By Christina Lavingia, Editor
This is the fourth installment of GOBankingRates' third annual "Best Banks" series, connecting consumers with the best banks and deposit accounts of 2015. Come back each week of February for our rankings and reviews of the year's best financial institutions and products, including brick-and-mortar banks, military financial institutions, savings accounts, checking accounts and CDs.
It's easy enough to become complacent with where you bank. After all, maintaining your budget and paying your bills can be worrisome, consuming all aspects of your finances. Between taking care of the basics, keeping your finances in check and working toward different goals, the bank that's making it all possible is often overshadowed. According to the 2013 World Retail Banking Report, only 10 percent of bank customers reported plans to switch financial institutions within a six-month period. That means banks are eager for a portion of this small customer market, offering incentives like cash-back promotions to get new account holders.
If you're aware that your interest rates are less than favorable or that you have some unmet banking needs, whether in customer service or accessibility, it can then be complicated and discouraging to go through the process of finding a new financial institution. After all, there are so many criteria to consider, such as deposit rates, loan rates, customer service, technology, branch access, ATM network size, etc. What's more, your life stage can greatly affect which bank is best suited for you.
GOBankingRates has done much of the work for you, ranking the best financial institutions of 2015 so you can best decide where to put your hard-earned money. In this edition of the "Best Banks" series, we evaluated online banks, which traditionally offer better deposit and loan rates than brick-and-mortar institutions, thanks to their lower overhead costs.
See More 2015 Rankings From GOBankingRates:
You might be skeptical of online banks, wondering whether your funds are as safe with a virtual institution as they are with a traditional one; however, all of the online banks listed below are FDIC-insured, meaning your funds are just as protected. If your goal is to finally grow your savings in 2015, it might be time to transition over to an online bank to capitalize on higher interest rates for your deposited funds.
To put the difference of an online bank into perspective, GOBankingRates found in September that average online savings account interest rates were seven times higher than the average savings rates at brick-and-mortar banks and four times higher than average savings rates offered by credit unions. If you could get 0.55 percent APY on average from an online bank, why wouldn't you, when compared to the average traditional bank interest rate of just 0.08 percent APY?
For this study, GOBankingRates considered seven criteria for each online bank: checking account fee, savings account yield, one-year CD interest rate, BauerFinancial Star Rating indicating overall financial strength, whether the bank offered 24/7 customer service by web or phone, real-time chat with a live representative, and a mobile app. Banks were then ranked based on their overall scores.
1. Ally Bank
Why: Ally Bank boasts no checking account maintenance fee, high savings and CD yields, and ample customer service and mobile banking access, making it the best online bank of 2015. In GOBankingRates' 2014 best banks survey, Ally Bank ranked No. 1 for best online CD account.
Review: Ally Bank doesn't charge its checking customers a monthly maintenance fee, a huge perk considering average checking account maintenance fees average $8.61 at online banks and $12.95 at brick-and-mortar institutions, according to MarketWatch. Ally Bank's savings account boasts a high 0.99 percent APY and its one-year CD has an equally competitive 1.05 percent APY. In terms of service, Ally offers 24/7 customer support via telephone, live chat with a real person and a mobile app. The bank's BauerFinancial Star Rating is 3.5 out of 5.
Those looking to grow their savings with a CD in 2015 should strongly consider banking with Ally. The bank offers two rare CD options: a No Penalty CD that allows depositors to withdraw their deposited funds and full interest before the account even matures, and a Raise Your Rate CD that allows you to switch to a higher interest rate if rates go up. The No Penalty CD earns a 0.87 percent APY on terms of 11 months, and the Raise Your Rate CD earns 1.29 percent APY on two-year terms; both APYs are much higher than the average CD rate, which was 0.51 percent APY across terms as of October 2014.
How to join: Get started with Ally Bank by visiting its website. From there, you can open an account; all account holders must be 18 years or older, have a U.S. mailing address and provide a Social Security number.
2. Bank5 Connect
Why: Bank5 Connect also doesn't charge a monthly checking account maintenance fee; however, its savings and one-year CD rates were lower than Ally Bank's. Bank5 Connect offers customers a mobile app and live chat with a human representative through its site, though it doesn't offer around-the-clock phone support. It is one of only two banks on this list to receive a 5 out of 5 BauerFinancial Star Rating.
Review: Bank5 Connect offers all the banking staples you'd find at a traditional bank. For those concerned about cash access, Bank5 Connect customers have free in-network access to thousands of SUM Network ATMs. Additionally, the bank charges no fees for out-of-network ATM use and provides reimbursements up to $15 per month for ATM fees charged by other banks. As an added bonus, those with account balances above the $250,000 FDIC threshold are protected through the Depositors Insurance Fund (DIF). As stated on Bank5 Connect's website, "No depositor has ever lost a penny in a bank insured by both the FDIC and the DIF."
Its savings and CD accounts offer rates lower than Ally's, but are still impressive, at 0.90 percent APY for savings and 1.00 percent APY for a one-year CD. The bank's high Bauer Rating also helped it take the second spot on this list.
How to join: Those interested in opening an account with Bank5 Connect can do so by visiting its website or calling 1-855-55BANK5. A Social Security number, valid ID, previous home address (if you've resided in your current home for under two years) and a means of funding your account -- i.e. credit or debit card, checking or savings account -- are required when applying for a Bank5 Connect product.
3. Discover Bank
Why: Discover Bank offers depositors the same interest rates on its savings and one-year CD accounts as Bank5 Connect; however, its BauerFinancial Star Rating is 4 out of 5. As an added perk, Discover Bank does offer 24/7 phone customer service, along with live chat support and a mobile app.
Review: Customers of Discover Bank enjoy a lot of customer support access along with a savings account rate of 0.90 percent APY and one-year CD rate of 1.00 percent APY. Discover Bank's checking account comes with no monthly maintenance charge and its savings account has a relatively low minimum opening deposit requirement of $500, especially given its high yield.
Discover Bank's high yields apply to other deposit products as well. Its money market account gives depositors 0.75 percent APY on balances up to $100,000, and the bank offers a 1.45 percent APY for a three-year IRA CD. In addition to these deposit accounts, Discover can be your lender for a mortgage, home equity, student or personal loan. Or choose Discover as your credit card issuer -- it's currently offering a credit card with a promotional 5 percent cash back on gas purchases and ground transportation through March 31, 2015.
How to join: To become a Discover Bank customer, you can visit its website or call a representative 24/7 at 1-800-347-7000. Opening an account takes just five to 10 minutes, according to Discover Bank's website, and requires a physical U.S. address, Social Security number or other taxpayer ID, email address and phone number, along with bank routing and account numbers to fund your account.
4. GE Capital Bank
Why: GE Capital Bank ranked No. 4 on our list, offering higher savings and one-year CD rates than the three banks above it; however, it doesn't offer a checking account product, nor 24/7 telephone customer service, live chat with a person or a mobile app. The bank's BauerFinancial Star Rating is 4 out of 5.
Review: GE Capital Bank's deposit rates are high, offering savings account holders a 1.05 percent APY and a 1.10 percent APY on its one-year CD. However, those who value customer service and mobile account access will have to consider GE Capital Bank's lack of 24/7 customer phone support, live chat and a mobile app when deciding where to bank. The bank doesn't offer a checking account, which lowered it significantly in our study; however, those who are looking just to open a savings product with GE Capital Bank should strongly consider its options, as your savings can earn 13.75 times more interest on deposits in a GE Capital Bank savings account than the average U.S. bank's savings vehicle.
How to join: You can open an account and become a customer of GE Capital Bank by visiting its website or calling 1-855-730-SAVE (7283) Monday through Friday between 7 a.m. and 11 p.m. CT. To open an account you'll need to provide a Social Security number, date of birth (you must be 18 years old to open an account for yourself), email address if applying online, U.S. street address and a means of funding your new account.
5. Synchrony Bank
Why: Synchrony Bank, like GE Capital Bank, doesn't offer a checking account but does have a high savings account rate of 1.00 percent APY and the highest one-year CD rate on this list (tied only with Sallie Mae Bank) at 1.15 percent APY*. Synchrony offers a mobile app and has a BauerFinancial Star Rating of 4.
Review: Those who rely on phone service from their bank should be aware that Synchrony Bank doesn't offer 24/7 phone customer service or live chat with a human. However, the bank's high yields and travel benefits could be more than enough reason to open an account. Synchrony's Optimizer+ Perks program rewards depositors based on their balance amount and time as a customer, with travel discounts, ATM fee reimbursements, bank account perks, special offers and even VIP events for the highest Diamond tier.
How to join: Synchrony Bank's accounts take just four simple steps to open: (1) enter your personal information online, (2) select an account to open, (3) choose an option to fund your account, (4) sign and mail over a form for a new account. To open an IRA or Trust account, customers are advised to call 1-866-226-5638.
*Synchrony's rank was calculated using the slightly lower 1.10 percent APY it offered on 12-month CDs at the time GOBankingRates verified its data sets for this series. The rate has since risen to 1.15 percent APY.
6. CIT Bank
Why: Much like Synchrony Bank, CIT Bank doesn't offer a checking account. But, with only slightly lower interest rates than Synchrony Bank, and the added benefit of a mobile app, CIT Bank claimed the sixth spot on this list.
Review: CIT Bank provides its customers with high yields of 0.95 percent APY on its savings account and 1.10 percent APY on its one-year CD. The bank also boasts a high 4 out of 5 BauerFinancial Star Rating and a mobile app. Live chat with a human and 24/7 phone customer service are not available with CIT Bank. Much like Ally Bank, when it comes to CDs, CIT Bank has many options. In addition to term CDs and jumbo CDs for larger deposits, the bank offers RampUp CDs that allow depositors to increase their yields after opening the account, with rates currently starting as high as 1.90 percent APY.
How to join: To open an account and become a CIT Bank customer, applicants must be 18 years of age or older, a U.S. citizen or resident alien, have a U.S. address, Social Security number and driver's license or state-issued ID, as well as a bank account number to electronically transfer funds to the new CIT Bank account.
7. Sallie Mae Bank
Why: With a lower savings APY but a higher one-year CD rate than CIT, Sallie Mae Bank came in No. 7. The bank offers its customers a mobile app and has a BauerFinancial Star Rating of 4; however, it doesn't offer a checking product, 24/7 telephone customer service or live chat with a bank representative.
Review: Sallie Mae Bank's savings account rate of 0.80% APY is lower than CIT Bank's by 0.15 percent APY; however, it makes up for this with a higher CD account rate, tied with Synchrony Bank's at 1.15 percent APY. For account holders who want a higher yield, Sallie Mae Bank also offers a money market account with no minimum balance, minimum deposit requirement or fees, at a rate of 0.90 percent APY. This is unique for money market accounts, as they're usually designed for customers with higher account balances. The bank also offers additional rewards in the form of a 10 percent annual match on interest earnings through Upromise.
How to join: It's easy to open an account and join Sallie Mae Bank. To become a customer, simply visit its website, select an account you'd like to open and fill out the online application.
8. TIAA Direct
Why: With the same savings account interest rate as Sallie Mae Bank and a one-year CD rate of 1.01 percent APY, TIAA Direct took the No. 8 spot on our list, with a BauerFinancial Star Rating of 3 and a mobile app for customer use.
Review: TIAA Direct rewards account holders with rates of 0.80 percent APY on its savings account and 1.01 percent APY on its one-year CD. Customers don't have 24/7 telephone customer service or the option to chat live online with a representative; however, the bank does offer a mobile app for banking by smartphone wherever a customer is. TIAA Direct also offers a starting rate of 0.05 percent APY on its interest-earning checking account, and charges no monthly checking fee. Depositors with larger checking account deposits should consider opening an account with TIAA Direct, as its checking account rewards depositors for higher balances with higher rates.
How to join: All you need is a U.S. mailing address, Social Security number and government-issued ID to apply for an account online with TIAA Direct. Applicants must be 18 years of age or older and a U.S. citizen or resident alien. A new account can be opened in as little as 10 minutes, and those needing assistance can call the bank at 855-842-2372 between the hours of 8 a.m. and 8 p.m. EST, Monday through Friday, or 9 a.m. to 6 p.m. on the weekends.
9. First Internet Bank
Why: First Internet Bank offers a competitive interest rate on its 12-month CD; however, its savings rate is lower than others on this list. The bank boasts the highest BauerFinancial Star Rating of 5, and offers its customers both live chat with a real representative and a mobile app for convenient banking on the go.
Review: Those considering opening an account with First Internet Bank have plenty of incentives to do so. The bank offers its customers a high 1.00 percent APY on its 12-month CD and 0.60 percent APY on its savings account -- a rate that's 7.5 times higher than the average brick-and-mortar savings account yield. Those wanting a bump on their deposited funds can open a personal money market account at 0.80 percent APY and still keep their money liquid. Customers of First Internet Bank don't have access to 24/7 telephone support; however, the bank's mobile app and live chat services keep customer support within reach. The bank's free checking account truly is what it claims, with no monthly maintenance fee or minimum balance requirement; however, the account is not interest-bearing.
How to join: You can become a customer and open an account online at First Internet Bank's website. By providing your name, address and date of birth, among other personal information, you can fill out and submit your application, check your application status, and upload necessary documents right from the comfort of your home.
10. Barclays Bank
Why: With a higher savings account APY and a lower one-year CD rate, Barclays Bank essentially ties with TIAA Direct for these categories. Its BauerFinancial Star Rating is 4 out of 5, but the bank doesn't have a checking account available to customers.
Review: Barclays Bank awards depositors with a high 1.00 percent APY on its online savings account and 0.80 percent APY on its 12-month CD. However, the bank ranked lower due to its lack of three important features: a checking account, 24/7 telephone customer service and live chat with a representative of the bank. Those who appreciate the ability to bank on the go can do so through Barclays' mobile app.
For those who wish to save for a long-term goal but don't want the restrictions of a CD, Barclays offers a unique deposit product: the Dream Account. This account rewards depositors who don't touch their funds for six consecutive months with a 2.5 percent bonus on the interest earned over that time. This account offers a base rate of 1.05 percent APY.
How to join: You can open an account by visiting the bank's website or calling 888-720-8756 between 8 a.m. and 8 p.m. EST, seven days a week.
Institution selection: In order to determine its "Best Online Bank" rankings, GOBankingRates examined 30 online-only banks, according to the GOBankingRates and FDIC databases, and did not consider online products offered by institutions with a physical, retail banking presence.
Criteria for rankings: Banks were scored from most to least favorable in the following categories: (1) checking account fee, (2) savings account APY, (3) one-year certificate of deposit APY, (4) BauerFinancial Star Ratings for overall financial strength. Each criterion was individually scored from most to least favorable. Banks were then scored according to whether they offered the following services, all of which contributed to a single weighting: (5) 24/7 customer service available by Web or phone, (6) live chat service with a human being, and (7) a mobile app. Finally, banks were ranked according to overall score. Data was compiled via BauerFinancial and the GOBankingRates interest rate database; figures were verified against the individual institutions' websites and are accurate as of Dec. 18, 2014.
GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some banks mentioned in this ranking are clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings are 100 percent objective and no institution, client or otherwise, paid for inclusion or specific placement.