee Model: Customers can choose how much they want to pay in monthly fees, even if that amount is zero.
  • Charitable Giving: They make it easy for customers to donate to causes they care about.
  • No Overdraft Fees: Aspiration doesn’t charge overdraft fees, which can be beneficial for those who occasionally overdraw their account.
  • Cash Back Rewards: Some of Aspiration’s accounts offer cash back on certain purchases, particularly those made at businesses they define as socially responsible.
  • FDIC Insured: Like many online banks, Aspiration partners with other banks to hold deposits, ensuring they are FDIC insured up to applicable limits.

Cons

  • No Physical Branches: Being an online-only bank, there are no physical branches to visit. This can be limiting if you prefer in-person banking services.
  • Limited Product Offerings: Compared to major traditional banks, Aspiration may not offer a full suite of financial products, like certain types of loans or mortgages.
  • ATM Fees: While they reimburse some ATM fees, there may still be charges when using certain ATMs out of their network.
  • Deposit and Withdrawal Limitations: Like many online banks, there might be limits to how much you can deposit or withdraw in a given period.
  • Customer Service Concerns: Some users have reported issues with customer service response times and problem resolution. As with any service, customer experiences can vary.
  • Account Requirements: Some of Aspiration’s premium features might come with certain account balance or deposit requirements.

9. Green Dot Bank:

Green Dot offers prepaid debit cards and online banking services, with a focus on providing financial solutions to underserved communities. Green Dot has its advantages and disadvantages. Here are some of the general pros and cons of Green Dot Bank:

Pros

  • Widespread Availability: Green Dot prepaid cards are available at many retailers across the U.S., making them easily accessible.
  • No Overdraft Fees: Green Dot typically doesn’t allow overdrafts, so customers don’t have to worry about overdraft fees.
  • Mobile Banking: Green Dot offers a mobile app that provides features such as mobile check deposit, account management, and more.
  • Flexible Loading Options: Funds can be added via direct deposit, bank transfers, or by cash loading at various retail locations.
  • High-Yield Savings Account: Green Dot offers a high-yield savings account with an interest rate that can be competitive compared to other online banks.
  • No Minimum Balance Requirement: Many Green Dot accounts do not require a minimum balance, allowing users flexibility in managing their money.
  • FDIC-Insured: Deposits with Green Dot Bank are FDIC-insured up to the legal limit.

Cons

  • Fees: Green Dot can come with various fees, such as monthly maintenance fees, ATM withdrawal fees (outside of their network), and cash reload fees. It’s crucial to understand the fee structure to avoid unexpected charges.
  • No Physical Branches: As an online-centric bank, there are no physical branches, which might be inconvenient for those who prefer in-person banking.
  • Customer Service Complaints: Some users have reported difficulties in dealing with customer service or resolving issues.
  • Limitations on Services: Compared to larger, more traditional banks, Green Dot might not offer as comprehensive a range of financial products and services.
  • Holds on Deposits: Some users have reported longer than usual holds on check deposits.
  • Account Closure Concerns: There have been reports of accounts being closed or funds being frozen without clear communication from the bank, although this is a complaint not unique to Green Dot and can be found with many financial institutions.
  • Limited ATM Network: While Green Dot provides free ATM withdrawals within its network, the number of in-network ATMs might be limited in certain areas, leading to potential fees when using out-of-network machines.

8. Revolut:

While initially popular in Europe, Revolut expanded to the USA, offering a range of financial services, including international currency exchange, cryptocurrency trading, and more.

Pros

  • Multicurrency Accounts: Users can hold and exchange multiple currencies in one account, making it useful for travelers or those who transact in various currencies.
  • Competitive Foreign Exchange Rates: Revolut offers competitive exchange rates, often better than many traditional banks, especially for premium account holders.
  • Global Usage: The Revolut card is accepted worldwide, wherever Mastercard or Visa (depending on the region) is accepted.
  • Instant Notifications: Real-time spending notifications help users track their expenses immediately.
  • Security Features: Users can freeze and unfreeze their card directly from the app, set spending limits, and enable or disable features like contactless payments, online transactions, and ATM withdrawals.
  • Budgeting and Analytics: The app provides a breakdown of spending by category, helping users manage their finances.
  • Additional Financial Products: Over time, Revolut has expanded its offerings to include cryptocurrency exchange, stock trading, and commodities in some regions.
  • P2P Payments: Users can send and request money from other Revolut users instantly.

Cons

  • Fees: Although many services are free or low-cost, certain actions, like ATM withdrawals beyond a set limit or foreign exchange transactions on weekends, come with fees. The fee structure can be complex and varies by region and type of account (Standard, Premium, Metal).
  • Customer Service: Some users have reported difficulties reaching customer support or slow response times, particularly when dealing with more complicated issues.
  • Limited Physical Presence: As a digital bank, there are no physical branches to visit, which can be a disadvantage for those who prefer face-to-face interactions.
  • Regulatory Concerns: As with many fintechs, the regulatory framework can sometimes be in flux, leading to potential service interruptions or changes.
  • Account Freezing: There have been reports of accounts being temporarily frozen due to security checks or compliance reviews, causing inconvenience for some users.
  • Product Availability: Not all features are available in all countries due to varying financial regulations and licensing.
  • Deposits: In some regions, Revolut may not offer a full banking license, which means deposits might not be protected by local deposit insurance schemes like the FDIC in the U.S. or the FSCS in the UK. However, Revolut has been making moves to obtain banking licenses in multiple regions.

7. N26:

N26 is a digital bank that provides mobile banking services with features like fee-free foreign transactions and budgeting tools.

Pros

  • User-Friendly Interface: The N26 app is known for its clean, intuitive design, which makes banking tasks straightforward.
  • No Foreign Transaction Fees: This makes N26 particularly appealing for travelers or those who often deal with foreign transactions.
  • Real-Time Notifications: Users receive instant notifications for all account activity, enhancing security and awareness of account movements.
  • Free Basic Account: N26 offers a basic bank account option with no monthly maintenance fees.
  • Spaces Feature: Allows users to set up sub-accounts for specific saving goals or budgeting purposes.
  • Global Card Acceptance: As the N26 card is a Mastercard, it is widely accepted around the world.
  • Security Features: The app provides features like real-time transaction alerts, the ability to set daily withdrawal and payment limits, and the option to immediately lock the card in case of suspicious activity.
  • P2P Payments: Users can send money instantly to other N26 users with the MoneyBeam feature.
  • Transparent Fee Structure: Fees are generally clearly communicated and can be easily found on their website.

Cons

  • Limited Physical Presence: As a primarily digital bank, there’s no option for in-person banking, which might be inconvenient for some users.
  • Customer Service Concerns: Some users have reported delays in reaching customer support or getting issues resolved.
  • Limited Product Range: Compared to traditional banks, N26 might offer a narrower range of financial products.
  • Account Freezing: Similar to other digital banks, there have been reports of accounts being frozen temporarily for security checks, which can be inconvenient.
  • Availability: While N26 has expanded to various countries, it’s not available everywhere. The range of services might also vary depending on the region.
  • Deposit Protection: While deposits in N26 are protected up to €100,000 under the German Deposit Protection Scheme, some users might feel more comfortable with traditional, local banks and their respective regulatory environments.
  • ATM Withdrawal Limits and Fees: The free account has restrictions on the number of free ATM withdrawals per month, and subsequent withdrawals might incur fees. Additionally, currency exchange rates on ATM withdrawals outside the Eurozone might not be as favorable as some other services.
  • Changing Terms: As with many fintech companies, terms and conditions, including fee structures, can change as the company grows and adapts.

6. Current:

Current is known for its mobile banking app designed for teens and young adults, offering tools for managing money, savings, and allowances.

Pros

  • Early Direct Deposit: Current offers the ability to receive paychecks up to two days early through direct deposit, which can be beneficial for budgeting and financial planning.
  • No Overdraft Fees: Current’s Premium account offers an overdraft protection feature called Overdrive, which allows qualified users to overdraw up to a certain limit without incurring fees.
  • Teen Banking: Current provides a banking solution for teens, enabling parents to have oversight and control over their teen’s spending habits, while also teaching the teen financial responsibility.
  • Instant Notifications: Users receive real-time alerts for all account activity, which can enhance security and awareness.
  • Spending Insights: The app offers analytics on your spending to help you manage your finances better.
  • Gas Hold Refunds: Current instantly refunds the holds that gas stations often place on card transactions, ensuring users don’t have to wait days for their funds to be accessible again.
  • Mobile Check Deposit: Users can deposit checks via the app, eliminating the need to visit a physical bank.
  • No Hidden Fees: Current promotes transparency and claims to have no hidden fees, which can be a relief for those wary of unexpected charges.

Cons

  • No Interest on Savings: As of my last update, Current doesn’t offer interest on savings kept in the account, which means users won’t earn any return on funds kept in the bank.
  • Limited Physical Presence: Being an online-only bank, there are no physical branches. This can be a limitation for those who prefer in-person banking.
  • ATM Limitations: While Current provides free ATM withdrawals within its network, there may be fees for using out-of-network ATMs. Additionally, the number of in-network ATMs may be limited in certain areas.
  • Customer Service Concerns: As is often the case with newer fintech companies, some users might experience challenges in reaching customer service or resolving specific issues.
  • Account Limitations: There might be limitations on certain features or account types, such as withdrawal limits or the maximum amount you can keep in your account.
  • Platform Stability: As with any technology-first service, there could be occasional app or service outages.
  • No Full Suite of Financial Products: Unlike traditional banks, Current doesn’t offer a wide range of financial products. While they offer checking accounts and related services, they might lack other products like loans, mortgages, or certificates of deposit.

5. Simple:

Simple, now part of BBVA USA, offers an easy-to-use mobile app and budgeting tools to help users manage their finances.

Pros

  • User-Friendly Interface: Simple was known for its clear, intuitive design, making it easy for users to navigate their financial information and transactions.
  • Innovative Budgeting Tools: “Goals” and “Expenses” were two features that allowed users to set aside money for specific purposes or upcoming bills, making it easier to manage funds and automate savings.
  • No Overdraft Fees: Simple did not charge overdraft fees. Instead, transactions that would overdraw an account were typically declined.
  • No Monthly Fees: There were no monthly maintenance fees, minimum balance fees, or other regular fees associated with the account.
  • Visa Debit Card: Came with the account and was accepted nearly everywhere Visa was accepted.
  • Instant Money Transfers: Between Simple accounts, money transfers were instantaneous.
  • Mobile Check Deposit: Users could deposit checks via the mobile app.
  • Built-in Financial Insights: The app offered insights into spending patterns and habits to help users understand their financial behaviors.

Cons

  • No Physical Branches: As an online-only bank, there were no branches for in-person service, which could be limiting for some.
  • Interest Rates: While Simple did offer a high-yield account called “Simple Protected Goals Account”, their standard account did not have a competitive interest rate compared to other online banks.
  • Cash Deposits: Depositing cash was inconvenient. Since there were no physical branches and no dedicated ATM network, cash deposits required purchasing a money order and then depositing it via mobile check deposit.
  • Foreign Transaction Fees: There were fees for foreign transactions, which could be a drawback for international travelers.
  • ATM Limitations: While Simple reimbursed some ATM fees and had a network of free ATMs, if you used an out-of-network ATM, you might incur charges.
  • Transition to BBVA: As mentioned, Simple announced its closure, and accounts were transitioned to BBVA. This change might not have been preferable for all Simple users, especially those who chose Simple specifically for its unique features.

4. SoFi Money:

SoFi Money combines banking and investing features, offering high-yield savings and cash management accounts, as well as investment and loan services. SoFi (short for Social Finance) Money is a financial product from SoFi, a financial services company originally known for student loan refinancing. SoFi Money offers a cash management account, which is a hybrid of a checking and savings account. Here are some pros and cons of SoFi Money 

Pros

  • No Account Fees: SoFi Money does not charge monthly fees, overdraft fees, or many of the other common bank fees.
  • Competitive Interest Rates: Compared to many traditional checking accounts, SoFi Money offers competitive interest rates on balances.
  • ATM Reimbursements: SoFi Money offers fee-free withdrawals at ATMs in the Allpoint network and reimburses ATM fees outside of this network, making it convenient for users to access cash anywhere.
  • No Minimum Balance: There’s no required minimum balance to open or maintain an account.
  • Mobile First: SoFi Money is built with a mobile-first approach, ensuring a smooth experience for users on their smartphones. This includes mobile check deposit.
  • P2P Transfers: Users can send money to others easily through the app.
  • Bill Pay: Integrated bill pay makes it easy to manage and pay bills directly from the account.
  • Security: Offers features like freezing and unfreezing your card via the app, two-factor authentication, and encryption to keep data secure.
  • Additional SoFi Benefits: Access to other SoFi products and perks, like financial planning sessions, member discounts, and community events.

Cons

  • Not a Traditional Bank: SoFi Money is a cash management account, which means it’s not a traditional bank. The funds are swept into partner banks, which hold the money and provide FDIC insurance.
  • Cash Deposit Limitations: Depositing cash can be a bit more challenging since SoFi doesn’t have physical branches and isn’t part of a more extensive deposit ATM network.
  • Limited Physical Presence: Some users prefer in-person banking options, which SoFi Money lacks due to its online-only model.
  • Customer Service Concerns: As with many fintech companies, there can be mixed reviews about the speed or effectiveness of customer service.
  • Product Changes: As with many newer financial products, terms and offerings can change. It’s essential to keep abreast of any updates to the account’s features or fee structures.
  • Dependence on Partner Banks: Since SoFi Money is not a bank in itself, it relies on partner banks to hold deposited funds. While this doesn’t typically affect the user experience or FDIC insurance, some users might be more comfortable with a traditional banking structure.

3. Varo Bank:

Varo is an online bank that offers a mobile app with no monthly fees, early direct deposit, and high-yield savings accounts. Varo Bank is a digital-first bank that offers a range of financial services, including checking and savings accounts. Here are some pros and cons of using Varo Bank:

Pros

  • No Monthly Fees: Varo doesn’t charge monthly maintenance fees on its accounts, making it a cost-effective choice for many users.
  • High-Yield Savings Account: The Varo Savings Account offers a competitive interest rate, especially when compared to many traditional banks.
  • Early Direct Deposit: Like some other online banks, Varo offers the ability to receive your paycheck up to two days early when you set up direct deposit.
  • No Overdraft Fees with Qualifying Direct Deposit: With “Varo Advance”, qualifying users can access a short-term line of credit to cover unexpected expenses without traditional overdraft fees.
  • No Minimum Balance: Varo accounts don’t have a required minimum balance.
  • Large ATM Network: Varo users have fee-free access to a network of over 55,000 Allpoint ATMs.
  • Automated Savings Tools: Varo offers features like Save Your Pay and Save Your Change to automate the process of setting aside money into savings.
  • Mobile Banking: As a digital-first bank, Varo has a robust mobile app that allows users to manage their finances, deposit checks, and more on the go.
  • FDIC Insured: Varo Bank accounts are FDIC insured up to $250,000, offering the same level of protection as traditional banks.

Cons

  • No Physical Branches: Being an online-only bank, Varo lacks physical branches, which can be a limitation for those who prefer in-person banking.
  • Cash Deposit Limitations: While Varo allows for cash deposits at participating retailers like Walgreens or CVS, it’s not as straightforward as depositing cash at a traditional bank.
  • Customer Service Access: As with many online banks, some users might experience challenges in reaching customer service or might prefer in-person assistance.
  • Limited Product Offering: Unlike larger banks that might offer a wide range of financial products and services, Varo’s offerings are more limited. For example, they might not have a suite of loan products or credit cards like some other banks.
  • Foreign Transaction Fees: There’s a fee for international transactions, which could be a disadvantage for those who travel or shop internationally.
  • Dependence on ATM Network: Since Varo doesn’t have its own ATMs or branches, users are dependent on the Allpoint ATM network or third-party retailers for physical transactions.
  • Platform Stability: Like any technology-driven service, there might be occasional app or system outages.

2. Chime Bank:

Chime is a financial technology company that offers banking services in partnership with The Bancorp Bank and Stride Bank. As mentioned earlier, Chime offers fee-free online banking with features like early direct deposit and automatic savings. Here are some pros and cons of Chime

Pros

  • No Monthly Fees: Chime doesn’t charge monthly maintenance fees, which can save users money over time.
  • Early Direct Deposit: Chime offers the ability to receive paychecks up to two days early when users set up direct deposit.
  • Overdraft Protection: With “SpotMe,” eligible users can overdraw their accounts up to a certain limit (typically $20 to $200) without incurring overdraft fees.
  • Automated Savings: Chime’s Save When You Get Paid feature automatically transfers a percentage of every paycheck directly into a separate savings account. They also offer a round-up feature that rounds transactions up to the nearest dollar and saves the difference.
  • No Minimum Balance: Chime accounts don’t have a required minimum balance.
  • Large Fee-Free ATM Network: Chime offers fee-free withdrawals at over 38,000 MoneyPass and Visa Plus Alliance ATMs.
  • Mobile Banking: Chime’s mobile app allows users to manage their finances, deposit checks, transfer money, and more.
  • Security: Chime provides features like instant transaction alerts and the ability to block the card immediately via the app if it’s lost or stolen.
  • No Foreign Transaction Fees: As of the last update, Chime does not charge additional fees for foreign transactions.

Cons

  • No Physical Branches: Being an online-only bank, Chime doesn’t have any physical branches which can be a limitation for users who prefer in-person banking.
  • Cash Deposit Challenges: While you can deposit cash into a Chime account at over 90,000 retail locations, this might be less convenient than traditional bank branches, and some retailers might charge a fee.
  • Customer Service Concerns: Some users have reported challenges in reaching customer service or resolving issues in a timely manner.
  • Limited Financial Products: Chime primarily offers spending (checking) and savings accounts, without the broader suite of financial products you might find at larger banks, like loans, credit cards, or certificates of deposit.
  • Dependence on Partner Banks: Chime is not a bank itself; it provides its banking services through partnerships with FDIC-insured banks. This means your funds are held and insured by those partner banks, which may be a concern for users who prefer a more direct relationship with their bank.
  • Platform Stability: Like any tech-driven service, there may be the occasional app or system outage.
  • ATM Fees Outside Network: If you use an ATM outside of Chime’s network, you might incur a fee.

1. Ally Bank:

Known for its competitive interest rates on savings accounts and CDs, Ally Bank offers a range of online banking services, including checking, savings, and investment options.

Pros

  • 1. High-Interest Rates: Ally Bank is known for offering competitive interest rates on savings accounts, CDs, and money market accounts, which can help your money grow faster.
  • 2. No Monthly Fees: Ally doesn’t charge monthly maintenance fees on its accounts, making it a cost-effective option for many customers.
  • 3. ATM Access: Ally Bank provides access to a vast network of fee-free ATMs nationwide through the Allpoint network, and they reimburse up to a certain amount for out-of-network ATM fees.
  • 4. Online and Mobile Banking: Ally’s online and mobile banking platforms are user-friendly and offer a range of features, including mobile check deposit and account management tools.
  • 5. 24/7 Customer Support: Ally offers round-the-clock customer support, which can be valuable in case of any issues or questions.
  • 6. CD Laddering: Ally allows you to set up CD ladders, a strategy to maximize your CD investments by staggering their maturity dates.

Cons

  • 1. No Physical Branches: Ally Bank is an online-only bank, so it doesn’t have physical branch locations. This may not be suitable for customers who prefer in-person banking.
  • 2. Limited Account Types: While Ally offers a range of deposit accounts, it doesn’t offer services like mortgages or personal loans. It’s primarily focused on banking and investing.
  • 3. Limited Cash Deposits: Depositing cash can be a bit challenging with Ally, as you may need to use an Ally eCheck or MoneyGram to add cash to your account.
  • 4. No International Wire Transfers: Ally doesn’t support international wire transfers, which may be a drawback for customers with international banking needs.
  • 5. Interest Rate Fluctuations: Like all banks, Ally’s interest rates can fluctuate with market conditions, which means your earnings on savings and CDs may vary over time.
  • 6. Mobile-Only Check Deposit: While Ally offers mobile check deposit, you can’t deposit checks using a computer scanner, which some people may find inconvenient.

Overall, Ally Bank is popular for its competitive interest rates, lack of monthly fees, and user-friendly online and mobile banking experience. However, the absence of physical branches and limited in-person services may not be suitable for everyone. It’s essential to consider your banking preferences and needs when evaluating Ally Bank or any other financial institution.

 

Published On: October 11th, 2023Last Updated: November 7th, 20233900 wordsCategories: Finance0 Comments on Top 10 Non-Traditional Online Banks in the USATags: , ,

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