Whether you’re comparing online or brick-and-mortar banks, there are some things to look out for if you’re concerned about the safety of your cash: deposit insurance, cybersecurity and user protections.
Are online banks safe?
Online banks can be just as safe as regular institutions with physical locations. Online banks typically have the same security protections and deposit insurance you’d find at large traditional banks, like Chase or Wells Fargo.
While a digital bank won’t have a branch location with a backroom vault stuffed with cash, the deposit insurance and security measures are typically the same.
For example, online banks like SoFi®, Varo and Ally Bank are all legitimate institutions with federal deposit insurance and bank charters. They also offer industry-standard encryption and security features such as two-step verification.
Yes, online savings and checking accounts from federally insured online banks are protected by deposit insurance. Federally chartered banks are legally required to have this coverage, and customers don’t have to pay for it.
Just like traditional banks, online bank accounts can have federal deposit insurance, either through the Federal Deposit Insurance Corporation for banks or the National Credit Union Administration (NCUA) for credit unions.
Insured deposit accounts are protected up to at least $250,000 per depositor, per FDIC- or NCUA-insured institution, per ownership category. This protection applies to various deposit account types, such as checking, savings and certificates of deposit.
Hot tip: Some online banks offer higher deposit insurance than the standard $250,000, usually thanks to a network of banks spreading the deposits around for higher coverage amounts.
SoFi’s deposit accounts are insured up to $3 million with the FDIC (higher coverage due to a deposit sweep program)., https://www.finder.com/banking/high-fdic-insurance
Alliant Credit Union’s deposit accounts are insured up to $250,000 with the NCUA., https://www.finder.com/banking/alliant-credit-union
Chime’s deposit accounts are insured up to $250,000 with the FDIC through its partner banks, Bancorp Bank and Stride Bank., https://www.finder.com/checking-accounts/chime-spending-account
With SoFi Checking and Savings get paid up to two days early. Set up direct deposit to automatically get your paycheck up to two days early every time you get paid
Up to 3.60% APY on savings by meeting deposit requirements or by paying the SoFi Plus subscription fee every 30 days
Get up to a $300 bonus with direct deposits of $5,000 or more
New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Eligible Direct Deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC.
SoFi members with Eligible Direct Deposit can earn 3.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the 3.60% APY for savings (including Vaults). Members without Eligible Direct Deposit will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.
We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees may be incurred when using out-of-network ATMs. SoFi’s ATM policies are subject to change at our discretion at any time.
Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
Overdraft Coverage is a feature automatically offered to SoFi Checking and Savings account holders who receive at least $1,000 or more in Eligible Direct Deposits within a rolling 31 calendar day period on a recurring basis. Eligible Direct Deposit is defined on the SoFi Bank Rate Sheet, available at https://www.sofi.com/legal/banking-rate-sheet. Members enrolled in Overdraft Coverage may be covered for up to $50 in negative balances on SoFi Bank debit card purchases only. Overdraft Coverage does not apply to P2P transfers, bill payments, checks, or other non-debit card transactions. Members with a prior history of unpaid negative balances are not eligible for Overdraft Coverage. Eligibility for Overdraft Coverage is determined by SoFi Bank in its sole discretion. Members can check their enrollment status, if eligible, at any time by logging into their account through the SoFi app or on the SoFi website.
Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Enroll in SoFi Plus between 9/18/25 and 1/31/26. Rates variable, subject to change. Terms apply at sofi.com/sofi-plus SoFi Bank, N.A. Member FDIC.
What security measures do online banks have?
Alongside deposit insurance, you can expect these industry-standard security protections at online banks:
Two-factor authentication (2FA), such as a security code when you sign in to your account.
Biometric logins, such as face recognition or fingerprint authentication, are used when logging in to your bank’s mobile app.
Fraud detection and alerts, such as contacting you if the bank sees suspicious activity on your account.
Personal information encryption, including the industry-standard Advanced Encryption Standard (AES) 256-bit encryption.
Card locking, usually available in the bank’s app, to turn your cards on or off if you suspect fraud or have misplaced them.
Hot tip: AES 256-bit encryption means that your data is turned into a cipher, which is unreadable without a key to decode it. The data is made up of 256 different bits, in multiple blocks, making it nearly impossible for someone to decode it without that key. This level of security is standard with most banks and credit unions to keep customer data secure.
How do I resolve issues with an online bank?
For most online banks, you can resolve issues over the phone, through email or in your bank app. Some online banks will also offer online forms you can fill out if you have a problem.
Online banks don’t have physical branches, so you can’t exactly head to a local branch to get a new debit card or resolve a fraud issue. Admittedly, not having access to physical locations isn’t as great for complicated banking issues, and it is one of the most glaring downsides of doing all your banking exclusively online.
If you’re thinking of doing all your banking online, make sure you’re comfortable resolving any issues through electronic channels.
Online banks vs. traditional banks
"You can have both traditional and online accounts. I like online banking, but I do like the convenience of physical branches from time to time. I have a few accounts with a local credit union that has multiple branch locations in my area, which is great for when I need to pull out cash or make deposits. However, my credit union doesn’t have the best savings rates, so I have accounts with a few online banks to snag high rates, and I have credit cards with other banks for their rewards. Long story short, you don’t have to put all your eggs in one basket."
The short answer is no, online banks aren’t more vulnerable to scammers or fraud than regular banks.
Most banks, online or otherwise, employ similar security measures. Whether you get scammed often comes down to bad luck or falling victim to a sophisticated banking scam.
Phishing and spoofing are common tactics scammers use to try to get your information:
Phishing. A social engineering scam that involves a scammer pretending to be someone else (like your bank) to get your personal information.
Spoofing. Caller ID spoofing involves scammers masking their phone number to make it look like your bank or credit card company is calling you.
In many cases, scammers will use a combination of phishing and spoofing to try to dig your sensitive information out of you. If someone contacts you out of the blue asking for your two-factor authentication or banking password, consider that a sign of a scam — even if it seems like they’re from your bank.
If you’re ever suspicious of odd text messages, emails or phone calls, simply contact your bank directly.
Bottom line
Online banks can be just as safe as traditional banks, as long as they have deposit insurance and industry-standard security features, such as two-factor authentication for logins and encrypting your sensitive data.
Compare more bank accounts, including checking, high-yield savings, money market accounts and business accounts.
Compare TD Bank and Bank of America on fees, features and convenience to find your fit.
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We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
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