Online Banking vs Traditional Banking

Choosing an online bank provides a modern, flexible, and convenient way to manage your finances, offering round-the-clock access to accounts, competitive rates, and innovative tools—all from the comfort of any device. Explore the unique advantages of online banking and see how it aligns with your financial habits and lifestyle.

	Online Banking	Traditional Banking
Accessibility Services accessible 24/7 via internet, allowing customers to bank anytime, anywhere.
Convenience Offers the ability to perform banking tasks remotely without the need to visit physical branches.
Security Incorporates encryption, multi-factor authentication, and other advanced technologies to protect user data.
Service Speed Faster transaction processing, bill payments, and fund transfers compared to traditional methods.
Cost Efficiency Typically lower fees due to reduced operational costs and no need for physical branches.
Personal Interaction Provides face-to-face customer service and personalized advice in a physical setting.
Loan/Account Setup Streamlined digital processes for setting up accounts or applying for loans quickly and efficiently.
Customization Offers tailored financial products and services based on customer data and preferences.
Cash Handling Physical locations for depositing and withdrawing cash, ensuring immediate access to cash when needed.
Competitive Rates Offers higher interest rates on savings and lower rates on loans due to reduced overhead costs.

What Is Online Banking?

Online banking is a system that lets you access your account and make transactions on the internet instead of in person. It provides nearly every service that would traditionally only be available in a branch.

This includes viewing balances, sending funds, paying bills, making deposits, and much more. All you need is a bank account, a device, and an internet connection. Banking online has several benefits, with one of the biggest advantages being convenience.

You can bank on your own terms, and won’t be restricted by the hours set by the bank itself. It gives you 24/7 access to your accounts and makes it quick and easy to conduct transactions in seconds from anywhere. Also, an entirely online bank will generally have fewer overhead expenses and thus be able to offer lower fees and better rates.

What Is a Savings Account?

A savings account is a deposit account designed to hold onto funds you don’t need right away and are saving for the future. These accounts pay a modest interest rate and thus are generally a better option for putting money aside than a checking account.

People use savings accounts to set aside money for an upcoming vacation, to buy a home, make a vehicle purchase, and more. Many also use them as an emergency fund to cover situations like medical emergencies, car troubles, or job loss.

Savings accounts are generally safe and reliable places to store funds, and your money is easily accessible when you need it. Here are a few pros and cons to help understand more about savings accounts:

Pros

• Low-risk option to grow your funds
• Easy access to your money
• Doesn’t require a lot of money to start saving

Cons

• The rates are generally lower than other options like investments and certificates of deposit (CD)

• Some savings accounts have monthly fees or require a certain balance to avoid them
• Interest rates can change over time

Who Can Open a Savings Account?

While every bank has its own eligibility criteria, generally, if you’re over 18 years old and able to confirm your identity, you can open a savings account. However, if you’ve had prior issues with a bank account (e.g. not paying overdraft fees, bouncing checks, etc.), you may face some difficulties when attempting to open an account.

What Is a High-Yield Savings Account (HYSA)?

A high-yield savings account (HYSA) is a savings account that offers higher interest rates than a traditional savings account. The best HYSAs have APY rates that are often 10 to 12 times higher than other savings accounts.

Another difference between savings accounts and high-yield savings accounts is that online banks often provide HYSAs. So if you like to bank in-branch and be able to use ATMs, these HYSAs may not suit your needs.

Online banks won’t always offer comprehensive financial services, either. So to get the best HYSA, you may need to have your checking account with one bank and your savings with another.

Our top 3 Savings Accounts:

Our top choice

#1

9.9

Outstanding

User Engagement

Based on the past 7 days

9.9

Brand Visibility

Based on digital performance

9.6

Products & Services

Based on

editorial assessment

10.0

Learn more on how we score

View Rates

7691 Excellent reviews on

In a Nutshell

SoFi secured its bank charter in 2022, and now presents a range of online banking services—notably a combined checking and savings account. With this account, you benefit from an APY of up to 3.80%, and zero overdraft or transaction fees.

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Features

• Higher returns with direct deposit
• Earn up to 3.80% APY
• Up to $300 direct deposit bonus. Terms apply.
• No fees or minimum balance
• FDIC insured up to $2M

Most Popular Products

Pros

• Customer service available on weekdays and Saturdays
• No monthly or overdraft fees
• Earn money with referrals, an awards program, and promotions
• Get paid up to 2 days early with direct deposit

Cons

• No physical branches
• No business accounts
• Cash deposit fees
• Just one combined savings and checking account available

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7691 Excellent reviews on

#2

8.8

Very Good

User Engagement

Based on the past 7 days

8.0

Brand Visibility

Based on digital performance

9.8

Products & Services

Based on

editorial assessment

9.4

Learn more on how we score

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640 Excellent reviews on

In a Nutshell

American Express (AMEX) is one of the top banks in the country trading out of New York City. Established in 1850, it offers a range of financial products, including savings, checking, and business accounts, IRAs, credit cards, and prepaid cards. AMEX’s high yield savings account is free to use and doesn’t require a minimum monthly balance. All deposits are protected up to $250,000 with the FDIC, and you can open an account in just a few minutes.

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Features

• No account or transfer fees *
• Earn a variable 3.60% APY **
• No minimum balance*
• Member FDIC
• 24/7 live chat customer service

Most Popular Products

Pros

• FDIC insurance to at least $250,000
• 24/7 customer support through live chat
• No minimum monthly balance or fees
• 3.60% Annual Percentage Yield (APY) as of 05/08/2025

Cons

• No ATM access to account
• No branch access
• No cash deposits
• No instant access to funds

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640 Excellent reviews on

#3

8.8

Very Good

User Engagement

Based on the past 7 days

7.8

Brand Visibility

Based on digital performance

9.7

Products & Services

Based on

editorial assessment

10.0

Learn more on how we score

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In a Nutshell

Discover offers no-fee checking and savings accounts with no minimum balance requirement. The checking account provides 1% cash back on debit card purchases and lets you get your paycheck two days early when you set up direct deposit. Its online savings account has a generous APY and no minimum opening deposit. The accounts are easy to open, and you can manage them on the go in the app. Discover also provides 24/7 customer support.

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Features

• No monthly fees
• High yield savings with 3.60% APY
• $0 minimum opening deposit
• Interest compounded daily

Most Popular Products

Pros

• No monthly or overdraft fees
• Competitive savings rates
• 1% cash back on debit purchases
• 24/7 customer service

Cons

• Only a single physical branch
• Limited account options
• High outgoing wire transfer fee

View Rates

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What Do You Need to Open a Savings Account?

If you want to open a savings account, you’ll have to submit an application. It’s typically a straightforward process, but you’ll need to provide the following details to the bank:

• Your social security number
• Contact information such as your phone number and/or email
• Some sort of government ID, such as a passport or driver's license
• Address, as well as proof of address—like a utility bill
• Date of birth
• Information about your checking account to make the initial deposit

Also, if the bank offers joint savings accounts, you’ll have to specify whether you want to open an individual account for yourself or a joint account with someone else. If you’re opening a joint account, the co-signer has to provide their information, too.

Keep in mind that the exact requirements can vary from bank to bank.

What Features Should You Look for When Choosing a Savings Account?

When researching savings account options, pay attention to the following important features.

First, keep your eyes out for the best savings account rates possible. If you have a savings account with a high APY, your money grows quicker than in one with a subpar rate. However, the highest-yield savings accounts may have fees or a minimum deposit or balance requirement, so keep that in mind.

Speaking of fees, look for savings accounts that don’t charge any, as they can cut into your ability to grow your wealth. When it comes to minimum balances and deposits, look for an account that either has no minimums or one that is easy for you to maintain.

Make sure to choose a high-interest online savings account with good customer service, too. You don’t want to be stuck waiting days for assistance if there’s an issue.

Look for a highly-rated and fully-featured app, too. An app is an accessible and convenient way to manage your online savings account on the go. It should include features like notifications/alerts, the ability to transfer funds, biometric authentication, and others.

You can also consider an account that offers CD options. A CD is another savings instrument, where you earn interest on a deposit that you leave untouched for a time. While you can’t access your funds for this predetermined period, the interest is normally higher than for savings accounts.

Keep security in mind, as well. Make sure the bank you work with is legitimate, protects customer data, and is FDIC-insured. This FDIC insurance protects your account for up to $250,000 in the case of a bank failure.

Disclaimers

Western Alliance

*APY means Annual Percentage Yield. APY is accurate as of 03/27/2025. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected.

Accurate as of the time of publication. The national average rate referenced is from the FDIC’s published National Rates and Rate Caps for Savings deposit products, accurate as of 7/15/2024. See the FDIC website for more information.

American Express

* There is no minimum balance required to open your Account, to avoid being charged a fee, or to obtain the Annual Percentage Yield (APY) disclosed to you.

** The Annual Percentage Yield (APY) as advertised is accurate as of 05/08/2025. Interest rate and APY are subject to change at any time without notice before and after a High Yield Savings Account is opened. Interest Rate and APY of a Certificate of Deposit account is fixed once the account is funded.

CIT Bank

* Deposit Transfer Requirements:

Transfer a one-time deposit of $25,000 -$49,999.99 for a Bonus of $225

Transfer a one-time deposit of $50,000+ for a Bonus of $300

Terms:

Promo Code: Account must be opened with code PS2025 within the Promotion Period

Funding Period: 30 days from the account open date

Bonus fulfillment: 60-days from the funding date

Conditions:

There are is no period of time where the customer will be required to maintain the funds.

Account must be open when bonus is credited

Promotion is available per account and Primary customer

Bonus will be credited into the Platinum Savings Account that fulfills the funding requirement

Funding can be deposited in one-deposit or incrementally

Promotion Period will be 3 months or until CIT's goals are met, whichever comes first