It wasn’t that long ago when visiting a branch was the only way to open and manage a bank account. However, the arrival of online-only banks has radically changed how we manage our money. What are the benefits of banking purely online, and are there any pitfalls?
Latest reviews of online-only bank accounts and e-money accounts
Get a £20 welcome bonus when you spend your first £20 (T&Cs apply).
To open an account with Revolut, simply download the app through Google Play or the App Store, enter some personal details and your account will soon be up and running. There are 5 pricing plans to choose from, one of which has no monthly fee. Plans that charge a monthly fee have larger fee-free cash withdrawal limits and might include other perks such as travel insurance and medical insurance. Revolut lets you convert money in 36 currencies in the app, as well as send money abroad in more than 150 currencies. You can also use your card to spend overseas and no fees will be charged, provided you stay within your monthly limit and carry out transactions on a weekday.
Low overseas fees
Quick application
Earn cashback on spending
Set budgets for financial goals
Virtual cards for online purchases
Easy to transfer money internationally
Linked 'Junior' account available for one child
1% currency conversion charge on weekend spending abroad
Free cash withdrawals in the UK and abroad both limited to £200 per month
The Starling bank account can be opened and managed online or via the app. There’s no monthly fee to pay and you’ll earn interest on credit balances up to £5,000 per account. You can use the Bills Manager feature to pay direct debits and standing orders straight from a separate savings pot, helping you to see exactly how much you have left over to spend. You’ll also be able to split bills, create budgets and set up additional savings spaces with ease from the app. Plus, there are no fees for using your Starling Bank card overseas.
Representative example: If you use an arranged overdraft of £1,200, you'll be charged
interest at 15% EAR variable
.
No monthly-fees
100% digital sign-up
24/7 UK customer support
'Settle up' feature to split joint bills
Pays interest on current account balance
Overdrafts available (only on personal accounts)
Lower ATM withdrawal limit than some other digital challengers
Monzo Instant Access Savings Pot earns you 4.10% AER interest (variable), paid monthly into the Pot you create.
It’s quick and easy to open a Monzo bank account through the app. You’ll be able to set aside money in savings pots, create budgets and track your spending. There are no foreign transaction fees for purchases made on your card abroad. If Monzo is your main bank account, you can also make unlimited fee-free cash withdrawals in the EEA and up to £200 every 30 days for free outside the EEA (this limit is higher for paid-for accounts). There are 3 different pricing plans to choose from, one of which is free. The Premium plan includes worldwide travel insurance and mobile phone insurance.
Representative example: If you use an arranged overdraft of £1,200, you'll be charged
interest at 39% EAR variable
. Account fee of £0.
Easy to set up
Good for budgeting and categorising spending
Automatic saving feature
Fee-free spending abroad
Slick app with face login
Overdrafts and loans available
Free ATM withdrawals outside the EEA limited to £200,
Receive 1% cashback on everyday debit card purchases capped at £15.
This free bank account can be opened and managed via the app. Simply download the app through Google Play or the App Store. As well as earning interest on your account balance, you’ll earn 1% cashback on your debit card spending for the first year. Plus, you can round up your spending to the nearest £1 and the difference will automatically be saved for you - your round-up balance will even earn 5% interest. You’ll also have access to the Chase Saver account which pays a competitive rate of interest, and you’ll be able to spend on your debit card fee-free across the globe.
You can open accounts in GBP, EUR and RON with Monese. Accounts can be up and running in a matter of minutes and you can choose from 3 different pricing plans, one of which is free. Choosing a paid-for plan will give you access to benefits such as accident, sickness and unemployment insurance, as well as purchase protection. You’ll also be able to spend on your card abroad for free and withdraw cash up to a set monthly limit - the free plan charges a fee for foreign transactions and ATM withdrawals. Additionally, you can choose to build your credit history with the Monese Credit Builder.
UK current account that does all you can expect, including direct debits and standing orders.
Fast and easy set-up (no credit check or proof of local address needed).
Colourful app that is easy to use, allows you to categorise your transactions and freeze the card if you lose it.
Free card payments and ATM withdrawals abroad.
You can load cash into the account for free.
Can open both a UK and European account and switch instantly.
With a free plan, fee-free ATM withdrawals and cash loads are limited to £200 per month.
You can’t put your savings in a separate account or earn interest on them.
It doesn’t offer anything more than a current account.
No physical branches.
Minimum opening balance
£0
Account fee
£0
What is an online-only bank?
Online-only banks don’t have a network of branches, meaning customers have to manage their transactions through a website or an app.
Provided you have an internet connection, you can apply for online-only accounts and move money wherever you are.
It’s usually the younger “challenger” banks that are online-only, such as Starling and Monzo. This sets them apart from traditional banks like NatWest and Lloyds, which have hundreds of branches dotted around the UK.
What to consider before opening an online-only bank account
Some online-only banks only let customers log in from either a website or an app rather than both, so make sure you understand what it offers before you sign up.
It’s always important to compare the features and limitations of a bank account. For example, if you would like to deposit cash into an account, some online-only banks won’t let you, while others have ways around this, such as visiting a Post Office branch.
It tends to be relatively straightforward to set up and use an online-only bank account. However, if you want to speak to someone from the bank in person, it won’t be the right option for you.
How do I open an app-based bank account?
Here are some steps to help you get started:
Compare the best current accounts to choose the right bank account for you.
Find the bank’s app and install it onto your device. Make sure you’re installing the legit app — go on the bank’s website, which should have a link.
Answer questions about yourself, such as your name, contact details and date of birth.
Choose an account. The bank might ask you some questions about how much you plan to pay into it and what you plan to use it for.
Provide a picture of your ID, such as a valid driving licence or passport. You may also have to record a video of yourself saying a few words.
Wait for the bank to approve your application. You should get a notification that your account is ready to use (many online-only banks approve accounts in a day).
Once it’s open, you should get immediate access to a virtual bank card. Your physical card will be sent in the post, which you usually have to activate through the app.
How safe are online-only banks?
Online-only banks tend to be just as safe as the traditional high street ones. UK banks are heavily regulated, and there are strict rules to abide by when managing customers’ money.
Any bank that offers online banking should have robust security systems to protect customers’ information and keep their money safe. Many ask you to provide a password to verify yourself whenever you log in and make payments. For some transactions, you might have to provide extra information to verify yourself, such as a one-time passcode texted to your phone.
Many online-only banks have features that can help keep your money safe, such as blocking certain types of transactions and sending real-time notifications to your phone.
A big perk of using an online-only bank is that once the account is open, you will receive a virtual bank card, which you can view in the app.
You can use the virtual card immediately to make payments while you wait for your physical card to arrive in the post. It also means that you don’t need to carry around a physical card to pay for things.
The virtual card can be stored on Google Pay or Apple Pay. To do this, download either Google Pay (for Android devices) or Apple Pay (for Apple devices) and follow the instructions to add the card to your virtual wallet.
Once set up, you can pay for things in-store by tapping your device on a card machine, like you would when using a contactless card (you just have to unlock your phone at the checkout).
Will I get a physical card with an app-based bank?
Once your account is open, most banks automatically send you a physical card in the post.
Some physical bank cards don’t have card numbers printed on them, so if you want to use your card to pay for something online, you have to open the app and copy your card details.
If your physical card is lost or stolen, you can also temporarily lock it using your app to stop anyone from using it (and unlock it again if you find it).
Pros and cons of online-only banks
Pros
It’s usually quick and easy to set up an account
They tend to have useful features, such as being able to divide your money into pots
Many offer cashback and fee-free spending while abroad
Get a virtual card to use immediately
Cons
No bank branches so you can’t get face-to-face customer service
Problematic if technical issues stop the website or app from working
Limited product range compared to high street banks
Some don’t accept cash or cheques
Bottom line
Online-only banks tend to be relatively new banks that have created accounts to suit our modern lifestyles. Their apps are often quick and intuitive, which makes it easy to bank on the go.
It’s probably not a coincidence that many online-only banks, like Monzo and Starling, top the league table for customer satisfaction.
If you’re not fussed about face-to-face customer service, an online-only bank can be well worth using, especially if you make full use of the features.
FAQs
Yes, if you prefer to manage your money entirely online, it’s perfectly fine to just use an online-only bank.
Lots of people are choosing to switch their main accounts over to online-only banks, but you don’t have to choose one or the other — it could even be useful to have more than one account.
The main downside of an online-only bank is that you don’t get face-to-face customer service.
This means that if you need help with your account, you’re relying on the bank’s online and call centre helplines to get the support you need.
But sometimes, you might find that, compared to the traditional banks, the online-only companies have shorter call wait times and more convenient ways of communicating.
We’ve rated and ranked our best banking accounts here. We also highlight banks that excel in certain categories, of which 4 out of 6 are online-only banks.
Banking scores
★★★★★ — Excellent
★★★★★ — Good
★★★★★ — Average
★★★★★ — Subpar
★★★★★ — Poor
Finder scores, in blue, are based on our expert analysis. We also show reviews from users, where we've received more than 10, with a score in yellow. We gather more reviews from customers every year in Finder's customer satisfaction survey.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Katherine Denham is a freelance journalist, writer and consumer champion, specialising in personal finance. She has written for The Times since 2019. She also has bylines in The Sunday Times, Times Money Mentor, City A.M. and a number of financial trade publications. When she’s not working she can be found hiking and drawing pictures of her tortoise.
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