Would You Trust an Online-Only Bank? Here’s What You Should Know
Choosing a bank account is a big deal. After all, you’re handing the institution what’s most likely the majority of your money for safekeeping. You want to make sure it’s actually safe.
You also need to be able to access that cash for all your day-to-day operations, like paying bills or coughing up for your share of the pizza.
Along with choosing from multiple financial institutions, banking in 2019 and beyond means making another important decision: Will you use of one of the many all-digital, online-only banking options, or will you keep it old school by opening an account at brick-and-mortar facility?
Are Online Banks Safe?
In a recent survey conducted by The Penny Hoarder, more than 50% of respondents said they wouldn’t consider using an online bank, and more than 19% were unsure about using one. Given how much of our lives are conducted online these days, we found that data point surprising.
But on the other hand, we do understand having reservations when it comes to money matters. Walking into a stately, brick-built bank can make it feel less scary to hand over your hard-earned cash.
So are online banks safe? The truth is there are a growing number of online-only banking alternatives that are, indeed, legitimate and safe. Online banks like Chime and Simple are FDIC-insured for deposits up to $250,000, just like Bank of America and Chase.
And thanks to the magic of technology, you can do pretty much everything you might need to with your money without ever needing to visit a teller in person: depositing checks on your mobile phone, pulling cash from a network ATM or transferring funds to a family member or friend. You can even write paper checks… if you really, really have to.
It’s true, however, that you won’t be able to walk into a bank and talk to a teller in person. What are the other important differences between these two methods of banking?
Brick-and-Mortar Banking: Pros and Cons
Since nearly 72% of our survey respondents said they’d visited a brick-and-mortar bank in the past year, we want to give this option its due. Here are the drawbacks and benefits of patronizing and old-school bank — the kind you can walk into to open your account.
Traditional Banking Pros
- Larger banks may offer “one stop shopping” for your financial needs: They often make it easy to take out a mortgage, open a credit card, or apply for a personal loan with the same institution you bank through. (However, these products may come at higher fees than you’d find by shopping around for independent lenders.)
- Some users simply find it easier to walk into a bank and ask for the service they need. This may be a better option for you if you don’t like figuring out how to get what you need through an online banking portal or app.
- Depending on the bank you choose, you may be supporting a local (or local-ish) business, or at least a nationwide business that provides jobs in your area. Credit unions in particular are often community-focused institutions that participate in local events and provide friendly, face-to-face customer service to account holders.
Traditional Banking Cons
- Again, depending on the bank you choose, you may only be able to access your bank locally. That can present problems for those who travel or eventually plan to move out of state.
- Large banks often have higher account maintenance fees and other associated costs. After all, they have to keep the lights on at an in-person banking facility. Furthermore, the amount you stand to earn through interest-accruing savings and checking accounts may be lower than what you’d get from a digital-only bank.
- You’re probably already doing most of your banking online. In fact, more than half of our survey respondents said they do most of their banking online or via mobile app. And at an in-person bank, particularly a small or local one, the online banking portal or mobile app won’t be quite as spiffy as the tech tools you’ll find at a bank where those tools are the primary way to access and interact with your cash.
Online-Only Banking Pros and Cons
So what about digital-only banks? What incentives can they offer to outweigh the drawback of not having a physical location — and what other drawbacks are there?
Online-Only Banking Pros
- Because they don’t have as much overhead as banks with physical facilities, online banks frequently offer lower-cost banking options. Many have no monthly maintenance fees or balance requirements.
- With an online bank, your money goes with you everywhere. You’re not tied to the physical location where your bank has branches. Many online banks allow you to access your cash through a fee-free network of ATMs that stretches not only across the country, but overseas as well, and you’ll always have access to the tools available on your computer and smartphone.
- Some online banks and alternatives do offer other financial products, like mortgages and student loan refinancing. For example, check out Ally and SoFi, which also offer investment products*, educational resources and more.
- Many online banks offer a suite of digital tools to help you take charge of your finances. These include built-in budget trackers, automatic savings, and integration with popular third-party apps like PayPal or Venmo. While brick-and-mortar banks are also catching on and adding in these extras, all-digital banks tend to have the leg up on these sorts of forward-thinking extras.
Online-Only Banking Cons
- No in-person banking option. If you’re set in your ways and don’t want to have to move through the learning curve of figuring out a digital bank’s tools, a brick-and-mortar bank may be easier. (That said, even big chains are installing souped-up ATMs and routing much of the queue to the machine rather than having them interact with tellers… so in the end, you may not really have a choice!)
What to Consider if You’re Looking for a Bank Account
No matter which kind of banking option appeals to you best, keep in mind that not all banks are created equal, whether they inhabit real space or cyberspace. It’s important to thoroughly research all the features and policies of your potential bank account before you sign the paperwork.
Looking for a new home for your cash? Check out our reviews of the best checking accounts and savings accounts on the market today.
Jamie Cattanach’s work has been featured at Fodor’s, Yahoo, SELF, The Huffington Post, The Motley Fool and other outlets. Learn more at www.jamiecattanach.com.
Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The secured Chime Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank.
MyPay® line of credit provided by The Bancorp Bank, N.A. or Stride Bank, N.A. MyPay services provided by Chime Capital, LLC (NMLS ID 2316451).
Chime is recommended by more of its users in the 2024 Qualtrics® NPS study when compared to top national banks and select fintechs. THE #1 MOST LOVED BANKING APP is a Registered Trademark of Chime Financial, Inc.
* Terms apply. Limited time only, must open the new account and complete qualifying activities to earn 3 individual rewards, up to a max of $350.00, as described at https://www.chime.com/policies/newmemberofferv3.
1 Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
2 Out-of-network ATM withdrawal and over the counter advance fees may apply except at FCTI® ATMs in a 7-Eleven® or Speedway, or any Allpoint® or Visa® Plus Alliance ATM participating in the Allpoint network.
3 SpotMe® on Credit is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.
Qualifying members will be allowed to overdraw their Chime Checking Account and/or their Secured Deposit Account up to $20 in total, but may be later eligible for a higher combined limit of up to $200 or more based on member’s Chime account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your SpotMe Limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your SpotMe Limit. SpotMe for Credit and SpotMe on Debit share a single SpotMe limit. Your SpotMe Limit may change at any time, at Chime or its banking partners’ discretion. Although there are no overdraft fees, there may be out-of-network or third-party fees associated with ATM transactions or OTC cash withdrawal fees at retailers. SpotMe won’t cover non-card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. SpotMe Terms and Conditions.
4 With a qualifying direct deposit, earn 1.5% cash back on eligible secured Chime Visa® Credit Card purchases. Please refer to the Secured Chime Visa® Credit Card – Cash Rewards Program Addendum for details and more information on rotating cash back categories.
5 On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.
6 Out-of-network ATM withdrawal and OTC advance fees may apply. View The Bancorp agreement or Stride agreement for details; see back of card for issuer.
7 Money added to Chime Card™ will be held in a secured deposit account as collateral for your Chime Card, and you can spend up to this amount. You can use money deposited in your Secured Deposit Account to pay off your charges at the end of every month.
8 You must notify your financial institution immediately of any unauthorized use. For specific restrictions, limitations and other details, please consult your issuer.
9 To be eligible for Chime+™ status, you must receive a qualifying direct deposit to your Chime Checking Account in the preceding 34 days. Certain products marketed as Chime+ benefits have additional eligibility requirements. While some Chime+ benefits may have associated fees, none of these fees are mandatory to access Chime+ benefits or to maintain Chime+ status. See Chime+ Terms and Conditions for details.
10 To be eligible for MyPay, you must receive qualifying direct deposits to your Chime Checking Account in the preceding 36 days as set forth in the MyPay Agreement. A qualifying direct deposit is a deposit from an employer, payroll provider, gig economy payer, government benefits payer, or other permitted source of income by Automated Clearing House (“ACH”) or Original Credit Transaction (“OCT”). Your MyPay Credit Limit and Maximum Available Advance may change at any time. MyPay is a line of credit and available limits are based on estimated income and risk-based criteria. Eligible members may be offered a $20 – $500 Credit Limit per pay period. Your Credit Limit and Maximum Available Advance will be displayed to you within the Chime app. MyPay is currently only available to eligible Chime members in certain states. Other restrictions may apply. See Bancorp MyPay Agreement or Stride MyPay Agreement for details.
11 Top three national bank ranking according to the Federal Reserve Statistical Release based on domestic assets; number of ATMs self-reported by Chase, Bank of America and Wells Fargo – June 2025.
12 To apply for a Chime Card, you must also open a Chime Checking Account.
13 Chime Visa® Credit Card holders – Deposits and debit refunds go to your Checking Account, then transfer to your Chime Card Secured Deposit Account – other than Chime Card cash deposits at retailers, which go to your Chime Card Account, then transfer to your Secured Deposit Account. Funds are moved from your Secured Deposit Account to your Checking Account to facilitate outbound transfers and debit purchases. Your Available balance is the money you can spend with your Chime Card or Checking Account. See account agreements and statements for details.
14 Chime will report the following activities, as applicable, to TransUnion®, Experian®, and Equifax®: amount past due; payment status of the last paid-off balance; how long you’ve had your card; current statement balance; last balance payment date; and highest balance before paying it off.
