Best Online Savings Accounts: Which High Yield Savings Account is Best?
The best high-yield online savings accounts offer strong interest rates and great customer service, making them a popular option for savers. In addition, studies show online savings accounts come with lower fees.
“High-yield” is, unfortunately, a bit of a misnomer these days. A decade ago, interest rates were 4% and 5% among selected savings accounts and money market accounts. Today, the best rates are around 1%, but some banks offer rates hovering near 0%.
The rates you see below are up-to-date at the time of publishing. Be sure to visit the bank websites to confirm rates.
The Best Online Savings Accounts
CIT Bank was founded in 1908 in St. Louis by Henry Ittleson. Throughout the 20th century CIT continued to grow in all sectors. An FDIC-insured institution, it serves consumers and small businesses with certificates of deposit, savings accounts, and custodial accounts. CIT Savings account offers 0.50% APY on all deposits. Click here for more details
Ally Bank was selected by Bankrate as the best savings account for 2020. Formerly known as GMAC Bank, Ally Bank provides an interest rate for their online savings account of 1.00% APY. Click here for more details
Empower offers an intelligent Automatic Savings Account. Just tell Empower your weekly savings target and every day Empower studies your income and spending and automatically knows when to save the right amount of money at the right moment in time. You can also access a whole host of unique features via their app. This includes automatically helping you with your budget (once you link your main checking account), helping you save money by showing you unused subscriptions. Plus, there’s a Cash Advance feature that will help you when you’re strapped for cash with no interest, no late fees and no credit check.* Click here for more details. Learn more on Empower features with our Empower review.
*Eligibility requirements apply. Banking services provided by nbkc bank, Member FDIC
Chime was founded in 2013 and headquartered in San Francisco. It offers savings accounts at 1.00% APY, with no monthly service fees or minimum account balance requirements. What stands out is account holders may be able to receive their paycheck via direct deposit up to two days before many other banks. It also offers two features that help you save money automatically: Round-Ups, where you save your change from every purchase, and Save When I Get Paid where you can save a percentage of each paycheck automatically. Chime offers a lot of additional features – learn more with our full Chime bank review. Click here for more details
Radius Bank doesn’t have the most competitive APY at 0.10% (you need a $2,500 account minimum). However, it makes up for it with other perks such as free ATMs (including internationally) and an intuitive, easy to use banking app. Learn more about Radius Bank features and services in our full review. Click here for more details
Synchrony Bank offers a 0.75% APY on an FDIC-insured savings account. With no minimum balance required and no monthly service fees, it’s one of the most popular options. Click here for more details
TIAA Bank has a variety of products including a high-yield checking account, a money market account, and world currency CDs. All of these accounts offer top-tier interest rates. For example, first time account holders of TIAA’s Yield Pledge Money Market account earn a new account bonus rate of 0.75% for the first year. After the first year, the ongoing APY is 0.50 – 0.70% for account balances. And their Yield Pledge Checking Account for first time account holders for balances up to $250,000 offers a new account bonus rate of 0.40% for the first year and the ongoing APY is 0.15% – 0.25%. Click here for more details
Discover Bank offers a solid online savings account with a fast opening process. For example, I opened my account within twenty-four hours. The current interest rate for the Discover Bank Online Savings Account is 0.40% APY. Click here for more details. Learn more about Discover offers with our Discover saving accounts review.
Marcus: By Goldman Sachs specializes in online savings accounts and certificates of deposit. A high-yield online savings account offers 0.80% APY. One major advantage that GS Bank has is that they are backed by one of the most respected financial institutions in the world: Goldman Sachs. Not only should that make your investments more secure, but it also holds the promise of expanded features and opportunities in the future. Click here for more details
Compare The Best Online Savings Accounts
What to Look for in a Savings Account
There are so many savings account bells and whistles. And some of them are great. It can be nice to be able to automatically roll “spare change” from your checking account to your savings, for instance. And having tools to track your savings account balance on your phone automatically is also great. But these are extras. At the core, here are the six things you need to consider when looking at a savings account:
- Interest Income
Let’s tackle these issues one by one here.
Stability: Look for FDIC Insurance
The first thing to look for in a savings account is FDIC protection. This ensures that your money will be available to you, even if the bank you choose fails. As we saw in the early 2000s, even the banks with the best reputations can fail. So always be sure that your money is FDIC insured. Or, if you choose a credit union, look for National Credit Union Administration insurance, which is similar to the protection offered by the FDIC.
Fees: How Low Can You Go?
These days, there are so many fee-free options available that you really shouldn’t be paying for a savings account at all. But if you do choose one with conditional fees, see if you can meet the requirements for having those fees waived. Even fees as small as a few bucks a month will wear away at your savings over time.
Accessibility: Get Your Money When You Need It
Sure, you might find a bank that offers outstanding interest and no fees. But if it takes a week to transfer money from that bank to your checking account, it’s not a great place to store your emergency fund. Generally, the more likely you are to need the money at a moment’s notice, the more easily you should be able to access the money. Also, you may not want to have all your savings linked to your checking account, as that can cause unnecessary temptation to overspend.
Apps: Check for Value-Added Features
Most online banks offer apps. However, not all offer much more than the usual, such as mobile deposit, basic transaction monitoring and the ability to transfer funds. To help you manage your money better, some banks have added more value by offering intuitive budgeting management tools and making recommendations to help you save. Plus, there are other features you can look for, such as ones that help you save automatically towards a goal, like a vacation or an emergency fund.
The bottom line here is that you might need different levels of accessibility for different accounts. Maybe half your emergency fund is at a bank in town so that you can withdraw cash without ATM fees whenever you need it. Store the rest of it at an online bank with a good interest rate. It’ll take a couple of days to get your money, but not usually more than that. And then you can store savings for particular goals, like your next car, somewhere that you can access the money within three to five days.
Interest Income: Higher Isn’t Always Better
Remember, this type of savings account is not for investing. And in today’s environment, you shouldn’t expect to find an account with stellar interest rates. The differences between banks are pretty small, too, so don’t choose based on this factor alone. With that said, earning a bit of interest can offset some of what you’d otherwise lose to inflation. So do look at interest rates, especially when choosing a bank for longer-term, higher-balance savings that will earn more over time. But, of course, be sure to balance any increases in interest against potential increases in fees, which can quickly erode that extra interest income. Nevertheless, if your savings is at a brick and mortar bank earning below 0.25% APY, choose one of the better options above.
Customer Service and Tools: Look at Reviews
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. Second, live customer service representatives should be knowledgeable, helpful, and available.
Excellent customer service is essential for a bank. If you have trouble logging in online and need your money, you need to be able to get someone on the phone to fix the problem. So check around for customer service reviews for the banks you’re considering. Then, be sure to take a look at additional tools that you might find helpful. These days many banks have apps for managing your money, taking check deposits from your phone, or providing financial advice available for free. These aren’t make-or-break features for most customers. But they can be the icing on the cake.
Once you’ve gotten through all of these steps, you should be able to find a savings account — or two or three! — that meets your particular needs.
What is your favorite online savings account? Share your thoughts in the comments below.