Update 1/22/2015: This post was originally released in 2014 when there were special bonus promotions for signing up with Capital One 360, but new sign-ups with them are STILL eligible for up to $50 for each account opened! Read on to find out more!
Original Post 7/1/2014:
Banks. People love to hate them, but we all know that we need them. Since banking is essential to live in this day and age, why not seek out a better banking experience? For me, the answer is online banking.
The two online banks I currently use are Ally Bank and Capital One 360 (formerly ING Direct). In this post I’ll be discussing virtues of online banking that apply to both institutions, and perhaps in a future post I’ll compare/contrast the two of them in more detail. Suffice it to say that I have had good experiences with both banks and would recommend them both to those who are interested.
No More Brick and Mortar
By doing away with brick and mortar locations all together, these banks have much lower overhead and the results are better rates and services for you. But that raises the biggest concern for online banks: “What about the services that I need a physical location for?” Here’s how they accommodate some of those key needs:
- Cash withdrawal – With Ally, you can use any ATM from any other bank and they will refund you the ATM fee. Capital One 360 offers a huge network of ATMs that you can use for free. In either case, you are well covered.
- Check deposit – You can mail in the check, scan and deposit via the website, or snap a photo to deposit with your smartphone/tablet mobile app.
- Cashier’s check – The bank will mail one to you, usually at no charge. Since for most people this is a rare occurrence, the delay shouldn’t be a huge issue. Capital One 360 will even send it overnight.
The only service that an online bank can’t provide is the depositing of cash. For that, you’ll need to exercise some creativity and call on the help of some friends. For Deb and me, we so seldom need to deposit cash that it has hardly ever been a problem.
Big, Big Benefits
Here are some of the biggest benefits of online banks, Ally Bank and Capital One 360 in particular:
1. Higher Interest Savings Account and CDs. At the time of this writing, savings accounts for Ally and Capital One 360 are yielding 0.87% and 0.75% respectively as opposed to 0.02% for Bank of America. CD rates tell a similar story.
2. Interest Checking Accounts. Yes, you also get interest from their checking accounts too! As of right now, Ally’s checking is 0.10%* while Capital One 360’s checking is 0.19%. In case you didn’t catch it, these banks’ CHECKING accounts have higher interest than BofA’s SAVINGS account.
I know these fractions of percents are still paltry, but consider for a moment how they stack up relative to each other with this graph:
BofA’s numbers don’t even register on the map! Put it this way, suppose you have $10,000 in savings; with BofA you’ll get $2/year, Capital One 360 will get you $75/year, while Ally will get you $87/year. It’s a sizable difference.
So why stay with a big bank that pays you no interest AND slaps a fee on you if you go below the minimum balance? Speaking of which…
3. No Minimums, No Maintenance Fees, No Hidden Gotchas. I used to feel that the banks were always looking for ways to nickel ‘n dime me to death with new fees. With my online banks now, I never worry about unknown fees jumping out of nowhere to take a bite out of my hard earned Crumb-stash. Everything is straightforward, as it should be.
4. Free Debit Cards & Free Checks. I use my reward credit card for most everything these days, but for our excursions to ALDI I turn to my trusty Ally Bank debit card. The Capital One 360 debit card even has no foreign transaction fees! And who doesn’t love getting free checks?
5. Awesome Customer Service. Ally has 24/7 telephone customer service, which I have used on countless occasions. You go straight to a US-based human (you don’t even need to navigate a phone menu that’s 12 layers deep!) who is always very professional and superb. I have never had an instance yet where they flubbed or couldn’t help me. I haven’t called Capital One 360’s customer service as much, but the few times that I have, I had an excellent experience as well. In both cases, I actually felt respected and valued as a customer and it’s developed my loyalty for both banks.
6. Convenience. As their names suggest, these banks try to stay on the cutting edge of internet technology. That means they’re always updating their websites and mobile apps with better, easier, and faster ways to manage your finances. Even ways to help make transferring money to other people easier, safer, and cheaper than before.
Ready for a New Banking Experience?
Are you curious? The best part is, it costs you nothing to give it a try. IN FACT, if you open a Capital One 360 account, they’ll pay YOU a sign-up bonus! As of this writing, Capital One 360 will give you up to $50 for each account you open! So if you’re on the fence about online banking, now might be your big chance! (In full disclosure, for each person who signs up for Capital One 360 through the links on this page, we get a referral bonus as well.)
There are no sign-up bonuses (for you or for us) for Ally Bank at this time, but we would still recommend them.
The only issue to be aware of is that you will need an existing bank in order to make your initial deposit into your account. After that, you may never need to step foot into a physical bank again.
*Ally actually currently offers a 0.60% APY interest checking account for balances of $15,000 or more, but we’re using the lower number just to be a bit more conservative in our comparisons.

Thanks for the info!! You might be getting a referral bonus from us. 🙂
LOL! Thanks, Lynette. Honestly though, we would offer the same recommendation whether or not there’s a referral bonus. 🙂
I had “research online banking” on my list of to do’s for the month. Looks like I can cross that one off! You might just be getting a referral bonus for me, too!
Glad to be of service, Kirsten. 🙂 There are other online banking options out there too, but these are the two that we have experience with. At the time when I signed up for these, some of the others may have had better interest rates, but the combo of rates plus features/perks/service made me decide on these two. I had a friend who used Everbank, but switched to Ally Bank because Everbank’s web interface was just too clunky and difficult to use. That could have changed since then though.
Can I ask why do you guys use 2 different checking accounts? and if you had to choose just 1 which one would it be?
Ha! Yeah, why does anyone need TWO checking accounts that pay you peanuts in interest, right? 🙂 We were with Ally first then decided to open up a Capital One 360 account just to try it out (no minimums PLUS we got a sign-on bonus–free money!) about a year ago. Since that time, we use the two accounts to keep our personal finances separate from our “business” finances (i.e. this blog). From my gut, I would have to give Ally the slight edge but that’s probably because I’ve been with them longer. Honestly though, if I started off with Capital One 360, I’d probably give them the edge. They both have advantages to each other so it’s a bit of a toss-up. As with so many things, the best option will come down to your needs.
I just recently got Capital One’s Venture card for their 2% back on all purchases. Even with the card fee the second year onward, I’ll be getting more back than the 1-3% cash back plan Bank of America offers on limited purchase ranges. While many people might not be able to handle the responsibility of a credit card and avoid debt, I’ve never paid interest since I always pay mine up right away, so the 2% is a nice bonus at the end of the year to help off-set travel expenses.
After reading this blog, I’m tempted to go to the effort to close my checking and savings accounts with Bank of America and just shift everything to Capital One. I’ve never been particularly impressed with the service or features of BoA.
Yeah, we moved completely away from BofA nearly a year ago and have never looked back. We’ve got a Capital One rewards credit card too, but we’re partial to cash back rewards over travel rewards. The Venture card is a good choice from them though.
Yeah. When I was choosing, I figured I woud get a little more through taking it off my travel expenses. Either way is pretty good though.
FYI, I just tried making accounts with Ally & Cap1 (thought I’d take advantage of the savings interest with Ally and the checking interest with Cap1) and the process was a lot easier and faster with Ally (Cap 1 had me AND my husband call to ask security questions; Ally just had them on line; then the links Cap 1 sent were confusing, so I had to call them back).
PS Perhaps Al likes Ally bank cause it fits his name? 😉
Thanks for the comparison of the sign up processes, Lynette! It sounds like Capital One 360 has beefed up their security precautions a lot more recently. Ally definitely sounds more user friendly to sign up for…and yes, the name does have a nice ring to it. 🙂
Nice post! Those are actually both banks I use as well. I’ve got to say that I’ve been shopping around for CapitalOne alternatives lately, but I am still really happy with Ally. That was probably the best banking decisions I’ve made so far. And I love that you can deposit checks using their app now too – that definitely fixed my biggest pet peeve about them initially.
Thanks Mel! Yeah, I’ve had very few reasons to complain about Ally. What about CapOne360 makes you want to find alternatives?
Cap1 is still on probation with us: I found only the first 50 checks are free (after that they’re $5) and there’s a $3,000 limit for scanning a check to deposit (only a problem if in the future we were ever lucky enough to have a check over 3K). Just thought you might be interested.
Hmm, that’s not good. I don’t recall having so much trouble with signing up with Capital One 360 before, thanks for letting the rest of us know of the headache. It looks like Ally continues to claim more of the edge between these two.
Oh this is so interesting! I was about to open a bank account with Chase, but Ally Bank seems very ideal to me. Thank you for sharing!!
Glad to help out! We’ve been very pleased with Ally.
Thanks, I wanted to switch banks and did lot of research. Definitely finalized on Ally and Capital One. And clicked on your link so that you can get referral. But both banks do not open accounts for visa holders, I am not sure why. Any local banks readily open account for SSN holders but these banks refuse. Further more, according to patriot’s act, banks can open accounts for those who just have ITIN number but not SSN number. However, these banks refused that too. I can’t figure out why, as govt needs is a way to track taxes.
anyways, thanks for this post – I am subscribing to your blog.
That’s a very fascinating discovery, RK. Perhaps it might be something due to the inability to physically verify the identity of the individual because they are online banks without a physical office? I’m not sure about that, and am quite surprised that they wouldn’t open a bank account for visa holders either. I hope you discover a a way around it.
Thanks for the click and the follow!
Thank you so much for this article! Your blog really helps those trying to be good stewards of God-given resources 🙂
Thanks Iona!