Online banks have many great things, such as a high APY and low fees. However, are they truly safe? Learn more about their pros and cons and the best online savings accounts by reading the rest of this post.
Are Online Savings Accounts Safe?
Online banks are considered just as safe as traditional banks. They are also insured by the FDIC and take measures to protect your privacy and personal information.
Pros & Cons of Online Savings Accounts
Pros
- Higher interest rates. Higher yields are one of the main advantages of an online savings account. A higher yield can help grow your funds at a quicker rate. Online savings accounts offer APY’s in the 1.6% to 1.8% range, which is 16 times more than what traditional banks offer.
- Lower bank fees. There are generally no maintenance fees, but sometimes it is in exchange for maintaining a minimum balance.
- Online convenience. Banking can be carried out either online at the bank’s website or on their mobile app.
- Easy transfers. Many online banks make ACH transfers free and easy.
Cons
- No physical branches. The idea that online banks do not have a physical person you can go talk to about your account and banking needs is the biggest disadvantage that they have. Traditional banks offer a teller to help you out.
- Difficulty withdrawing money. Online banks usually do not offer ATM services and may charge for withdrawals.
It is possible, but very unlikely, that you could lose your money in a savings account. With a FDIC insured bank, this would only happen if the bank fails and you have more than $250,000 in your account.
How to Protect Your Online Savings Account
Even though online banks are considered secure, you should still take proactive measures to protect your financial information. This should be applied even if you bank online or in person.
When you bank in person, your information is stored digitally. Follow these steps to protect your account:
Using public Wi-Fi won’t necessarily give someone instant access to your info, but someone who is knowledgeable in technology can find a way to access your information sent through a public network.
Try to avoid banking on public Wi-Fi and make sure the banking apps are not running in the background.
Many hackers disguise their email address to make it look like it came from your bank. Never click on any suspicious links in an email. Contact your bank directly to confirm whether they need information from you.
Try to make a password that includes a unique combination of letters, numbers, and symbols. The more random your password is, the more secure it is.
You can further protect your account by applying two-step authentication factor. This requires two steps to log-in.
For example, you would need to enter your password and a unique code that is texted to you before you are able to log into your account.
All banks can be subject to failure, but the more established a bank is, the less likely it is to fail. Choose a bank that has a trustworthy reputation to minimize the threat of a bank failure. This is especially important if your deposits exceed $250,000 or if the bank is not FDIC insured.
Opt in and always pay attention to fradulent activity alerts. It’s always best to check and make sure, even if you think you made the transaction yourself.
You can withdraw money from an online savings account at any time, just like a traditional savings account. Be aware that some banks charge a withdrawal fee.
Best Online Savings Accounts
 Open a Discover® Online Savings Account for all these features: • Earn $200/$150 Bonus with promo code LOP325 by 9/11/2025 • Earn high interest rate of 3.50% APY • No minimum opening deposit, no minimum balance requirement, and now no fees • Interest on Discover Online Savings Accounts is compounded daily and credited monthly • Manage your account online or with the Discover mobile app • FDIC insurance up to $250,000 • See advertiser website for full details To qualify for Bonus: Apply for your first Discover Online Savings Account, enter Offer Code LOP325 at application, deposit into your Account a total of at least $15,000 to earn a $150 Bonus or deposit a total of at least $25,000 to earn a $200 Bonus. Qualifying deposit(s) may consist of multiple deposits and must post to Account within 45 days of account open date. Maximum bonus eligibility is $200. What to know: Offer not valid for existing or prior Discover savings customers. Eligibility is based on primary account owner. Account must be open when bonus is credited. Bonus will be credited to the account within 60 days of qualifying for the bonus. Bonus is subject to tax reporting. Offer ends 09/11/2025, 11:59 PM ET. Offer may be modified or withdrawn without notice. Due to new customer funding limits, you may wish to initiate fund transfers at your other institution. For information on funding, see FAQs on Discover.com/Bank. |
 |
 |
Bottom Line
Most online savings accounts are FDIC insured, but always confirm before you open an account. Even when it is insured, take proactive measures to safeguard your financial information.
Online savings accounts can provide several advantages over traditional savings accounts. Compare different terms and conditions, including yield rates, to find an online bank that meets your savings account needs.
For more information on banking, check out the rest of our bank guides right here on HMB!
Leave a Reply