Compare digital banks in the US

Editor's pick: Axos Bank Rewards Checking

• Earn up to 1.25% APY
• No monthly maintenance fees
• Unlimited domestic ATM fee reimbursements

Editor's pick: Axos Bank Rewards Checking

Earn up to 1.25% APY while enjoying a suite of digital tools for smarter money management.

• No overdraft or NSF fees
• Low foreign currency conversion rate
• Digital money management tools

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Like many other parts of our lives, banking is becoming increasingly digital. The US has a number of new digital banks, also called neobanks, promising to revolutionize the financial industry through the use of world-class technology and digital services. But are they worth the hype? Learn about what makes them different and if they’re a right option for you.

What is a digital bank?

Like the name suggests, a digital bank operates digitally, usually from an app, rather than from a physical branch or office. A digital bank is a fairly loose term — the correct industry name for these banks is a neobank.

A neobank is a completely digital bank that doesn’t use any existing legacy systems to operate. This means the bank doesn’t use any physical infrastructure or digital operating systems that are already being used by existing financial institutions. The technology used by these fully digital banks is developed from scratch.

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Name	Product	APY	ATMs	Fee
BBVA Online Checking			No ATM fees nationwide at more than 64,000 AllPoint, participating 7-Eleven and BBVA USA ATMs	$0	Bank with BBVA and you could earn a total offer value of $250. Offer valid: 2/1/20 - 2/28/20.	Go to site More Info	Compare	loading Fetching your data...
Axos Bank Rewards Checking		1.25% on balances of $0+ with $1,000+ in direct deposits, 10 $3+ debit card transactions and 5 additional account transactions per month	ATM fees reimbursed at any ATM nationwide	$0	Earn up to 1.25% APY while enjoying a suite of digital tools for smarter money management.	Go to site More Info	Compare	loading Fetching your data...
Axos Bank Essential Checking			ATM fees reimbursed at any ATM nationwide	$0	No fees. Unlimited domestic ATM fee reimbursements.	Go to site More Info	Compare	loading Fetching your data...
Chime Spending account		0.01%	38,000 fee-free ATMs nationwide	$0	Linked checking and savings accounts from a mobile-first bank that’s light on fees.	Go to site More Info	Compare	loading Fetching your data...
Radius Bank Rewards Checking		1.20% on balances of $100,000+ 1.00% on balances of $2,500 to $99,999.99	More than 20,000 ATMs + unlimited ATM surcharge rebates	$0	Earn cash back with this high-interest checking account, plus get free ATM access worldwide.	Go to site More Info	Compare	loading Fetching your data...
Zero Checking			No access to ATMs	$0	A mobile banking experience consisting of an app, a credit card called Zerocard, and a checking account called Zero Checking.	Go to site More Info	Compare	loading Fetching your data...
USAA Classic Checking		0.01% on balances of $1,000+	Free at 60,000 ATMs nationwide (USAA, Allpoint, MoneyPass, PNC)	$0	An online checking account means no driving around town, no waiting in line and no bankers' hours.	Go to site More Info	Compare	loading Fetching your data...

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What other digital banks will be launching in the US?

There are a number of digital banks operating overseas that plan to launch in the US in the future, including:

• N26. This German challenger bank lets you divide your money up into Spaces, or subaccounts, to help you budget and save. N26 plans to launch in the US — a date hasn’t been announced yet, but you can sign up on the website to get early access.
• Revolut. This UK-based bank was created with travelers in mind, offering low fees for international purchases, withdrawals and money transfers. Revolut’s US launch date hasn’t been announced yet, but you can sign up for their waitlist online.
• Glint. This UK-based banks brings an old concept into the digital age. Glint lets you store your money as gold so that it’s less vulnerable to the economic factors than can impact a country’s currency. US customers can already use the app to buy gold, but Glint plans to launch a debit card that allows you to spend your gold or exchange it for US currency at an ATM in the near future.

What’s the difference between a digital bank and a traditional bank that’s available online?

Many banks in the US appear to be digital banks — they don’t have branches and customers use mobile banking apps to control their money. However, just because a bank doesn’t have branches and offers a range of digital products and platforms doesn’t mean it’s a digital bank or a neobank. These online-only banks are built on existing infrastructure and closely mimic traditional banks, but true digital banks utilize new technology to create innovative banking solutions.

Online banks aren’t 100% digital banks

Many people refer to American Express and Discover as digital banks because they don’t have any physical branches. However, these banks aren’t neobanks because they rely on existing banking infrastructure and operate like a traditional bank.

Are digital banks safe?

Digital banks need to have the same banking licenses and approvals as existing US banks before they’re able to offer products and services to consumers. These new banks will be regulated by the Federal Deposit Insurance Corporation (FDIC) and the US Securities and Exchange Commission (SEC) in the same way that existing banks are regulated.

Your deposit of up to $250,000 with an FDIC-insured bank is protected by the US government. This means if something were to happen to the bank, your money (up to this amount) would be safe. Note that some of the digital banks mentioned in this guide are not yet considered banks and haven’t yet been licensed or FDIC-insured.

How to get started with a digital bank

If you’re interested in joining one of these new digital banks, you can join their waitlist by visiting their website. When they launch products, those on the waitlist will be the first to know and the first to receive access to these new products.

What is app-based banking?

App-based banking is any sort of financial institution or tool that you control primarily through an app. There are several advantages to app-based banking:

Things to know about app-based banking

Using your phone as your main point of contact with your bank can save you time and give you more control over your finances, but there are a few things to be aware of.

• Some apps require credit checks

  If you’re planning to apply for a new checking account or credit card, your bank may pull your credit file in order to assess how likely you are to overdraw the account.

• Your money may not be protected the same way it is with big banks

  Most banks are insured by the FDIC, which means your deposit of up to $250,000 is backed by the US government. Not all app-based banks have this same protection. You can use the FDIC’s BankFind tool to learn if your bank is FDIC insured.

• App-based banking doesn't always afford the same rewards as traditional banks

  App-based banks aren’t always able to offer the financial rewards, such as signup bonuses, that are common at many big banks.

• If you forget your PIN or lose your card, most app-based banks won't panic

  A benefit of an app-based bank is having full access to your account at all times. Lots of app-based banks allow you to freeze your account if you lose your card, so if you find it again you can just unfreeze the card in the app. If you forget your PIN, you may even be able to answer security questions in the app.

• Some banking apps link to your pre-existing bank accounts and show you ways to spend better

  Not all app-based banks are banks in the traditional sense. Some banking apps work alongside your pre-existing accounts to gather all your spending data in one place, offer you insights into the way you spend your money and suggest ways to improve your finances.

What are the different types of app-based banking?

App-based banking encompasses a lot of different financial products, including:

• Digital banks. Digital banks rely on new, innovative technology and are generally app-based.

• Traditional bank apps. App-based banking doesn’t only apply to neobanks, it’s also becoming increasingly possible to bank on your smartphone with traditional banks such as Chase and Bank of America, both of whom have highly-rated mobile apps where you can control your money.
• Apps that help you save. One of the most common reasons for people heading away from traditional banks and towards app-based banking is how easy app-based banking makes it for people to save money. This includes everything from budgeting apps like Cleo to cashback apps like Ibotta.
• Prepaid card apps. Companies like NetSpend let you control a prepaid debit card from an app so you can track your transactions and see exactly how much money you have left.
• Investment apps. Apps like Robinhood and Acorns let you invest in stocks from your phone so that you have more control over your finances.

Bottom line

Digital banks are getting a lot of hype right now, and for good reason. They often cater to specific niches and groups and they’re known for offering innovative apps. But before you ditch your current bank, take the time to read through all of the fine print to make sure the bank you’re interested in is as good as it sounds.

Frequently asked questions

Digital banks often have multiple ways to contact customer service, including via online chat, email and phone. Check with the Image source: Getty Images