best banks

5 Best Banks of 2021: Our Top Picks

The Best Banks and Credit Unions To Join in 2021

Not all banks are created equal. Before you entrust your money with any one institution, look for certain perks, such as rewards and cashback on purchases, competitive interest rates, superior customer service, and convenience.

5 Best Banks of 2021: Our Top Picks

  • Axos Bank®: Best overall
  • Discover®: Affordable banking, ample rewards
  • Alliant: Best of both bank and credit union worlds
  • Connexus: High APY on checking
  • Varo: High APY on savings

Defining Features of the Best Banks of 2021

Axos Bank® – No Fees and Excellent Rates

Axos Bank is a strictly online bank that does away with the many fees associated with traditional banking and offers ample rewards. Though it only has two branches, you can access a representative 24/7 via phone, Twitter or online chat.

When you receive at least $1,000 in direct deposits and make a minimum of 15 debit card transactions per month, the Axos Bank® Rewards Checking earns a 1.25% APY on the total balance. This is a higher rate than the High Yield Savings account, which offers an APY of 0.61%. Earn 1% cashback on eligible purchases.

If you don’t use one of the 91,000 in-network Axos Bank® ATMs, get fee reimbursement from domestic machines. With the Essential and Rewards accounts, never pay an overdraft or insufficient funds fee.

Discover® Bank – Cash Back Rewards

Though exclusively an online bank for all but those who live near Greenwood, Delaware, Discover® Bank offers a stellar customer experience and plenty of incentive for individuals to become members.

The Discover® Bank Cashback Debit account comes with a $0 monthly fee and lets you earn 1% cash back on debit card transactions up to $3,000 per month. There is no monthly balance requirement, and you can access your funds for free at any one of the 60,000 fee-free ATMs. Sign up for a fee-free savings account, too, and earn 0.55% APY on monthly balances.

Discover® is one of the few banks that does not charge an overdraft or insufficient funds fee. If you don’t have enough money, the bank will either draw from a connected account for free or decline the transaction. Other banks charge up to $35 — sometimes several times a day — for overdrafts.

Alliant Credit Union – Strong Rates and Flexible Enrollment Requirements

While many credit unions have strict enrollment criteria, you can become a member by making a one-time $5 donation to a nonprofit that supports foster children, which Alliant will make on your behalf. Though it has one physical location in Chicago, Illinois, it developed a highly usable mobile app and offers a strong online banking experience.

The High-Rate checking account lets you earn 0.25% on your total monthly balance when you make at least one electronic deposit a month and enroll in e-statements. It also comes with a $0 monthly maintenance fee. If you don’t use one of the 80,000 in-network ATMs, receive up to $20 ATM fee reimbursement per month.

Sign up for the High-Rates savings and earn 0.55% on balances over $100.

Connexus – Competitive Checking APY

Connexus Credit Union partners with other credit unions to ensure physical access to over 5,000 branches nationwide. It also has a strong online presence and easy-to-use digital tools for budgeting and goal setting.

If you make at least 15 debit card purchases that total $400 or more per month and enroll in e-statements, the Xtraordinary checking account lets you earn 1.75% APY on monthly balances. Teen accounts automatically generate 2.00% on balances, whether or not you meet the requirements. The APY drops to 0.20% for each month the requirements aren’t met.

Access your funds for free from one of over 54,000 in-network ATMs, or receive up to $25 per month in ATM fee reimbursements.

Varo – High APY on Savings

Varo is a mobile-only banking app and therefore eliminates many of the fees associated with traditional banking while offering some of the best rates on savings accounts.

If you meet certain requirements, Varo offers one of the highest APYs on a savings account, at 2.80% on balances less than $10,000. If you don’t meet requirements, or if you save more than $10,000, the rate drops to 0.81%, much higher than the 0.05% national average. Varo is part of the Allpoint network, which boasts more than 55,000 fee-free ATMs nationwide.

If you receive at least $1,000 in direct deposits per month and make at least five debit card transactions, Varo won’t charge you for overdrafts that leave your account up to $50 in the red. However, if the negative amount exceeds $50, the bank will decline the transaction.

Summary

Banking has evolved in recent decades, and now the best banks offer high-yield checking and savings accounts, a fee-free ATM network, robust technology and strong customer service. Don’t settle when it comes to your money — consider joining one of the above five banks this year.

Quick Questions

Why does fee-free banking matter?

Banking fees, such as monthly maintenance fees, ATM fees, low-balance fees, overdraft fees, paper statement fees, etc. quickly add and are good enough reasons to enroll in a fee-free account.

What features should you look for in a checking account?

Free ATM access, no monthly fees, no minimum deposit requirements and mobile access are just a few features to look for in your checking account.

Will strictly online banking work for you?

Online banking may work for you if you receive direct deposits, are technologically savvy, enroll in a bank with a large ATM network and rarely need to deposit cash.

Check out our look at the best free checking accounts.