Best online banks with the lowest fees

There are two types of online banks:

• Neobanks. These are online banks that operate only on the internet. They don't have physical offices, and access to the service is provided only through mobile devices or PCs. All communication with bank employees and registration of services is carried out only via the internet. Also, online banks may not be licensed by the regulator;

• Challenger banks. These are online banks that can be independent units of large conventional banks. This category also includes banks established based on failed banks or highly specialized platforms that occupy a sector that is not typical of conventional banks. They are licensed by regulators.

Pros of Revolut digital bank:

• Free multi-currency account. It allows for the storage of up to 30 currencies. There are minimal fees for international transfers and conversions compared to the average market rates;

• Savings plans. The rate on savings accounts is up to 1.67%, with the ability to withdraw money without a fee at any time;

• Payment solutions for businesses. The payment gateway for an online store, access to over-the-counter markets, salary projects, etc.;

• The possibility of investing with a low entry barrier. From $1 (investing in stocks is available only for UK residents).

Cons of the Revolut digital bank:

• There are paid plans. If you want to get the most favorable rates on savings accounts and reduce fees, you should pay for the tariff plan. This encourages clients to make more turnover on accounts and accumulate more funds in savings accounts;

• There is a fixed fee for certain international payment directions.

Pros of the Wise digital bank:

• Worldwide presence and partnerships with many banks. Using the payment app, you can transfer money to almost any country. Also, thanks to the partnerships with national banks and payment systems, the recipient can withdraw money with a minimum fee and without intermediaries;

• Low fees. Plus, it offers full transparency. The calculator shows the final amount for the recipient at the online rate, taking into account all fees;

• Functionality. The system has a multi-currency wallet where you can store funds and make internal transfers in over 50 currencies;

• High level of e-wallet protection. Throughout the existence of the system, no client money has been lost due to hacking as a result of Wise’s fault.

Cons of the Wise digital bank:

• There are no loan products;

• Slow transfers to some countries. A money transfer to certain countries may take up to 3-4 days. However, the system warns about this at the time of completing the transfer details.

Pros of the CIT digital bank:

• Reliability. State regulation and participation in the FDIC's federal compensation scheme;

• No fees and debit card maintenance fees. Multilevel interest rates on savings accounts, refund of fees when withdrawing cash from partnered ATMs in the USA.

Cons of the CIT digital bank:

• Registration is only available to residents of the USA.

Pros of Bunq digital bank:

• Flexible pricing. The bank offers eight plans: four for retail clients and four for businesses. Three retail plans with advanced features have a fixed monthly fee;

• The bank is licensed by the Central Bank of the Netherlands;

• The ability to withdraw money at any time. This feature does not depend on the tariff plan;

• Investment products. Two tariff plans for retail clients provide the opportunity to invest in stocks.

Cons of the Bunq digital bank:

• Loan programs are not provided;

• Premium plans are expensive.

Pros of the Monzo digital bank:

• Low fees. Thanks to the partnership with banks in the USA and Europe, money can be withdrawn from the Monzo card without a fee within the limit set by the account;

• There are savings accounts with relatively high rates of return, which include up to 2.57% with savings on the accrued interest tax rate (ISA);

• There are plans for businesses. The plans provide the possibility of creating virtual maps, connecting accounting tools, etc.

Cons of the Monzo digital bank:

• Most of the services are intended for UK residents only. Residents of the United States can pass verification in a limited mode;

• The most favorable conditions are offered for paid accounts.

Pros of the Monese digital bank:

• Instant transfers worldwide. The bank's partner is PayPal;

• There are short-term loans. To build a positive credit record, the bank offers a small loan of up to £600 at 28.2% per annum without checking your creditworthiness.

Cons of the Monese digital bank:

• A limited number of currencies. The wallet supports only the Euro, British pound, and Romanian leu;

• A high rate for paid plans.

Advantages of the SoFi digital bank:

• Favorable tariff policy. In terms of the range of banking services, SoFi Bank is almost as good as many conventional banks. Moreover, thanks to digital technologies, the bank has optimized its administration and operating costs by reducing fees and interest rates for its clients;

• Issuance of MasterCard payment system credit cards. It is a combination of reliability, freedom of action, and low fees. The card is accepted by many ATMs in the USA and Europe;

• Also, there is an opportunity for additional savings. Active members of the digital bank community receive discounts on trust management plans, free advice from career development specialists, etc.

• It has a unique product range.

Cons of the SoFi digital bank:

• Only US residents can register on the platform.

The main differences between digital and conventional banks are:

• Low fees. Online banks save on administrative expenses, so they do not incur expenses for fixed assets, maintenance of the transport fleet, etc.;

• Also, a limited range of products is offered.

• Conventional banks are banks offering a wide range of services, while online banks mostly offer debit or credit cards of various types (with cash back for everyday expenses, accumulation of miles for travelers, etc.), savings accounts, retirement savings options, or insurance services.

• Individual challenger banks focus on a particular service such as only consumer lending, mortgages, etc.;

• Neobanks have simpler and faster verification, credit risk assessment, and digital paperwork procedures, as well as convenience for the client. Neobank services can be used at any time from almost anywhere in the world.

Online banks offer the following service types:

• Credit cards. It is one of the main services for everyday life. Cards can be issued under the brand of a bank, but most often, a neobank acts only as an issuer, working in partnership with Visa or MasterCard payment systems. The range of credit cards can offer more than 10 options – cards for travelers, student cards, cash back cards for everyday expenses, cards with a reduced conversion fee, partner cards, etc.;

• Savings accounts. An analog of classic deposits. In addition to standard accounts, there are accounts for children and retirement saving accounts with a fixed interest rate or compound interest;

• Loans (the service is not available at all digital banks) such as car loans, refinancing, mortgages, overdrafts, etc.;

• Insurance for cars, life, real estate, etc.

Protection of client funds by digital banks:

• Deposit insurance. Each country has its own insurance funds, to which banks with local registration are required to contribute. For example, these are the FDIC and NCUA funds in the US, or the FSCS in the UK. The amount of insurance can vary from $80,000 to $250,000. The platform's membership in these funds is an additional advantage;

• Two-factor authentication. This is an additional level of protection to the client's digital account password. In addition to a complex password (over 8 digits, uppercase letters, numbers, and special symbols), there is additional protection – confirmation of password entry using a code sent to the phone or email;

• Biometric protection. Login to your account by fingerprint or retina scan. This type of protection is offered by a few banks, so it is an additional advantage;

• Control via notifications. In the event of login to your profile or unauthorized use of the card account, you will be notified via phone or email;

• CSS encryption. Encryption of data on payment gateways to exclude interception of information and account hacking.

Comparison of pros and cons between payment systems and digital banks:

• Multi-currency electronic wallet. Online banks, in most cases, work only with domestic or freely convertible currencies. Many payment systems allow you to transfer to and convert currencies of more than 100 countries;

• Transaction speed. Online banks can transfer money in about 3-4 days or more. Payment systems can transfer money from a few hours up to 3 days;

• Simple cost calculation. Online calculators of payment systems allow you to estimate the final amount.