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a smart way to save
AAA’s savings products and services can help you simplify your finances and be more confident about your money.
Given the speed and ease of online banking, it’s no wonder that most Americans now turn to online and mobile platforms for their financial needs. In fact, according to a national American Banking Association survey released in late 2025, 76 percent of customers reported using their bank’s mobile app or online banking platform as their primary method of banking. In comparison, only 9 percent said they still mostly rely on the brick-and-mortar banking experience.
These reports have jumped dramatically in recent years, with the same survey in 2017 showing just 26 percent primarily using their bank’s mobile app. Major factors for the increase are rapid advancements in technology that make it easier to access financial services, especially in more rural locations.
Despite their fast growth and increasing popularity, online-only banking may not be for everyone. Here’s a look at the pros and cons of online-only banks, so you can decide if they’re right for you.
Online-only banks are financial institutions that serve customers without traditional brick-and-mortar branches or tellers. Customers of these institutions can access their accounts and make transactions online only, as opposed to the in-person experience that dominated the last century.
While most traditional banks also offer mobile apps and online banking platforms, fully digital, online-only banks, also called “challenger banks,” are designed to compete with the major banking power players by offering the latest technology, lower fees and higher interest rates.
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Watch NowOnline-only banks offer many reasons why they might be worth considering.
Lower fees, better rates
Perhaps even more compelling, online-only banks save money on overhead as compared to their brick-and-mortar counterparts. That means they can pass along those savings to customers in the form of no-fee checking and savings accounts and higher interest rates on savings accounts and certificates of deposit, or CDs.
In recent years, online high-yield savings accounts have offered as high as 5 percent APY, compared with the national average of under 1 percent. Of course, the rates vary based on inflation and other factors, but higher interest rates generally mean your money grows exponentially faster, simply by sitting in the account.
Automation
Another pro of using an online bank is automation. While many traditional banks now also offer automated tools, online-only banks generally offer the most cutting-edge automations to help remind you of upcoming bills, to systematically save for future goals and to track spending.
Easy, fast access
Online-only banks are available anywhere you have access to your phone or computer, which saves you the time and hassle of waiting in line at a physical bank for transactions or for assistance from a customer service representative.
Money security
As for security, many people—especially those from older generations who may not be as tech-savvy as younger generations—worry that online-only may not be safe. But like branch banks, most online banks are also insured by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 of deposits per depositor in the event of a bank failure.
Plus, if you’re worried about cyberattacks, online-only banks are no more susceptible to targeted threats than traditional banks. In fact, given their often-superior technological foundation, online-only banks may even be more protected due to more modern security measures.
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Take the First StepWhile online-only banks are becoming more popular and offer many perks, there are still drawbacks.
Access to cash
One con to online-only banking is quick access to a large amount of cash. Let’s say you’ve engaged a contractor to start on a house project, but the company requests the upfront deposit tomorrow. While online-only bank transactions are usually simple and painless, accessing cash in a pinch can be challenging. Online-only banks rely on mobile deposits, digital transfers (which can take days) and partner ATMs, so there is no branch to go to if you need a lot of cash right away. Of course, this is less of a downside if you rarely use cash.
| Pros | Cons |
|---|---|
| Lower Fees & Better Rates: You can enjoy no-fee accounts and high-yield interest rates to help your money grow significantly faster, simply because digital banks pass their overhead savings on to you. | Limited Access to Cash: Getting a large amount of cash quickly can be challenging. You must rely on mobile deposits, digital transfers, and partner ATMs instead of visiting a local branch. |
| Smart Automation: You get access to cutting-edge digital tools that make it incredibly easy to set up bill reminders, track your daily spending, and automatically save for your future goals. | No Personal Service: You won't find physical branches or in-person tellers. If you prefer face-to-face, human interaction to navigate your personal finances, a fully digital bank might feel restrictive. |
| Easy, Fast Access: You can manage your money anytime and anywhere you have a computer or smartphone. This saves you the time and hassle of waiting in line at a traditional brick-and-mortar bank. | |
| Strong Money Security: You can rest easy knowing most online banks are FDIC-insured up to $250,000 per depositor. They also use top-tier, modern security measures to protect your money from cyber threats. |
Also, keep in mind that with an online-only bank, there’s no in-person assistance should you need it. Some people prefer human-to-human interaction when it comes to personal affairs like finances. Remember, by opting for an online-only bank, you benefit from the bank’s overhead savings, but that means no tellers or local branches.
Since everyone requires varying needs from their banks, there’s no clear-cut answer to whether or not an online-only bank is the best fit for you. Many people keep emergency money and other sinking funds in online-only, high-yield savings accounts, and simply feel more comfortable with the traditional setting for their day-to-day business or personal banking. Ultimately, it’s up to you to decide whether an online-only bank is the best choice for your financial future.
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Join Today!An online-only bank operates entirely digitally without physical branches or tellers. People often call these institutions “challenger banks” because they compete with traditional banks by offering modern technology, lower fees and higher interest rates.
Online-only banks offer several perks to help you manage your money:
Yes, you should consider two main downsides before making the switch:
The right choice depends entirely on your personal financial needs. Many people enjoy a hybrid approach. For example, they keep emergency funds in high-yield online accounts and use traditional banks for daily business or personal transactions. Ultimately, you get to decide the best setup for your financial future.
a smart way to save
AAA’s savings products and services can help you simplify your finances and be more confident about your money.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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