Alternatives to Traditional Banks: Which Ones Are Worth Your Time?

For many, including me, visiting a traditional bank to withdraw or deposit money is what we grew up with. And while traditional banks may be the most familiar, they aren't the only option for your money anymore. Several alternatives to banks are available, and they can often help you earn more, have lower fees, or have more mobile-friendly banking options than traditional banks.

You may already be familiar with some options, like credit unions, which offer experiences similar to traditional banks but typically with better service and lower fees. Others, like online banks or fintech companies, offer more digital banking options, but it's important to understand the trade-offs before you switch to managing your money entirely online.

While traditional banks aren't going away anytime soon, these alternatives can give them a run for their money.

Online banks

Online banks are similar to traditional ones but only operate through a website or mobile app (though some banks might have a few physical locations). Like traditional banks, legitimate online banks are FDIC-insured and offer the same types of accounts like checking and savings. The best online banks also offer CDs, loans, or investment accounts.

Since online banks don't have the overhead costs of brick-and-mortar branches, they typically pass the savings on to customers through higher annual percentage yields (APYs) and lower account fees, helping you earn more. However, since there are no branches, tasks like depositing cash or getting a cashier's check can be difficult. While they usually have workarounds for those services, it can take extra effort that may not be worth it to some customers.

Recommended online banks

Discover

As part of its no-fee checking account, Discover offers a Cashback Debit program where users earn 1.00% cash back on up to $3,000 in monthly debit purchases.¹ <p>Earn 1% cash back on up to $3,000 in debit card purchases each month. See Deposit Account Agreement for details on transaction eligibility, limitations and terms. Deposit Account Agreement can be found at <a href="https://www.discover.com/content/dam/dfs/online-banking/documents/NationalDepositAccountAgreement.pdf">https://www.discover.com/content/dam/dfs/online-banking/documents/NationalDepositAccountAgreement.pdf</a>.</p> It also provides fraud protection and access to over 60,000 fee-free ATMs. Discover's high-yield savings account offers 3.60% APY, significantly more than some traditional banks offering only 0.01%.² <p>See <a href="https://www.discover.com/content/dam/dfs/online-banking/documents/NationalDepositAccountAgreement.pdf">Deposit Account Agreement</a> for details on transaction eligibility, limitations, and terms.</p> ³ <p>Annual Percentage Yield (APY). Advertised Online Savings Account APY is accurate as of 04/22/25. Applies to personal accounts only. APY may change before or after the account is opened. No minimum deposit to open.</p>

Visit Discover | Read our Discover review.

SoFi®

SoFi Checking and Savings is another online option that offers up to 3.80% APY on its high-yield savings account and 0.50% (as of 01/24/25) APY on its checking account if you meet specific deposit requirements. It does not charge monthly account fees⁴ <p>We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at <a href="http://sofi.com/legal/banking-fees/">sofi.com/legal/banking-fees/</a></p> and provides access to more than 55,000 ATMs nationwide.⁵ <p>We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.</p> However, you'll have to use the GreenDot network and pay a fee of up to $4.95 to deposit cash into your SoFi account. Member FDIC.⁶ <p><b style="font-family: Rubik, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, &quot;Helvetica Neue&quot;, Arial, sans-serif;">SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations.&nbsp;Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at&nbsp;<a href="http://sofi.com/banking/fdic/sidpterms">SoFi.com/banking/fdic/sidpterms</a>. See list of participating banks at <a href="http://sofi.com/banking/fdic/participatingbanks">SoFi.com/banking/fdic/participatingbanks</a>.</b></p>

Visit SoFi | Read our SoFi review.

Fintechs

Fintech is short for financial technology and refers to companies that use modern technology to offer advanced financial products. Some fintech companies offer banking services while others provide mobile payment apps, digital wallets, or buy-now-pay-later (BNPL) platforms, among others.

Fintechs are generally easier to sign up for than a traditional bank and tend to have more features like secured credit cards, no-fee overdraft protection, and early direct deposit. Some fintechs may also have lower fees than traditional banks.

However, fintech companies are not banks, and unlike traditional or online banks, they are not covered by FDIC insurance. Many fintech companies partner with an FDIC-insured bank to provide FDIC-insured accounts, however. Like banks, fintech companies have access to your personal information but are generally less regulated than traditional or online banks, which could put your data at risk.

Recommended fintechs

Chime®

Chime partners with FDIC-insured The Bancorp Bank, N.A., or Stride Bank, N.A., to help protect customer deposits.⁷ <p class="">Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC.&nbsp;<br></p> It doesn't charge monthly maintenance, overdraft, or minimum balance fees.⁸ <p>There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account.</p>

Chime also offers a high-yield savings account that earns 2.00% (as of Sept. 9, 2024) APY.⁹ <p class="">The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is accurate as of September 20, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.&nbsp;</p> Note that the savings account is optional and can't be opened without a Chime® Checking account.¹⁰ <p class="">Chime Checking Account is required to be eligible for a Savings Account.<br></p> It also provides access to over 50,000 fee-free ATMs, and you can deposit cash for free at any Walgreens or other participating retailer.¹¹ <p>Once the retailer accepts your cash, the funds will be transferred to your selected Chime Account. Barcode and debit card cash deposits land in the Checking Account. Credit Builder card cash deposits first go through your Card Account and then land in your Secured Account. Cash deposit fees may apply if using a retailer other than Walgreens and Duane Reade.</p> ¹² <p>Out-of-network ATM withdrawal and over the counter advance fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.</p>

Visit Chime | Read our Chime review.

Current

Current is a fintech company that partners with Choice Financial Group and Cross River Bank to offer FDIC insurance if you meet certain conditions.¹³ <p><b>Current is a financial technology company, not an FDIC-insured bank. FDIC insurance up to $250,000 only covers the failure of an FDIC-insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply. Banking services provided by Choice Financial Group, Member FDIC, and Cross River Bank, Member FDIC.</b> The Current Visa®️ Debit Card is issued by Choice Financial Group pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Current Visa®️ secured charge card is issued by Cross River Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank. Current Individual Account required to apply for the Current Visa®️ secured charge card. Independent approval required.</p> What I like most about Current is the secured credit card that helps users build their credit.¹⁴ <p>Individual results may vary. Using your credit card responsibly may allow you to improve your credit score. Credit building depends on various factors, including your payment history, credit utilization, length of credit history, and other financial activities.&nbsp;</p> It does not have annual fees or require a credit check.¹⁵ <p>Some fees may apply, including out of network ATM fees of $2.50 per transaction, late payment fees of 3% of any total due balance outstanding and past due for two or more billing cycles, foreign transaction fees of 3% of the full transaction amount (minimum $0.50), card replacement fees per card of $5 for regular delivery and $30 for expedited delivery, cash deposit fees of $3.50 per deposit, and third party processing fees.</p> Current also offers savings pods with a savings boost of up to 4.00% (as of Aug. 1, 2023) APY on $2,000 per pod ($6,000 total) if you meet the deposit requirements.¹⁶ <p>Boost Bonuses are credited to your Savings Pods within 48 hours of enabling the Boost feature and on a daily basis thereafter, provided that the Savings Pod has accrued a Boost Bonus of at least $0.01. The Boost rate on Savings Pods is variable and may change at any time. The disclosed rate is effective as of August 1, 2023. Must have $0.01 in Savings Pods to earn a Boost rate of either 0.25% or 4.00% annually on the portion of balances up to $2000 per Savings Pod, up to $6000 total. The remaining balance earns 0.00%. A qualifying direct deposit of $200 or more is required for 4.00%. No minimum balance required. For more information, please refer to Current Boost Terms and Conditions.<br></p>

Visit Current | Read our Current review.

Credit unions

Credit unions are not-for-profit financial cooperatives owned by members of a community. They generally offer the same or similar products as a traditional bank like checking and savings accounts, loans, and mortgages.

However, unlike banks, you need to meet the membership requirements to join a specific credit union. These requirements usually include living in a particular area, working for a specific company or industry (or having a family member who does), or belonging to a specific group like a place of worship, university, or labor union. However, there are some credit unions anyone can join.

Since credit unions aren't necessarily looking to prioritize maximum profits like a traditional bank, they generally offer better APYs on savings accounts and lower loan interest rates. Most credit unions are covered by NCUA insurance, which means individual accounts are protected by the federal government up to $250,000, the same as FDIC insurance at a traditional or online bank.

However, they typically have fewer physical locations than traditional banks and may not have as many online or mobile services.

Recommended credit unions

Alliant

Alliant is a Chicago-based credit union that offers various digital banking products, including accounts for kids and teens. Its high-yield savings account earns 3.10% (as of 12/19/24) APY with a $100 minimum balance. Alliant's checking account earns 0.25% (as of 01/03/25) APY with no minimum balance requirements or fees and provides access to over 80,000 fee-free ATMs.

Alliant will also reimburse you up to $20 in ATM fee rebates. Since Alliant is a credit union, you must apply for membership. If you don't belong to a group affiliated with Alliant or live near the Chicago headquarters, you can join by making a $5 donation to the Alliant Foundation.

Visit Alliant

Connexus

Connexus is a credit union based in Wisconsin. Much like Alliant, anyone in the U.S. can join if they (or a family member) belong to a partner group or make a $5 donation to the Connexus Association.

Connexus has fewer account options than Alliant, but it offers a checking account that earns APY. The Xtraordinary checking account earns 1.75% (as of 04/04/25) APY if you meet the criteria on balances up to $25,000. However, its savings account only earns 0.20% (as of 04/04/25) APY, and you must keep a minimum balance of $100 in the account, though you may also qualify for dividends.

Visit Connexus

Choosing the best alternative

As you can see, there are a lot of options when it comes to nontraditional banking alternatives. The right choice for you will depend on multiple factors, but to help you determine which option is best, consider the following.

APYs and interest rates: You can generally find higher APYs at an online bank or credit union if you search around. However, some accounts require maintaining a minimum balance to get the highest rate. Read the fine print to learn how to earn the highest rate on a specific account and for any situations that might prevent you from earning the maximum amount.

Fees: Look for accounts with low or no fees on everyday services. Before you sign up, review the account's fee schedule and determine which fees may apply to you. If you choose an online bank or fintech account, pay attention to extra fees like for depositing cash or getting a cashier's check.

Insurance: Both traditional and online bank deposits are typically covered by FDIC insurance, and credit unions are covered by NCUA insurance. However, these programs do not cover many fintech companies like Chime and Current, which rely on partner banks to secure deposits. Be sure to read the fine print to understand how (or if) your money is covered in the event of a bank failure.

Branch and ATM availability: A local credit union might be your best option if you like visiting a branch in person. However, an online bank or fintech might be best if you want access to your money 24/7 through an app or website.

If you frequently use ATMs, consider a bank or credit union with in-network ATMs close to your home, work, or other places where you spend a lot of time. If you choose a bank without an extensive ATM network, you may have to pay fees for using a non-network ATM.

Security: Keeping your private data secure is vital to your financial well-being. Read the account disclosures carefully to understand what kind of data is collected, how the bank or company uses your data, and when they might share it with third parties.

FAQs

Bottom line

Finding an alternative to a traditional bank can take some work, but multiple options are available. Think about how you like to bank and make a list of the features that are important to you. Consider joining a credit union if you want to visit a branch in person or keep your money in your local community. Use an online bank to conveniently check on your money and earn the highest APY possible.

Before you sign up, read the account disclosures, fee schedules, and customer reviews to help you compare each company or financial institution. While it might seem like a lot of work, you'll save time and hassle by researching the best banks before you sign up.