Online vs. Brick and Mortar Bank: Which Is Better?
Updated
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When opening a new bank account, the first decision you have to make is what kind of bank you want to work with. There are clear advantages to online banks, but brick-and-mortar banks still excel in some areas.
When deciding between online vs. traditional banks, choose a bank that meets you where you are right now. You're not locked in forever -- should you require extra services or better rates in the future, you can switch banks. You can even open accounts at two banks to get the best of both.
Unsure which bank type fits you best? No worries. Read on for details into which type of bank could best satisfy your banking needs.
Before we start determining which is right for you, let's look at savings accounts at an online bank vs. a brick and mortar bank to compare side by side.
| Service | Savings accounts at brick-and-mortar banks | Savings accounts at online banks |
|---|---|---|
| Interest rates | Generally low | Generally high |
| Hours of operation | Fixed to the bank's schedule | Flexible to your schedule |
| ATM networks | Extensive ATM networks | Coverage varies |
| Customer service | In-person service in addition to call centers | Call centers often extended or 24/7 hours |
| Account access | Branch withdrawals, transfers, and ATMs | Transfers and ATMs |
| FDIC insured | Yes | Usually |
You can find basic bank accounts, like checking and savings accounts, at both traditional banks and online banks. It's the other services that set these bank types apart.
If you need these services, a brick-and-mortar bank may be a better fit:
But if you're prioritizing great interest rates and low fees, an online bank is the way to go.
Online banks don't have to funnel a bunch of money into maintaining a branch network. That means they can offer you better rates.
Online banks tend to offer the best rates, but not always. Don't assume online banks always offer the highest returns. If you want to earn relatively high interest on savings, shop around.
Make sure you're getting the best account for you by comparing savings rates and promotions. Here are some of our favorite high-yield savings accounts to consider.
| Account | APY | Promotion | Next Steps |
|---|---|---|---|
Open Account for SoFi Checking and Savings
On SoFi's Secure Website.
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
up to 3.80%²
Rate info
You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.
Min. to earn: $0
|
New customers can earn up to a $300 bonus with qualifying direct deposits!¹
|
Open Account for SoFi Checking and Savings
On SoFi's Secure Website. |
Open Account for CIT Platinum Savings
On CIT's Secure Website.
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
4.10% APY for balances of $5,000 or more
Rate info
4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY
Min. to earn: $100 to open account, $5,000+ for max APY
|
Earn a bonus of at least $225 after a one-time deposit of $25,000+.
Transfer a one-time deposit of $25,000-$49,999.99 for a bonus of $225. Transfer a one-time deposit of $50,000+ for a bonus of $300. Account must be opened with code PS2025 while this promotion lasts, and funded within 30 days. Bonus will be fulfilled within 60 days from the funding date. There is no period of time where the customer will be required to maintain the funds. Account must be open when bonus is credited. One bonus per account and primary customer. Bonus will be credited into the Platinum Savings Account that fulfills the funding requirement. Funding can be deposited all at once or incrementally.
|
Open Account for CIT Platinum Savings
On CIT's Secure Website. |
Open Account for American Express® High Yield Savings
On American Express's Secure Website.
Rating image, 4.00 out of 5 stars.
4.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
3.70%
Rate info
3.70% annual percentage yield as of April 5, 2025. Terms apply.
Min. to earn: $0
|
N/A
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
SoFi disclosure:
¹ 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 Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking#1.
² SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
³ 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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
⁴ 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.
⁵ 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 incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
⁶ 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.
⁷ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the“30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.
All bank accounts charge fees, but online banks generally charge fewer. Online banks have lower overhead costs -- so they can charge you less and pay you more.
Most online banks don't charge you monthly fees or have minimum balance requirements. Brick-and-mortar banks often have both. You may be able to waive monthly fees if you meet minimum balance requirements or set up direct deposits.
TIP
Whichever type of bank you go with, review its fee schedule before you sign up and make sure you're comfortable paying what it's charging. Ideally, you want to pay as little as possible so you can hold onto more of your money.
Both types of banks usually offer ATM access. The better choice boils down to your location and banking habits.
Most banks offer ATM locator tools on their websites or mobile apps, so you can see how many ATMs are in your area. If you plan to deposit cash at an ATM, make sure your bank offers deposit-taking ATMs as well.
If you're opening an account at a brick-and-mortar bank, you're probably choosing one that has a branch near you. That gives you easy access to fee-free ATMs when you're near home. But unless your bank has a large, nationwide ATM network, you could get stuck paying $3 to $5 to make an out-of-network ATM withdrawal when you travel.
Online banks usually partner with nationwide fee-free ATM networks, but there may be none near you. Plus, you can rack up extra fees for using out-of-network ATMs (unless your bank reimburses you for this).
There's little to distinguish online vs. brick-and-mortar banks in terms of online banking. Nearly every bank lets you view your balance, transfer funds, pay bills, and remotely deposit checks via website or mobile app.
The main difference here is whether or not you can visit a branch if you want to. With an online bank, you won't have that option. If you’re unable or unwilling to bank on the internet, a brick-and-mortar bank is your best bet at getting things done.
The online vs. brick-and-mortar banks competition will likely go on forever because each type has definite pros and cons. Both types of bank are insured by the FDIC. Both types are also safe places to bank.
Ultimately, you should pick an online bank if you're comfortable managing your money entirely online and you prioritize high returns and low fees. But consider a traditional bank if you require specialized services or you want in-person support at a branch when you need it.
Have you decided which bank type best meets your needs? If so, you're well on your way. Next, compare top banks so you get the best of what you're looking for. Or, take a step back and consider the big picture: generally speaking, how to choose a bank.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Motley Fool Money's top savings account picks can earn you more than 10x the national average savings account rate.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page. APYs are subject to change at any time without notice.
