Online banks typically offer significantly higher interest rates than traditional banks, often with lower fees and better digital tools. The key is knowing what to look for. While online banks share many features with traditional banks — like FDIC insurance and basic account services — others features require more evaluation since you won’t have physical branches to visit.

Here’s what matters most when choosing an online bank that will serve your needs and help your money grow faster.

1. FDIC insurance protection

This should be your first and most important consideration. FDIC insurance protects your deposits up to $250,000 per depositor, per bank, per ownership category. It’s backed by the full faith and credit of the U.S. government, which means you won’t lose your money even if the bank fails.

Most legitimate online banks carry FDIC insurance, but it’s worth confirming before you deposit any money. You can verify coverage by visiting the FDIC’s BankFind website and searching for your bank by name and location.

Don’t assume all online financial companies are FDIC-insured banks. Some fintech companies and payment apps partner with FDIC-insured banks but aren’t banks themselves. While your money may still be protected, the structure can be more complex.

2. Competitive interest rates

This is where online banks really shine. They typically offer annual percentage yields that are five or more times higher than the national average for traditional bank accounts. Online banks can afford to pay these higher rates because they don’t have the costs of maintaining physical branches. They pass those savings on to customers in the form of better yields.

The difference can be substantial over time. If you put $5,000 in an account earning 0.1 percent APY, after five years you’d have $5,025. But that same $5,000 in an account earning 4.50 percent APY would grow to about $6,246 — that’s more than $1,200 in extra earnings.

When comparing rates, look at the APY rather than just the interest rate, since APY includes the effect of compounding. Also check whether the rate is promotional or ongoing, and if there are balance requirements to earn the advertised rate.

Compare today’s best high-yield savings account rates to see which online banks are offering the most competitive yields right now.

3. Low or no fees

High interest rates don’t mean much if you’re paying them back in fees. Fortunately, many online banks have eliminated common fees that traditional banks still charge.

Look for banks that don’t charge monthly maintenance fees, minimum balance fees or excessive transaction fees (here’s a list to get you started). Many online banks also don’t charge overdraft fees or have eliminated nonsufficient funds fees.

4. Robust ATM networks

One concern people have about online banks is accessing cash, but many online banks actually offer better ATM access than traditional banks through large networks like Allpoint and MoneyPass. Allpoint has about 55,000 ATMs across the U.S., while MoneyPass offers around 37,000. These networks include ATMs at major retailers, pharmacies, and other convenient locations.

Many online banks don’t charge their own ATM fees and will reimburse fees charged by other banks when you use out-of-network ATMs (here are eight examples). This can save you money if you frequently need cash and can’t always find a fee-free ATM.

5. Quality customer service

Since you can’t walk into a branch when you have questions or problems, customer service quality becomes crucial with online banks.

Look for banks that offer multiple ways to get help: phone support, online chat, email and in-app messaging. The best online banks provide 24/7 customer support, though some limit phone support to business hours while keeping chat available around the clock.

6. Useful money management tools

Many online banks offer features that can help you manage your money more effectively than traditional banks. Some provide savings goal tracking, where you can set up separate “buckets” within your savings account for different objectives like vacation funds, emergency savings, or a down payment. This makes it easier to see your progress toward specific goals.

Read more: 9 bank accounts that offer built-in budgeting tools.

Others offer spending categorization, budgeting tools or the ability to link external accounts so you can see all your finances in one place. Some even provide credit score monitoring or financial education resources.

7. User-friendly digital experience

Since you’ll be doing all your banking through the bank’s website and mobile app, these platforms need to be well-designed and reliable.

Look for apps and websites that make it easy to check balances, transfer money, deposit checks, pay bills, and handle other routine transactions. Mobile check deposit is particularly important since you won’t be able to visit a branch to deposit checks.

Potential drawbacks of online banks

Online banks aren’t perfect for everyone. Here are the main limitations to keep in mind:

• No in-person support means you can’t walk into a branch when you have complex problems or prefer face-to-face interactions. If you’re someone who likes building relationships with local bankers or needs frequent in-person assistance, online banking might feel impersonal.
• Limited product offerings can be an issue if you want to handle all your banking with one institution. Many online banks focus on savings accounts and basic checking, but may not offer mortgages, investment services, or business banking.
• Cash deposits can be challenging since you can’t visit a branch. Some online banks partner with retailers for cash deposits, but this isn’t always convenient. If you frequently receive cash that needs to be deposited, this could be a significant limitation.

Bottom line

When choosing an online bank, start by comparing the basics: interest rates, fees and FDIC insurance. Then consider your personal banking habits and preferences.

You might love online banking if you already do most of your banking digitally, want to maximize the interest you earn on savings, don’t need frequent in-person support, or want access to innovative money management tools.

You might prefer traditional banking if you like having local branches available, frequently deposit cash, need a full range of banking services in one place or prefer building in-person relationships with bank staff.

Ready to start earning more on your savings? Explore high-yield savings accounts from top online banks, or compare money market accounts that offer competitive rates with additional features.