Online and mobile banking are growing in popularity, thanks to how they can make transactions faster, easier, and more secure. Indeed, the number of Americans who are going all in on managing their finances this way continues to grow. Recent research shows that about 27% of Americans use online-only banks.
Not only that, those who use any type of online banking, whether through a traditional or online-only bank, tend to use it frequently. In SoFi’s April 2024 Banking Survey, which looked at the banking usage of 500 U.S. adults, 48% of respondents said they use online banking daily, and another 26% reported using it several times a week.
Whether you are among the online-only banking crowd or are using your traditional bank’s website or app, online and mobile banking have many advantages. And as with most financial services, there are also downsides to consider. Here, take a closer look at this important facet of your personal finances, so you can decide which banking style suits you best.
Key Points
• Online and mobile banking are becoming increasingly popular, with close to 30% of Americans primarily using online-only banks.
• Common online banking features used include checking balances, transferring funds, depositing checks via mobile device, and using automatic bill pay.
• Some online banks may offer higher interest rates and lower fees compared to traditional banks.
• Online banks provide the convenience of banking from just about anywhere, but lack in-person assistance and may have more limited services and ATM access in certain areas.
• Any traditional and online bank that is insured by the FDIC guarantees the same amount of protection in the highly unlikely case of a bank failing.
What Is Online Banking?
Online banking, most generally, refers to the ability to conduct transactions through a financial institution’s web page or app, making it unnecessary to go to a branch. Most banks today offer some form of online banking, and most members, in turn, are accustomed to having that option.
For instance, 63% of respondents in SoFi’s survey said they frequently use online banking to transfer funds between accounts, and 43% said they frequently do mobile check deposits.
|
Frequent Uses of Online Banking | |
|---|---|
| Check account balances | 77% |
| Transfer funds | 63% |
| Mobile check deposit | 43% |
| Automatic bill payment | 40% |
| View or download account statements | 38% |
| Chat online with customer service | 17% |
Source: SoFi’s April 2024 Banking Survey of 500 U.S. adults
Often, however, the term “online banking” is used to refer to online-only banking vs. traditional banking, meaning you manage your personal finances completely online.
Since online banks typically have no physical locations and therefore lower overhead, they can usually offer consumers a higher annual percentage yield (APY) on deposit accounts and other perks.
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Pros of Online Banking
To better understand online-only banking, consider these upsides:
Higher Interest Rates and Lower Fees
As mentioned, online-only banks tend to offer a higher interest rate on savings accounts and possibly checking accounts, too. As of July 2024, the national interest rate on savings accounts is 0.45%. At some online-only banks, however, you can find an APY of 4.00% or higher.
In addition, these banks may offer lower or no fees. Stashing your cash in one of these banks can be a way to avoid bank fees, such as account maintenance charges and the like.
Recommended: APY vs. Interest Rate: What’s the Difference?
No Minimum Balance
Many traditional banks still require you to maintain a minimum balance or else be charged a monthly fee. In terms of how much money you need to open an account online and keep it in good standing, you may be in for a pleasant surprise. A number of digital financial institutions allow a balance of just a few dollars, and you still won’t be hit with charges on your statement.
Convenience
Online banks are open 24 hours a day, 7 days a week, which means you can take care of transactions after normal bank hours. You can manage your money whenever and wherever.
ATM Access
Most online banks are part of an online network of ATMs, such as MoneyPass or Allpoint. What’s more, there is generally no fee for using these ATMs. If the financial institution doesn’t partner with an ATM network, they will typically offer to refund ATM fees up to a certain number of withdrawals.
Enhanced Online Experience
As digital innovators, online-only banks may provide a better user experience when online or in the app. Expect to get the latest tools and access to a wealth of features such as round-up savings programs or a dashboard that helps you track your earnings, spending, and savings.
Cons of Online Banking
There are, however, some potential downsides to managing money this way. Consider these potential issues with online banking:
No In-Person Assistance
While most online banks provide a customer service line or chat function, they generally do not offer personal bankers. This means that there is no one available face-to-face to help you with your banking needs, such as setting up accounts, applying for loans, and getting a document notarized. If you are a person who wants and appreciates this kind of personal connection, you may not be well-suited to digital banking.
Limited Services
There may be some services that you aren’t able to enjoy with an online-only bank. It may or may not offer credit cards, car loans, and mortgages; you may not be able to deposit cash easily, as you can at a brick-and-mortar bank branch. Every online bank is different, so do your research to see what services they offer.
Limited ATM Access
Although many online banks will have a network of tens of thousands of ATMs that customers can access, others may offer less robust options vs. traditional retail banks. It’s worthwhile to see exactly where a digital bank has allied ATMs near your usual haunts, like your home and office, before signing up.
Is Online Banking Safe?
People may worry about whether online banking is safe. In the SoFi survey, 21% of respondents said they were very concerned about the security of their online bank accounts, and another 21% said they were somewhat concerned. The truth is, traditional banks are no more or less secure than online-only banks, and vice-versa. All are at a very minimal risk of a hack.
Recommended: What Do You Need to Open a Bank Account Online?
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The Takeaway
Whether you call it online banking, mobile banking, or digital banking, keeping your funds with an online-only bank can offer many rewards. You’re likely to earn a higher interest rate and pay fewer fees, for instance. But those who like banking in person at a branch may choose to stick with a traditional bank. Think carefully about what suits your financial style and needs best.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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