The best online savings accounts offer high interest rates and great customer service. Savings accounts, particularly so-called high-yield savings accounts, are best for money you might need within a year. Any money that you don’t want to subject to the short-term risk and volatility in the stock market should be held safe in a savings account, earning as much interest as possible. Your emergency fund should primarily consist of money held in a high-yield savings account.
“High-yield” is unfortunately a bit of a misnomer these days; a decade ago, interest rates were 4% and 5% among select savings accounts and money market accounts. Today, the best rates are all below 2% while a fair amount are still hovering around 1%, many rates are now dipping below the 1% mark. This trend will continue until banks need more cash from depositors.
Interest rates. Interest rates are important because money shouldn’t lose too much purchasing power. In a perfect world, interest rates offered by banks should beat inflation while preserving the balance without risk. I am not aware of any bank offering a savings option with ongoing interest rates high enough to beat inflation, whether measured by the government-reported CPI-U or by any other meaningful measure of consumer prices. Nevertheless, if your savings is at a brick and mortar bank earning below 0.25% APY, choose one of the better options below.
Customer service. When evaluating customer service, there are two important factors to consider. The best banks offer all account maintenance and transfers through a professional, reliable, and easy-to-navigate website. Secondly, live customer service representatives should be knowledgeable, helpful, and available, although customers should have to deal with a representative infrequently if at all.
Based on my own experiences and reviews from other Consumerism Commentary readers, here are the most-recommended accounts for short-term savings. All of the listed interest rates are current but they are subject to change by the banks. Although I have nine accounts listed below the table of rates, you don’t need to have accounts with that many different banks. Choose one that fits you the best.
First, here is a list of the latest interest rates. Following this table, I offer a few of my own observations and opinions about savings accounts from nine popular online banks.
Type: Savings
Type: Savings
Advertiser Comments
- Named Best Place to Park Your Emergency Cash by Money Magazine.
Type: Savings
Advertiser Comments
- Capital One 360: No fees. No minimums. No changing banks.
Type: Savings
Advertiser Comments
- 1.25% Bonus Rate for the first 6 months (1)
- 1.01% 1st-year APY up to $50K (1)
- Earn a top 5% yield-Always (2)
Type: Savings
Advertiser Comments
- Deposits are FDIC insured up to the maximum allowed by law
- Low $500 minimum opening deposit
- No minimum balance or monthly maintenance fees
| Institution | Type | Rate | APY | Min. To Earn APY | Details |
|---|---|---|---|---|---|
| Ultima Bank Rates as of May. 15th | Savings | 2.00% | 2.02% | $0 | SMART Savings Account - for young adults 18 yrs or younger, withdrawals prior to 18th birthday may result in a penalty |
| Washington Savings Bank Rates as of May. 15th | Savings | 1.50% | 1.51% | $0 | Saver Rewards, tiered rates apply, APY valid for balances between $0 to $15,000, online accounts only, requires an Interest Rewards Checking account in which you must meet monthly qualifications to earn maximum Saver Rewards APY - 12 debit card purchases - electronic statements - 1 direct deposit or ACH. Limited to Massachusetts market area. |
| Dollar Bank Federal Savings Bank Rates as of May. 15th | Savings | 1.20% | $0 | FreeMONEYSavings - Rate for balances below $20,000 - must maintain Dollar Bank FreeMONEY Checking or e-Checking to earn rate. Open online and mail in forms. Available in Pennsylvania, and Ohio market area. Rate collected within: 15222 (PA) | |
| AmTrust Direct Rates as of May. 15th | MMA | 1.04% | 1.05% | $5,000 | Earn More Money Market Account - Rate earned on balances of $5,000.00 and up-new money only. |
| MyBankingDirect Rates as of May. 15th | MMA | 1.04% | 1.05% | $5,000 | Earn More Money Market Account - Rate earned on balances of $5,000.00 and up-new money only. |
| Bank2 Rates as of May. 15th | Savings | 1.01% | $0 | Great Rate Savings - Tier Up to $35,000 - Account must be linked to Great Rate Checking Account - Available only to Oklahoma residents | |
| SmartyPig Rates as of May. 15th | Savings | 1.00% | $0 | APY for balances up to $50,000 | |
| Biscayne Bank Rates as of May. 15th | Savings | 1.00% | $1 | Regular Savings - Maintain $1,000 balance each day and avoid a $25 monthly maintenance fee - Miami-Dade County, Florida market area only | |
| Barclays Rates as of May. 15th | Savings | 1.00% | $0 | Online Savings - APY for all balances | |
| Doral Bank Rates as of May. 15th | MMA | 0.95% | 0.95% | $5,000 | Current Promotion - Money Market Account - Account must be opened in person at one of the New York branches - New money only - Limited time offer - Rate collected within: NY |
| Doral Bank Rates as of May. 15th | Savings | 0.95% | 0.95% | $1 | Statement Savings - Rate collected within: NY |
| SFGI Direct Rates as of May. 15th | Savings | 0.94% | $1 | ||
| Union Federal Savings Bank Rates as of May. 15th | MMA | 0.90% | $1 | Online Money Market Account | |
| Sallie Mae Bank Rates as of May. 15th | MMA | 0.90% | $0 | Nationwide - apply online | |
| Salem Five Direct Rates as of May. 15th | Savings | 0.90% | $0 | eOne Savings - APY on balances of $0.01-$500,000. Companion account to eOne Checking, no minimum balance, no monthly fees, free ATM card, Online applicants only, who do not have existing deposit accounts with Salem Five | |
| CIT Bank Rates as of May. 15th | Savings | 0.90% | $100 | CIT Savings - APY for daily balances below $25,000 - apply online | |
| Gogebic Range Bank Rates as of May. 15th | MMA | 0.85% | 0.85% | $100,000 | Available only to Michigan market area. Must open account in person. Gogebic Money Market Checking - tiered interest rates. APY for balances of $100,000 - 9,999,999.99 |
| EH National Bank Rates as of May. 15th | MMA | 0.85% | 0.85% | $250,000 | Premium Money Market - tier $250,000 and over |
| Mutual of Omaha Bank Rates as of May. 15th | MMA | 0.85% | 0.85% | $5,000 | Online Money Market - Rate/APY for balances between $5,000-$500,000 |
| G E Capital Retail Bank Rates as of May. 15th | MMA | 0.85% | $25,000 | Money Market - APY for balances $25,000 and above. | |
| FNBO Direct Rates as of May. 15th | Savings | 0.85% | $1 | Online Savings Act - Rated Kiplinger's Best Online Savings Account, no minimums, no monthly fees, manage accounts securely online | |
| Colorado Federal Savings Bank Rates as of May. 15th | Savings | 0.85% | 0.85% | $2,500 | Online Savings Account - up to 6 withdrawal transactions per month with no service fee |
| American Express Rates as of May. 15th | Savings | 0.85% | $0 | High-Yield Savings - Bank by phone or online only. | |
| Sallie Mae Bank Rates as of May. 15th | Savings | 0.85% | $0 | Nationwide - apply online | |
| Mutual of Omaha Bank Rates as of May. 15th | Savings | 0.85% | 0.85% | $25 | Online Savings - Rate/APY for balances between $25-$500,000 |
| G E Capital Retail Bank Rates as of May. 15th | Savings | 0.85% | $25,000 | High Yield Savings - APY for balances $25,000 and above. | |
| Ally Bank Rates as of May. 15th | MMA | 0.84% | 0.84% | $0 | Money Market Savings Account - All balances - No monthly fees - Apply online |
| Ally Bank Rates as of May. 15th | Savings | 0.84% | 0.84% | $0 | Online Savings - Free online transactions, no monthly fees, no minimums - Apply online |
| First Internet Bank Rates as of May. 15th | MMA | 0.80% | $50,000 | Money Market Savings - Rate earned on balances up to $99,999.99 - transaction limitations - apply online | |
| Customers Bank Rates as of May. 15th | MMA | 0.80% | $10,000 | Apply online - Limited to Pennsylvania and New Jersey market area | |
| ableBanking Rates as of May. 15th | MMA | 0.80% | $0 | Money Market Savings - up to 6 withdrawals are permitted per month - apply online - a division of Northeast Bank based in Maine | |
| Discover Bank Rates as of May. 15th | MMA | 0.80% | 0.80% | $100,000 | Money Market Tier $100,000 and up |
| G E Capital Retail Bank Rates as of May. 15th | MMA | 0.80% | $10,000 | Money Market - APY for balances between $10,000-$24,999. | |
| Discover Bank Rates as of May. 15th | Savings | 0.80% | 0.80% | $0 | Online Savings Account - Account can only be held in individual or joint ownership - Up to 6 preauthorized transfers from your Online Savings Account per statement cycle |
| ColeTaylorBank Rates as of May. 15th | Savings | 0.80% | 0.80% | $10,000 | Online Savings Account - $10,000 minimum daily blanace requirement to avoid $10 monthly fee - optional eStatement - Free ATM/Debit Card, Online Banking, Mobile Check Deposit - Available to Residents of Illinois, Indiana, Michigan, Missouri and Wisconsin Only |
| Chesapeake Bank Rates as of May. 15th | Savings | 0.80% | 0.80% | $1 | Clear Sky Savings - Tier $1 - $249,999 |
| G E Capital Retail Bank Rates as of May. 15th | Savings | 0.80% | $10,000 | High Yield Savings - APY for balances between $10,000-$24,999. | |
| Century Bank Direct Rates as of May. 15th | MMA | 0.79% | $0 | Online MM Rate - apply online | |
| EverBank Rates as of May. 15th | MMA | 0.76% | 0.76% | $0 | Yield Pledge Money Market Account - New Account bonus rate - 1.25% for the first six months, 1.01% First Year APY and ongoing APY currently 0.76% - for account balances of $50,000 or less |
| Nationwide Bank Rates as of May. 15th | MMA | 0.76% | $1,000 | Tiered Money Market - tier $1,000 - $9,999.99 - apply online | |
| Nationwide Bank Rates as of May. 15th | MMA | 0.76% | $10,000 | Tiered Money Market - tier $10,000 - $24,999 - apply online | |
| Nationwide Bank Rates as of May. 15th | MMA | 0.76% | $25,000 | Tiered Money Market - tier $25,000 - $49,999 - apply online | |
| Nationwide Bank Rates as of May. 15th | MMA | 0.76% | $50,000 | Tiered Money Market - tier $50,000 - $99,999.99 - apply online | |
| Nationwide Bank Rates as of May. 15th | MMA | 0.76% | $100,000 | Tiered Money Market - tier $100,000 - apply online | |
| TIAA Direct Rates as of May. 15th | MMA | 0.75% | 0.76% | $0 | TIAA Direct is not accepting new account applications at this time. Money Market - tier 0 - $9,999 |
| TIAA Direct Rates as of May. 15th | MMA | 0.75% | 0.76% | $10,000 | TIAA Direct is not accepting new account applications at this time. Money Market - tier $10,000 - $24,999 |
| TIAA Direct Rates as of May. 15th | MMA | 0.75% | 0.76% | $25,000 | TIAA Direct is not accepting new account applications at this time. Money Market - tier $25,000 - $49,999 |
| TIAA Direct Rates as of May. 15th | MMA | 0.75% | 0.76% | $50,000 | TIAA Direct is not accepting new account applications at this time. Money Market - tier $50,000 and above |
| EverBank Rates as of May. 15th | Savings | 0.76% | $0 | Yield Pledge Savings Account - apply online | |
| TIAA Direct Rates as of May. 15th | Savings | 0.75% | 0.76% | $0 | TIAA Direct is not accepting new account applications at this time. High-Yield Savings, tier 0-$9,999 |
Rates / APY terms above are current as of the date indicated. These quotes are from banks, credit unions and thrifts, some of which have paid for a link to their website. Bank, thrift and credit union deposits are insured by the FDIC or NCUA. Contact the bank for the terms and conditions that may apply to you. Rates are subject to change without notice and may not be the same at all branches.
Ally Bank was selected by Kiplinger Magazine as the best savings account for 2009. Formerly known as GMAC Bank, Ally Bank provides an interest rate for their online savings account of 0.84% APY as of May 14, 2013. click here to apply
CIT Bankwas founded in 1908 in St. Louis by Henry Ittleson. Throughout the 20th century, CIT continued to grow, in all sectors. CIT Bank, an FDIC-insured institution, serves consumers and small businesses with certificates of deposit, savings accounts and custodial accounts. CIT Savings account offers 0.90% APY on all deposits between $100-$24,999 and 1.00% APY on all deposits of $25,000 and above, as of May 14, 2013.click here to apply
Barclays is a large, international bank that has been around for 300 years, and opperates in over 50 different countires. Barclays offers a 1.00% APY on all deposits, with no minimum balance and no monthly fees, as of May 14, 2013.
Discover Bank offers a solid online savings account with a fast opening process; my account was opened within twenty-four hours. The current interest rate for Discover Bank is 0.80% APY as of May 14, 2013. click here to apply
American Express offers an online personal savings account from the company’s banking division that rivals the best banks with a current interest rate of 0.85% APY as of May 14, 2013. click here to apply
Capital One 360 offers no fees and no minimum balance requirement. Like ING DIRECT before it, Capital One 360 also has a great website and excellent customer service. So far, managing your money with Capital One 360 is just as easy as it was with ING DIRECT. Capital One 360 offers a current interest rate of 0.75% APY as of May 14, 2013. click here to apply
FNBO Direct offers no fees and no minimum balance requirement. FNBO Direct is the online arm of First National Bank of Omaha. FNBO has an interest rate of 0.85% APY as of May 14, 2013. click here to apply
EverBank has a variety of products including a high yield checking account, a money market account, and world currency CDs, all with top-tier interest rates. Currently, for first time account holders, Everbank’s Yield Pledge Money Market account offers a new account bonus rate of 1.25% for the first six months, a first year APY currently at 1.01% and an ongoing APY of 0.76% APY for account balances up to $50K. And their Yield Pledge Checking Account for first time account holders for balances up to $100,000 offers a new account bonus rate of 1.25% for the first six months, and based on balances on a tiered structure, first year APY is currently at 0.82%-0.98% and a tiered ongoing APY of 0.39%-0.71% APY as of May 14, 2013. click here to apply
SmartyPig currently sports one of the better interest rates you can find online at 1.00% APY as of May 14, 2013. In addition to the high interest rate, you can also convert your savings goals into gift cards and earn an additional bonus for each gift card conversion. SmartyPig is not a bank by itself, but it is a goal-oriented savings vehicle, a layer, that can be compared with other savings accounts.
HSBC Advance offers no fees and no minimum balance requirement. HSBC Advance (formerly HSBC Direct) entered the race with one of the highest interest rates ever available at 6% APY. HSBC Advance Online Savings Account has an interest rate of 0.10% APY as of May 14, 2013.
Lending Club Investing offers a significantly higher return than most banks. LendingClub is a social lending site where you can invest in loans issued to individuals and businesses. The most recent average net annualized return for notes by grade A to G is between 5.49% and 11.91%, and some loans carry interest rates as high as 20%, as of May 14, 2013. While these investments are not FDIC insured, given the low interest rates paid by banks, LendingClub may be a great alternative.
What is your favorite online savings account? Share your thoughts in the comments below.
For more banks to round out the selection, see this list of savings accounts interest rates. I have been tracking the rate changes for many years now, and this list gives you an idea of which banks have been consistently offering the highest interest rates.
Updated May 14, 2013 and originally published February 29, 2012. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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Advertiser Comments