3 Reasons to Join an Online Bank in 2024

Here comes 2024! Perhaps you have big financial plans for the new year -- I certainly do. But might I suggest that you add "evaluate my bank accounts" to that list? 2024 is going to be a great year to join an online bank, specifically.

Online banks exist entirely in cyberspace, which means you can save money on bank fees (these banks have fewer overhead costs) and enjoy the perks of 21st century technology. Plus, the best online banks are FDIC insured, just like the big banks. Here's why else you should join an online bank in the new year.

1. APYs are still high

The last year and change has been a great time to have an online bank account. This is thanks to the 11 rate hikes implemented by the Federal Reserve. The federal funds rate doesn't directly apply to consumer banking and credit products, but banks and lenders are influenced by it, so we've seen higher APRs on credit cards and loans -- but we've also seen higher APYs on bank accounts. Right now, the best high-yield savings accounts are offering APYs of 4% or better, which is excellent motivation to save more money.

Personally, I have my calendar set to remind me of the day every month when my interest payment hits my savings account, because it is worth celebrating. Inflation has come down a lot as a result of the rate hikes (3.1% as of the last CPI report in December 2023; it peaked at 9.1% in June 2022). So if the Federal Reserve starts to bring the federal funds rate down as a result, we will also see those high APYs come down. Take advantage of them while you can by joining an online bank.

2. Mobile banking is a revolution

Online banks come with robust mobile banking apps, and mobile banking can seriously change your life. I have to laugh at myself when I check my bank balance from my exercise bike, or when I'm in the car coming back from a road trip, or literally any time. When I first opened a bank account as a teenager, I could view my balance from an ATM, or I could visit a bank branch during business hours and ask. Now, my money is at my fingertips whenever I want. Join an online bank, and this could be you, too.

In addition to viewing your balance, you can look to mobile bank apps for help with moving money, budgeting, creating savings goals (more on those below), or even viewing your credit score. If you still get paper checks, you can even deposit them! In personal finance, as in all things, knowledge is power -- your online bank's app can give you that and so much more.

3. A feature that can make saving more fun

Saving money can be fun -- there, I said it. But seriously, it's true. Whether you're saving for unplanned bills and emergency expenses, or toward a major goal like buying a home, there's an undeniable sense of accomplishment every time you see your balance tick up.

Online banks have loaded their account offerings with features that can help you lean into the joy of meeting your savings goals. Some of the best online savings accounts make it easier to save for separate targets within the same account, by offering account holders the opportunity to create "pockets," "buckets," or "vaults."

This is hands down one of my favorite perks of using my online-only savings account, and since I'm saving money to buy a home, alongside putting away money to pay my freelance taxes, take various vacations, and even cover vet bills for my cats, it's really come in handy. While it's a bit silly, I really love getting encouraging emails every time I've passed a savings milestone -- or met my goal. Join an online bank in 2024 to get the same chance to set individual savings goals within the same account.

If you're still sticking with your old brick-and-mortar bank, it could be because you didn't realize you had options -- I get that. But now that you know more, I highly recommend opening an account with an online bank in the new year. A high-yield savings account is a great place to start, as it'll likely come without fees of any kind and take you about five minutes to open. Then you can enjoy a higher APY on your money, as well as the other perks I discussed above. Happy new year -- and happy new bank account to you!