What is an online savings account?
An online savings account is a type of savings account you open and manage entirely online, via a bank's website or mobile app, without needing to visit a physical branch.
It functions just like a traditional savings account: you deposit money, earn interest on your balance, and can withdraw or transfer funds when needed through easy electronic transfers.
The key difference is the digital-only experience, which enables online banks to offer higher interest rates and lower fees by reducing operating costs compared to traditional brick-and-mortar banks.
Online savings accounts provide a safe, convenient way to store money, build wealth, and access your funds anytime, anywhere, all from your smartphone or computer.
How does an online savings account work?
An online savings account operates by replacing physical bank buildings with a digital solution. Here's how:
Opening and managing your account
You open your account and manage all your banking through a website or mobile app, rather than visiting a branch.
This gives you 24/7 access to manage your money from anywhere.
Making deposits
You can add money to your account by linking it to your checking account for electronic transfers, using mobile check deposit to snap photos of checks, or setting up direct deposit from your paycheck.
Earning interest
Your deposited funds automatically earn interest on your balance. Because online banks don't have to pay rent, utilities, or staff at thousands of branch locations, they pass those savings on to you through higher interest rates than traditional banks typically offer.
Accessing your money
You can withdraw or transfer funds electronically to linked accounts whenever you need them. Some online banks also provide ATM access for cash withdrawals.
6 key features of an online savings account
1. Higher interest rates
Online savings accounts pay you more interest than traditional banks. Because online banks, like Axos Bank, don't pay for physical branches, they can offer you better rates. That means your money grows faster.
Pro tip: Looking to earn more on your savings? High-yield savings accounts typically provide higher Annual Percentage Yields (APYs) than traditional savings accounts.
2. Low or no fees
Most online savings accounts have no monthly fees and don't require a minimum balance. This makes them a wise choice for anyone looking to save money without extra costs.
3. Bank from anywhere, anytime
Check your balance, move money, and manage your account 24/7 from your phone or computer—no need to visit a branch or wait in line.
4. Your money is protected
Online savings accounts are FDIC-insured up to $250,000 per person. This means your money is just as safe as it would be at a traditional bank.
5. Helpful digital tools
Deposit checks by taking a photo, set up automatic transfers, and easily move money between your accounts. Some banks even offer savings goal trackers to help you reach your targets.
6. Simple transfers
Link your online savings account to your checking account and move money back and forth whenever you need to. It's quick and easy.
Axos Summit Savings
The easiest way to earn more on your savings.
With Summit Savings, earn a competitive rate with no monthly fees, minimum balances, or opening deposits with up to $250,000 in FDIC coverage.
Pros and cons of online savings accounts
Now that you understand what online savings accounts are and how they work, let's look at the advantages and potential drawbacks to help you decide if one is right for you.
Pros | Cons | ||
Higher earnings | Online savings accounts pay you more interest, helping your money grow faster. | No in-person service | You can't visit a branch to ask questions or resolve issues face-to-face. |
Fewer fees | Most online savings accounts have no monthly fees and don't require you to keep a minimum balance. | Cash deposits can be tricky | Depositing or withdrawing cash often requires finding an in-network ATM or using a third-party service. |
Convenience | Manage your account anytime, anywhere, from your computer or mobile device. | Requires internet access | You need an internet connection and must be comfortable managing your finances digitally. |
Easy to open | The application process is typically fast, simple, and entirely online. |
How to choose the right savings account
Finding the right online savings account means balancing a high return with features that fit how you save and access your money. Here's what to look for:
Compare interest rates (APY)
Look for a high Annual Percentage Yield (APY) that's ongoing, not just a temporary promotional rate. A higher APY means your money grows faster.
Check fees and minimums
Choose an account with no monthly maintenance fees and low or no minimum balance requirements. Avoid accounts that charge fees that can eat into your savings. Also, check whether a minimum opening deposit is required to open the account.
Make sure your money is protected
Verify that the bank offers FDIC insurance, which protects your deposits up to $250,000 per person. This gives you the same safety as a traditional bank account.
Review digital features and tools.
Look for a user-friendly mobile app and website that make it easy to check your balance, transfer money, and deposit checks. Some accounts offer helpful features such as automatic savings tools, goal trackers, and savings "buckets" to organize your money.
Consider how you'll access your money
Check how easy it is to move money in and out of the account. Can you link it to your checking account? Are there daily transfer limits? Do you have ATM access if you need cash?
Pro tip: The right online savings account should help you earn more while making it simple to manage your money and reach your financial goals.
Start earning more with an online savings account
An online savings account offers a smart, simple way to grow your money faster with higher interest rates, lower fees, and the convenience of managing everything from your phone or computer.
Whether you're building an emergency fund, saving for a specific goal, or want to earn more on your money, an online savings account gives you the tools and flexibility to reach your financial goals.
When choosing an account, focus on a competitive APY, no monthly fees, FDIC insurance, and digital features that make banking easy. The best account is one that fits your savings style and helps you build the financial future you want.
Ready to start earning more on your savings?
Axos Bank's Summit Savings account offers a competitive rate with no monthly fees, no minimum balance requirements, and no opening deposit—just straightforward savings that work for you.
Open your account today and start watching your money grow.