What are the best digital banks in 2021? That will be the topic of this article.
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Introduction:
Digital Bank – A Digital Bank, which is also known as Online Bank or a Virtual Bank, is a type of bank that is totally opposite to a normal bank. The complete working procedure of online banks, as the name suggests, is completely online.
Not only the account can be opened online, but some online banks don’t even have a physical presence.
A brick-and-mortar bank, is a bank having physical branches located in various places. In general, these banks acquired the name as brick-and-mortar banks on the basis of the material used for construction (even though the materials are used in the olden days).
To let you have a better understanding of the variation between these two types of banks, let us have a look at a small example.
If banks are considered are places that sell products, online banks can be considered as online websites that sell products, and brick and mortar banks are something similar to a shopping mall.
Advantages and Disadvantages – There are some advantages as well as disadvantages while dealing with online banks. Let us have a brief overview of some of the pros and cons of online banks.
Cons – First of all, let us discuss the cons of digital banks.
Most people are used to approaching a bank physically for acquiring the financial products and services offered by banks. With online banks, they might not be able to do so.
Additionally, some people might feel safe when they make transactions with the help of a branch of a bank. Although these types of people might be seen on rare occasions, such people do exist.
As digital banks operate online, there is a possibility of issues such as interruptions in the technical aspects, or security-related problems.
One of the major issues that a person has to deal with, while he or she chooses an online bank is that they have to wait until the customer support is able to clear their issues. At a normal bank, they can visit a branch of their bank, and tell them about their issues.
Pros – Now the pros.
There are quite a lot of advantages offered to a user, who selects online banks instead of normal banks. The major advantage is that they offer better interest rates.
online banks do not have to cover additional costs related to maintaining physical branches. This saves a lot of money for them, which can be offered in the form of higher interest rates.
There are some other advantages such as easy accessibility, unique banking tools, and so on.
Online Banking and Online Banks – Online Banking services, also known as Internet Banking services, are the banking services that can be acquired online with the help of a smartphone or a computer.
Because of the advancement in technology, most of the banks in the world offer online banking services, such as transfers, payments, etc.
Online banks, on the other hand, are the banks that provide the same services without having a physical presence.
Most of the brick-and-mortar banks might also have the availability of online banking services as well, while some don’t.
There are some banks, which are online banks but require you to be in a specific country to acquire their services. On the other hand, some other online banks can be accessed from anywhere in the world.
In order to be specific and mention all the details, we will primarily focus on the best online banks in 2021, either if it offers services to a specific location or many places. The given below list is just a list and not a ranked list.
We haven’t ranked the list as it can be hard to understand what a person’s requirements might be while searching for an online bank.
What we think is the best (Such as a bank having high-interest rates), might not be favorable to you (if you are looking for low fees).
Best Online Bank Accounts in the world in 2021:
- N26:
N26 is a Berlin-based completely digital bank, which is considered as one of the best available options for people (especially expats and nomads) and is said to have more than 5 million customers.
An account can be opened at N26 with just a smartphone under 5 minutes or so, with no hidden fees. There is no requirement for minimum account balance, maintenance charges, and no additional charges for insufficient funds.
Pros and Cons – Let us have a look at some of the major advantages and disadvantages of N26.
Pros:
- Unlimited ATM withdrawals are offered to an individual, with the help of which, a person can withdraw money from more than 55,000 locations situated across the US, Canada, Australia, the UK, etc.
- Along with the unlimited withdrawals at their locations, additionally, 2 more free ATM withdrawals are offered for the people in the United States.
- Cashback rewards are offered on debit card purchases with an N26 card.
- The customers at N26 are offered a MasterCard and the exchange rates are real-time rates when a person makes an online purchase.
- Payments can be made with Apple Pay or Google Pay when a person makes a payment in an app, or in a store.
- People at N26 can set up financial goals and track their financial performances with the help of a feature called ‘Space’.
- As for security, people can opt for something more secure such as fingerprint or face recognition.
- There is even deposit insurance of up to €100,000 for the customers that acquire banking services from N26.
Cons:
- There is a withdrawal fee of 1.7% when a person withdraws money abroad with the help of an N26 card (basic account).
- No physical branches.
- No availability of telephone support and a tad bit of lagging chat support, which works for reduced hours.
- No overdraft or standing order.
- No availability of interest-bearing accounts at N26.
Based on your requirements, you can choose between three plans, which are the basic N26 plan (free), N26 Smart (€4.90), N26 You (€9.90), and finally, N26 Metal (€16.90) for which a metal card would be provided.
There are some business accounts as well, which are Business, Business Smart, Business You, and Business Metal, with just the same pricing plans.
These prices are on the basis of a monthly price and the highest plan would come with a lot of additional benefits related to travel, insurance, etc.
- Discover:
Discover started its services as a credit card in the year 1985, and after a time span of 15 years, it opened its first-ever banking branch. As of now, Discover offers financial products and services related to loans, credit cards, and online banking.
As of the recent stats obtained, Discover is said to have more than $57 billion in the form of deposits.
Pros and Cons of Discover – Here are some of the advantages and disadvantages of Discover, which we thought, were worth mentioning.
Pros:
- Cashback rewards with debit card.
- No monthly fees for checking accounts, savings accounts, or money market accounts at Discover.
- Credit cards offered by Discover do not have any sort of annual fees.
Cons:
- Almost all people have trouble when it comes to having access to a physical branch.
- The minimum deposit amount for money market accounts and certificates of deposit is $2,500.
- Most other online banks pay a bit higher rates when compared to the rates paid by Discover on savings accounts.
Online Savings Account – The Online Savings Account at Discover is said to provide a higher interest rate than most traditional brick-and-mortar banks, which is 0.4%.
No minimum deposit required. No monthly fees. The bank will provide free official bank checks and there are no additional charges for returned deposits or insufficient funds.
Cashback Debit – By hearing the name itself, you might have come to a conclusion, and yes, this a cashback account. For every $3,000 spent using a debit card, there will be a cashback of 1% (only on selected purchases).
No monthly fees. No minimum deposit. The bank will provide free official bank checks and there are no additional charges for insufficient funds.
There are more than 60,000 fee-free ATMs and no additional charges are imposed by Discover for using other bank ATMs.
Money Market Account – This is a combination of the interest-bearing ability of a savings account and the accessibility of a checking account. This comes in handy for the people who want easy access to their funds and earn interest on their deposits at the same time.
For balances up to $100,000, the interest rate is 0.30%, and it is 0.35% for a balance more than that. No monthly charges.
The minimum amount required to open this account is $2,500, however, there is no need for an ongoing balance requirement. The bank will provide free official bank checks and there are no additional charges for insufficient funds.
Certificates of Deposit – Depending on the term chosen, which usually varies between 3 months and 10 years, the interest rates range between 0.20% and 0.70%.
Other details – some other financial services offered by Discover are related to credit cards, personal loans, student loans, IRAs, etc.
- Radius:
Radius is an online bank, which is preferred by people looking for free access to international ATMs, cashback on debit card purchases, and low fees.
Pros and Cons – Now, let us see the benefits and drawbacks of banking with Radius.
Pros:
- No ATM fees.
- Competitive interest rates.
- Cashbacks.
Cons:
- Complete absence of physical branches.
- There is an availability of various types of bank accounts at Discover, which can be a bit confusing on what to select.
- In order to get most of the interest rates, the customer must be willing to deposit at least $100,000.
The types of accounts and other financial products and services offered by Discover are checking accounts, savings accounts, CDs, and credit cards.
Rewards Checking – A Rewards Checking account is a checking account with no fees, interest on deposits of more than $2,500, cashbacks, and unlimited ATM fee rebates.
There is even a possibility of opening an account with something as low as $100, which is considered the actual minimum deposit.
The interest rate is 0.15% and the customers are eligible for a cashback of 1% on the debit card purchases if they receive a direct debit of $2,500 or have a minimum balance of $2,500.
Superhero Checking – It is similar to that of the Rewards Checking account while the only difference is in the interest rate. Accounts having $2,500 or more are eligible for an interest rate of 0.05%.
Essential Checking – The monthly charges of an Essential Checking account are $9 per month and people who need to gain access to a Superhero Checking account or Rewards Checking account should have a positive banking history with this.
The daily debit card limit is $250 for the first 30 days, and after that, it is $500. Mobile check deposits can be made only for $1,000 a day or $2,000 for every 10 days.
High Yield Savings Account – This is the savings account of Radius and has no monthly fees or minimum balance requirement after the deposit of the initial $100.
The interest rate is 0.15% for balances ranging between $2,500 to $24,999, and for balances more than that, the interest is 0.25%.
An ATM card is provided for free, which can be used by a person other than the owners themselves.
The bank will provide free official bank checks and there are no additional charges for returned deposits or insufficient funds.
CD – The Certificates of Deposit at Radius Bank have a minimum requirement of $500 or $1,000 and the interest rates vary from 0.25% to 0.5% depending on the term (3 months to 5 years).
Penalties incur on the CDs for which people opt for an early withdrawal.
Other details – Some other financial products and services include credit cards, car loans, personal loans, student loans, mortgages, insurance, etc.
- Monzo:
Monzo is based in the UK and is a big player when it comes to online banks. Even though Monzo is based in the UK, the MasterCard offered by it can be used anywhere the card is accepted.
Pros and Cons – Banking with Monzo comes with a handful of pros and cons, which have been given below.
Pros:
- Monzo supports payment services using Google Pay as well as Apple Pay.
- Unlimited ATM withdrawals and International spends will not incur additional fees.
- Money can be managed with the help of direct debit transactions.
- Overdraft facility is available.
- Deposits can be made physically using Paypoint or cheques using Freepost delivery.
Cons:
- When a person makes withdrawals for an amount of more than £200, then there will be a 3% fee.
- The limit for daily withdrawals is £400, while the monthly limit is £5,500.
- Cheques require a lot of time to be cleared at Monzo.
- Overdrafts will be charged 50p per day.
There are 4 types of accounts offered by Monzo namely Current Account, Monzo Plus, Joint Account, and 16 to 17-year-old account.
Current Account – This is a checking account of Monzo, which does not incur monthly fees, and provides access to a free app as well as a MasterCard.
Monzo Plus – Within the Monzo Plus account, there are 2 types of premium packages available. They are ‘The Supporter’ and ‘The Traveller’.
The Supporter package costs £4.95 per month and customers will receive Monzo goodies, access to prize draws, and exclusive offers/discounts.
The Traveller package costs £9 per month and customers will receive travel insurance, airport lounge access, and other benefits. Not only that, but the people who acquire this package can withdraw £400 per month while they are overseas.
Joint Account – This is a joint account offered by Monzo and it allows users to track the spending during that respective month.
16 to 17-year-old account – This is for the individuals having ages between 16 to 17 years. This restricts those individuals from getting involved in activities such as gambling or any other age-restricted activities.
Other details – People who want to open a current account or Monzo Plus account, or Joint account should meet the following criteria.
- 18 years of age.
- UK residency.
- Smartphone should be compatible with Monzo app.
- An accepted form of photo ID should be provided while submitting an application to open a Monzo account.
- Revolut:
Revolut is a UK-based online bank and is currently offering services in 33 countries. Revolut can be said as one of the best as well as the largest online bank as it has more than 10 million customers.
Some of the major aspects that gained a lot of reputation for Revolut are ‘Personal Loans’, ‘free currency exchange’, ‘free international transfers’, ‘insurance products’, and ‘cryptocurrency trading’.
With a standard account offered by Revolut, a customer can only be able to withdraw money as much as €200 or £200 per month. For withdrawals exceeding that amount, there will be additional fees.
For a detailed view of Revolut, please check our Revolut review.
- Charles Schwab Bank:
Charles Schwab is in the top place, especially when it comes to offering banking services as an online bank, twice in a row. The interest-bearing checking accounts and savings account services offered at Charles Schwab Bank are some of the best.
Usually, when we hear about Charles Schwab, most of us think of it as an investment management firm. However, a few people might be familiar with the fact that Charles Schwab also acts as an online bank.
Even though there are more than 360 brokerage branches of Charles Schwab located in California, Arizona, and Connecticut, most people opt for the online services.
Pros and Cons – Having said that now… we shall take a brief look at some of the advantages and disadvantages of Charles Schwab as an online bank.
Pros:
- No monthly fees
- No minimum balance requirement for both checking accounts or savings accounts at Charles Schwab.
- No foreign transaction fees.
- Unlimited ATM fee rebates internationally.
- Money can be easily transferred between investments, savings, and checking accounts.
- Charles Schwab offers more banking services when compared to most of its competitors.
Cons:
- Low-interest rates for Certificates of Deposit, Checking Accounts, and Savings Accounts.
- It is mandatory to link the checking account with a brokerage account.
- It might be hard to understand the details regarding Certificate of Deposit services at Charles Schwab.
- Only for the US residents
- Schwab Bank High Yield Investor Checking Account:
This is the checking account from Charles Schwab, which should be linked to a Schwab One brokerage account and is apt for investors. As discussed, there are no minimum deposits or monthly fees for this account.
Additionally, customers won’t be charged any sort of foreign transaction fees and the annual interest rate for this account is 0.03%, which is quite good for a checking account.
The contactless debit offered with this account can be used to make hassle-free payments in a secure way. The application process is carried out online and the necessary application forms can be downloaded on the form.
- Schwab Bank High Yield Investor Savings Account:
Similar to the checking account, Schwab Bank High Investor Savings Account is also free from monthly charges, account minimums, and unlimited ATM fees rebated worldwide.
The interest offered on this account is 0.05% on the savings balance, and the accounts are insured by FDIC for an amount of up to $250,000.
- Other Details:
At Charles Schwab, the certificates of deposit have interest rates that range between 0.05% to 0.25% on the basis of the term chosen.
Some other banking services offered by Charles Schwab are Home Loans, Retirement Accounts, Educational Accounts, Custodial Accounts, Credit Cards, and others.
Deposits can be made using mobile checks, transfers from other Schwab accounts, direct deposits, transfers from other banks, mail checks, and wire transfers from other banks.
However, these banking services are only offered to the people in the United States for accessing international banking services.
Honorable mentions:
There are some other online banks, which might be advantageous to you on the basis of your requirements.
- Starling
- Valyuz
- Hello Bank
- Rebellion
- Axos
- Ally
- Varo
- Quantonic
- Chime
Final Word:
Choosing to acquire banking services online might be beneficial, especially when you travel often. However, it should be taken into consideration that there won’t be any place to go if you are having any problems related to your bank.
Mostly, the above-mentioned banks will definitely prove to be helpful and if not, you can still go for traditional banks. If you just need services related to international transfers, you can choose services from other providers such as WorldRemit, Azimo, Transferwise, etc.
That being said, you need somebody to take care of your investment needs or if you are looking for a wealth manager, we got you covered. In order to get access to the best-in-class financial solutions offered by us, please click here.
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