An excellent savings account should offer a high annual percentage yield (APY) on interest with little to no fees. Researching the best savings account rates is a crucial step when selecting an account. You want to leave your money safely with the bank and collect in a month, year, or more, hopefully with a nice chunk of interest on top.
Unfortunately, for most banks, this is not the case.
A lot of banks offer low-interest rates with high fees. The average APY of a traditional bank is 0.09%. This rate can be much higher with an online savings account. Four out of five American account holders admitted to not knowing what interest rate they are getting from their savings account. Now that you are armed with the information in this article, there is no excuse not to know. The list below contains several savings accounts that break the trend of low-interest rates.
Before going into that, let’s go over the basics of a savings account.
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What is a Savings Account?
As mentioned above, a savings account is a type of deposit account issued by a bank or similar financial institution. A savings account offers interest on money deposited into the account over a period of time. They are a great way to put money aside and earn money while you save. Saving for a new car or an upcoming vacation are excellent reasons for opening a savings account. A savings account can also serve as a backup in case you need it for emergency expenses.
Because savings accounts pay interest, it is often better to keep unneeded money there instead of in a checking account. They are considered one of the better saving investments. It is generally advised that you should have at least three to six months’ worth of bills in savings. This then acts as a financial cushion should the worst happen (losing your job, for example).
Funds from a savings account are easily accessible and usually don’t incur fees, unlike other saving methods such as a retirement fund, stocks, and shares. The easy access to funds can also be seen as a disadvantage, and that is the main reason for the low-interest rates. A savings account may also come with limitations on how many withdrawals you can make a month. Federal law only allows six withdrawals per month from a savings account before a service fee is charged. Most accounts also come with a minimum balance that you need to maintain.
How Do Savings Accounts Work?
The bank benefits from your savings account. The funds in your account are often used by the bank to fund loans. The interest is the bank’s way of saying thank you for letting them use your money.
Most major banks offer savings accounts with low-interest rates. Higher interest rates can usually be found with online institutions that do not have many (if any) brick and mortar branches.
In terms of the security of your money when having a savings account, you are insured by the Federal Deposit Insurance Company (FDIC). This means that your funds are insured up to $250,000 if the bank or institution were to fail.
Savings Account vs. Checking Account
Both savings and checking accounts are the most common types of accounts issued by banks. They both hold money for safekeeping, but that is where the similarities end. The main difference between the two accounts is how you use the money.
A checking account offers easy access to money. You can use this type of account to make in-store or online purchases. As we explained above, savings accounts are for keeping your money in one place for an extended time. Typically, they are used for money that you don’t need access to right away. Savings accounts do come with access to money, but retrieving it isn’t as easy as its checking account counterpart.
Writing a check is also not usually possible with a savings account. You can have the amount in the account sent to you as a check, but being able to withdraw with a check is rare. This is not the case with checking accounts (hence the name), where you can cash and send checks as needed.
Checking accounts can pay interest on the money held in the account, but the amount is much lower than that of a savings account. As an example, see FNBO on the list below. Their savings account offers 2.10% APY interest, whereas their checking account only provides 0.65% interest.
Checking accounts do come with more fees than a savings account. Monthly maintenance fees, overdraft charges, and even ATM fees are all things to consider when choosing a checking account. Here are some of our top picks for checking accounts.
A useful tip is that you can use your savings account as overdraft protection on a checking account. If you sign-up for the service, then the bank will use the funds from your savings account to cover the transaction. This way, you won’t suffer from unexpected charges when you run out of money in your checking account.
Online Savings Account vs. Brick and Mortar Branch
The internet changed the world of banking. Almost everything you can do at your traditional bank, you can do online using your laptop or mobile phone. Opening a checking account, taking out a loan, and opening a savings account each are possible from your computer.
Some banks have eliminated physical branches in favor of strictly online banking. Less staff, no physical location to pay rent for, and other factors associated with maintaining a brick and mortar location mean less money spent by the business.
These savings are then hopefully passed on to the consumer in the form of higher interest rates. As stated above, the average annual percentage of a traditional bank is 0.09%, and it can be much higher with an online savings account. American Express, for example, only offers online banking. For this reason, they provide an APY rate of 2.10%. That puts it high (but not the highest) on the list below. This rate wouldn’t be possible if they had to pay rent for multiple branches.
Advantages and Disadvantages
Choosing an online-only bank ultimately comes down to personal preference. There is no face-to-face contact. However, not having to deal with long lines at a physical branch can be an advantage. Everything can be done online or via a mobile app, which makes it faster and more convenient than traveling out to the bank branch and waiting to see someone.
However, the lack of a physical branch means you can only transfer money online. Online savings accounts usually come without a card and ATM support. If that is the case with your account, then your physical cash needs to be deposited into a checking account. You then need to transfer the money from your checking account into the savings account. This process is much more complicated than simply handing cash to a teller.
Online banking is accessible 24/7, including weekends and holidays. Customer service may be a bit more restrictive during these periods, but definitely better than a brick and mortar bank that’s not open. Banks are usually closed on Sundays and holidays and have limited hours on Saturdays. Online or telephone customer service for a traditional bank may be available 24/7, but this can differ per bank.
What Should I Consider When Choosing a Savings Account?
Savings accounts are a great way of keeping your money safe while gaining interest. High interest is excellent but can be offset with high fees or minimum balance amounts. Not all accounts will come with the same terms. What should be taken into consideration when choosing a savings account? Let us take a look at the following decision-making factors:
The main point to consider on any savings account is the interest paid on your savings. Saving account rates for online savings accounts can often pay double that of a standard account. If a bank is offering 0.1% as its annual percentage while charging fees, then you may as well stick your cash under your mattress.
Your primary focus, as stated above, should be the interest rate. The higher, the better, right? Wrong. Some banks and other financial institutions offer an initial high rate but then provide a lower rate after some time. You should check the terms of your account carefully before signing your deposit account agreement. For your peace of mind, make sure they are not trying to reel you in with a tempting 2.50% initial rate before dropping it down to 0.50% APY after a few months. Ask the bank how much they will pay in interest and for how long. If they can’t give you a straight answer, find another bank.
Annual fees are charged just for the privilege of having a savings account. Remember, a savings account is used by the bank to pay out loans, so you shouldn’t have to pay extra. There are plenty of options that don’t charge annual fees.
Minimum fees are a bit more reasonable than the annual fees above. Banks charge a minimum fee once your account goes below the minimum balance that is spelled out in your terms with the bank. This penalty fee can be monthly and can range from $4 to $10. Accounts that pay a higher APY have these minimum fees in place. If you keep the balance above the minimum, you have nothing to worry about. Most savings accounts now come with some form of a mobile or online app. This makes checking and keeping on top of your balance much more manageable.
Federal Law states that you can make six withdrawals per month from your savings account free of charge. From there, a fee can apply. The banks, however, can set their own rules for withdrawals, so this is another factor to consider. You could make as many as the allowed six or as little as two before a fee applies. The withdrawal fee is usually between $3 and $10 each time. As with any contractual agreement, check the fine print before signing the deposit account agreement.
No matter which savings account you choose, there should be standard features they offer. Mobile check cashing and electronic transfers are expected from savings accounts. Some, but not all, offer ATM usage with a card. Though they should be included, an account lacking these standard features should not be immediately dismissed. It all depends on what the most important factors are to you.
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How Do I Open a Savings Account?
Before opening a savings account, you should consider what you are going to use it for. Will you use the account as a nest egg for the future? Do you have a vacation that you need to save for? The reason behind opening an account will help you decide where to open one. It will also help you determine how much money per month you would like to put away.
To open an account, you will need to first apply to the bank you choose. You can do that online or in a physical bank. To open an account, you will need to provide:
- Your Name
- Your Address
- Telephone Number
- Photo Identification (Driver’s License, Passport, etc.)
- Social Security Number – This is necessary because interest is earned on your savings. The bank associated with the savings account will send you a form that shows how much interest you have made. This 1099-INT form needs to be submitted with your income tax return.
What to do Once You Have Opened a Savings Account
Once you have an account, it is time to make deposits. You can do this in a branch associated with your bank, set up a transfer from your checking account, or even organize for a portion of your paycheck to be deposited directly. Withdrawing funds is just as simple — you can do that in your bank, online with a mobile app, or via an ATM. But remember to keep the minimum balance amount set by the bank. If you don’t, then you could be subject to fees. If you do struggle to make enough to keep up with the minimum, then here are some easy ways to make money.
When Should I Open a Savings Account?
The simple answer to this question is: now. Don’t waste precious time keeping your money in a checking account or under your mattress and lose out on interest rates. A more detailed explanation would depend on your desired requirements and current financial situation.
As a young person, it is vital to get into good spending habits. You may not have the money to meet the minimum requirements for opening a high-yield savings account, but you can still take advantage of a standard savings account. You can save for an upcoming trip or use it as a backup fund. Putting any spare funds into an account and gaining interest on them is always a better option than not earning from investing at all. You may require a bit more access to your money, so an account that comes with a card may be a higher priority.
Potential Circumstances Where a Savings Account Would Come in Handy
A middle-aged person will have different requirements and, hopefully, more funds to deposit. A wedding can be a potentially costly expense. You may also just be thinking about being financially secure for the future. You could opt for an online bank that has no card for withdrawals but better interest rates.
If you are getting close to retirement, then you should already have a retirement fund set up to secure your future. An additional savings account won’t hurt, and those extra funds can help cover a possible medical emergency that would otherwise leave you in financial trouble. You could also use that savings account to cover the vacation or upcoming wedding of your kids if you are feeling generous.
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What Are the Different Types of Savings Accounts?
Generally, there is only one type of savings account. However, varying banks will advertise them differently.
You will see high-yield accounts on our list below. This term implies that they offer a higher-than-average interest rate. Don’t be misled by this, as you can find a savings account with no ‘high-yield’ title that offers more APY.
Some banks offer special savings accounts for children. These kinds of accounts may come with a lower minimum requirement. Money Market accounts fall under the definition of a savings account, so it could be considered a different type of account.
While checking through the available accounts, you will come across different titles. It helps to know what they mean. You won’t find each one at every bank. You may also find that more than one of the terms can apply to a single account. The terms to expect in your search for a savings account are:
A personal account, as the name suggests, is an account owned by only one person. This is your account, and no one else is allowed access to the funds within. An exception is if you have given someone power of attorney for the individual account.
Similar to an individual account but only the two people the account belongs to can access it. If there are no beneficiaries written into the account and one owner passes away, the funds go to the other account owner.
Payable on Death
It is possible to list beneficiaries on a savings account. When you pass away, the money is then transferred to those listed. Proof of death, such as a death certificate, is needed to claim the funds. If this were a joint account, then both owners would have to die before the funds are handed down.
Uniform Transfer to Minors Act/uUniform Gifts to Minors Act (UTMA/UGMA)
This type of account allows an adult to open an account on behalf of a minor and then deposit money into that account. The adult acts as the primary account holder and manages this account until the minor turns 18 or 21, and then the saved funds and ownership of the account are transferred.
What Are My Alternatives?
If the above terms have discouraged you from opening a savings account, don’t worry! There are alternative options for saving your money:
US Treasury Securities
US Treasury Securities are considered some of the safest investments you can make. They can be purchased in $100 increments via an online auction, and you can hold them for varying lengths of time. US Treasury Securities that need to be kept longer usually come with higher interest rates. Beware that the money is not as easy to obtain as it would be with a savings account. Securities held for two years may not offer enough interest to be worth not having that money available to you. A T-bill, which is security held for a short term, can be expected to net an interest APY of 2.37%. The interest earned with securities is also exempt from state income tax.
High Dividend Stocks
Stocks are a risky business, and you should not use them for holding emergency money. With risk comes reward (sometimes), and stocks can be a viable way of increasing your savings. It is possible to gain a dividend rate of 3% to 4% interest (if not more) when buying and selling stocks. The risk comes from the fact that shares can lose or gain value. You can employ a broker to do the trading for you, but you should ensure they are a member of FINRA — the Financial Authority Regulatory Authority.
Certificate of Deposit
A certificate of deposit (CD) is similar to a savings account. They can both be issued by a bank and are both, depending on the bank, insured by the FDIC. The bank holds the money in a certificate account for a certain amount of time. Once that period is up, you get your money back with interest. The longer the bank owns the money, the more interest you can get paid. The Barclays CD for one year offers 2.45% APY, for example. The downside of a CD is that if you withdraw money early, you will have to pay a fee.
Bonds, like stocks, can see a change in their value, so they are not entirely safe. They do offer higher interest rates than a standard savings account. They can be purchased through ETFs (Exchange Traded Funds). The type of bonds purchased will depend on the payout. For example, iShares National Muni Bond ETF paid 2.46% APY in a year.
Money Market Account
A money market savings account is an interest-bearing account held with a bank or other financial institution. They are known to pay more interest than a standard savings account. This type of account often comes with check writing privileges and a debit card to use. A six-month restriction on withdrawals restricts them. A money market account may be better suited for more long-term goals, whereas a savings account and the lower interest rate is better for short term saving. A money market account will usually come with a higher minimum deposit requirement when compared to a standard savings account. This type of account can be considered a savings account. Therefore, it may not technically be an alternative, but it is always good to know what options are available.
Health Savings Account
A health savings account (HSA) is not exactly an alternative but is a savings account with a particular use. Health insurance providers usually issue these types of accounts, though you can obtain one through other financial institutions. Their purpose is to hold money to cover deductibles, co-pays, and other medical expenses your health insurance wouldn’t cover. The accounts do come with maximum limits mandated by the government. As of July 2020, $3,500 is the maximum for an individual, with $7,500 being the maximum for a family.
Despite the above list, savings accounts are a tried and tested way of increasing your savings. They are more secure than stocks in the long term, too. Our list below has some great savings accounts with favorable terms.
Some of the Best Savings Accounts for You
Now that you know what makes an excellent savings account and how to get one, it is time to look at what accounts are available to you. As stated above, the best savings accounts should come with a high APY and low fees. The idea of a savings account is to grow your savings without having to worry.
Alliant Credit Union
Alliant Credit Union is an online credit union that offers multiple options for banking. Credit union APY is often higher than a bank’s. The Alliant high-rate online savings account is no exception and comes with a competitive annual percentage of 2.10%.
There is a minimum account opening balance of $5. You also need to keep a minimum average daily balance of $100 in your account to earn interest.
An excellent addition to this account is that you can hold 19 supplemental savings accounts. Each one can be given a unique name. Therefore, you can easily set different goals for each account and stay organized.
This is ideal if you have an upcoming wedding or vacation, and you also want to keep an emergency fund, for example. The account also comes with a card and no monthly fees if you opt to receive electronic statements only.
Ally Bank offers purely online banking solutions and is highly rated. Their online savings account offers 1.90% APY and comes with no monthly fees. Additionally, they provide a checking account so that you can do all your banking in one place. As they offer checking accounts, you are entitled to an ATM card. This means you can easily withdraw funds from your savings account. The ATM card is free to use at over 43,000 ATMs.
The downside to Ally is that you cannot deposit cash into the account because they work online only. The mobile app has average reviews, but they do offer 24/7 customer service.
American Express is well known for offering credit cards, but did you know they also offer a savings account? That online savings account currently issues 2.10% annual percentage interest, which is a high rate among saving accounts. There are no monthly fees or minimum balance requirements.
The standout feature of American Express is its above-average customer service. If you already hold an Amex credit card, then this may not be news to you. Unfortunately, despite being the same company, the credit card account and savings account are not linked in any way. However, your current account can be linked to the savings account for secure transfers.
It is possible to link three current accounts to your savings account and set up automatic transfers from each.
Like Ally Bank, American Express is entirely online. American Express is also federally insured, so your money is safe.
Barclays is a traditional bank that offers a great deal with its savings account. Its savings accounts are only online, which limits the overhead needed by the bank. This makes a 2.10% APY possible with no minimum account opening fee or minimum balance.
Online transfers to and from other banks are possible, along with direct deposits.
The downside to this excellent savings account is that there is no physical location, no ATM support, and no option to open a checking account. There is a mobile app available that lets you manage your finances on the move at any time. If you are satisfied with online banking only, then this is an excellent option for you.
CIBC Bank USA
CIBC Bank USA was initially known as The Private Bank and Trust Company. The bank is based out of Chicago and was founded in 1991. Nowadays, CIBC Bank offers a very competitive high rate APY of 2.39%.
This savings account comes with a mobile app and no monthly fees. There is a minimum balance of $1 to gain access to the high APY, but $1,000 is needed as an initial deposit to open the account. If you can meet the initial deposit, then this account is excellent.
There is a mobile app for managing your account that is available on both Android and Apple devices.
One downside, however, is that you cannot move money from the account to another external account in the first 30 days. This rule is flexible, though — if an emergency occurs and you need access to the funds, you can call CIBC directly and request a transfer over the phone.
If a physical location is a must for you, then a good option would be CIT Bank. CIT Bank itself is online-only, but OneWest Bank division acts as the physical location. There are over 60 locations for face-to-face banking. The bank is FDIC-insured, meaning your money is protected.
CIT Bank offers two savings accounts worth noting.
The Premier High-Yield Saver
This account is a high-yield savings account that comes with an APY of 1.55% interest. Don’t be put off by the average interest, as there is the possibility to earn compound interest daily on your savings. More appeal for this account comes from the $100 minimum opening deposit and then no other fees for regular use. You are limited to six transactions per statement cycle.
The other savings account offered by CIT Bank is the Savings Builder account. This account also requires a $100 minimum deposit to open. The initial interest rate is 2.274%. It is possible to earn up to 2.30% APY with this account, but you need to meet specific terms. You should either have $25,000 in your account or make at least $100 in monthly deposits to get the highest interest back. As with the other account, there is a limit of six transactions. There are also no maintenance fees.
One downside to banking with CIT Bank is that there are no checking accounts available. They only offer savings and CD accounts, and that limits how much banking you can do with them.
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Citibank, not to be confused with CIT Bank, is the consumer banking division of Citigroup. Their savings account (Citi Accelerate) pays 2.36% APY. That is a considerably high rate. Now add no minimum balance or minimum amount to open an account to the equation, and it becomes a terrific deal. Unfortunately, this is one of the rare savings accounts on our list that does charge a monthly fee ($4.50). This fee comes with the basic or access package but can be avoided if you keep over $500 in your account. Citi is a large bank and is available in 42 states with over 700 branches. Such a large bank offering a high-interest rate is a rare occurrence and certainly a good deal.
Citizens Access is the online banking division of Citizens Bank. They offer both a savings account and certificate of deposit accounts, and they have FDIC insurance.
The savings account they offer comes with a savings APY of 2.20%. There are no sign-up or monthly fees.
An essential factor to note is that to gain the high APY; you do need to maintain a high amount of $5,000 in your account. Any collected balance that falls under the minimum amount will have the APY cut to 0.25%, which, though higher than the average at standard banks, is quite low.
There is no mobile app, but you can use the website via your phone to deposit checks into your account. Besides no mobile app, there is no ATM access. If you can keep up on the minimum amount, then the extra interest is helpful. If you can’t, then there are better options available.
Comenity Direct Bank
Comenity Direct is relatively new to savings accounts, with the offer first becoming available in July 2020. Created in 2018, Comenity Direct itself is a recently established brand. For a new bank, they have started strong with a high rate of 2.45% APY.
Unlike some other high APY accounts, you only need a starting deposit of $100. After the initial deposit, you only need to keep $1 in your account to be able to earn interest.
They have customer service open from 7 a.m. until 11 p.m. on weekdays (central time). Exceptions are weekends and some holidays when they work between 9 a.m. and 5 p.m. This accessible customer service is an excellent addition to an already rewarding package.
The downside is that there is, once again, no ATM support.
There is a handy mobile app to manage your account from your phone. The app is available on both IOS and Android. The app lets you contact customer service and also allows you to keep track of your balance.
Discover, like American Express, is thought to be primarily a credit card company, but Discover offers a broad range of products. Personal loans, consumer banking, student loans, certificate of deposit, money market, and — of course — saving accounts are among its offerings. It is not typical for an online bank to offer such a wide range of services.
Being able to do all of your banking in one place is just one advantage to Discover. They offer a competitive savings APY of 2.00%, and no minimum balance is needed to gain this interest.
There are also no maintenance fees to worry about. Despite being a well-established bank, the downside to Discover is the online-only presence. If you had hoped to visit a branch and talk to someone in person, then this account is not for you. There is, however, one branch in Delaware if you happen to be in the area.
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FNBO, or First National Bank of Omaha, is a traditional bank with claims to a secure bank heritage going back 160 years. There are branches in seven states located mostly in Midwest America.
The minimum for opening an account is $1, meaning this account is open to almost everyone. This bank also offers a significant (though not the highest on our list) APY of 2.10% on your savings.
FNBO also offers a checking account, meaning you can do all your banking conveniently in one place.
FNBO is a member of the PopMoney network, meaning transfers can be made at no cost and quickly. This is not typical for a savings account and is another standout point for FNBO.
FNBO has a high-interest rate on savings and FDIC insurance, making it an excellent option for saving money.
Downsides of FNBO
There are downsides to FNBO, which are unique compared to others on this list. There is an overdraft fee of $33 on the savings account. You are not able to withdraw over $100,000 in a single transaction or a single business day. You are also not able to withdraw $500,000 in one month. A maximum of $1,000,000 restricts your balance. There is also a $15 fee for performing a domestic wire transfer.
This account offers a nice APY with a low opening fee. The wire transfer penalty is not as ideal, as it penalizes you for taking out your savings. If you have the money to reach the maximum limits, then there are better investments out there.
Goldman Sachs Bank
Goldman Sachs is one of the newer additions to consumer banking, though it has been a big name on Wall Street for a while. The bank’s actual name is Marcus by Goldman Sachs. Along with savings accounts, they also offer loans of varying types. They do not provide a checking account, which means you will have to go elsewhere for other banking services.
Their online savings APY currently sits at 2.15%.
There is nothing particularly special about this account, though it is ideal for no-frills saving. There are no fees to worry about, and it is easy to deposit money online.
Due to the account being an online savings account, there is no ATM support. Again, because the account is online, you cannot deposit cash directly into your account.
There is also no mobile app.
Customer service is available weekdays, or you can find answers about your account in the FAQ section on their website.
A $1 minimum is required to be in your account at all times. This account is a straightforward, interest-paying safe place to keep your money.
HSBC Direct Savings
HSBC is known throughout the world, with over 38 million customers worldwide. Their Direct Savings account comes from the HSBC USA headquarters and is available in 48 states.
The account comes with a better than average APY of 2.20% with the need for only $1 to open an account. There are no monthly fees.
The high APY is rare for a brick and mortar bank, but HSBC can offer this rate with the advantages of physical locations. There is a 6-month minimum time before you can close the account, which makes it more like CD than a standard savings account. If you choose to do so before this time, they charge $20.
Another strange decision on the part of HSBC is that you must transfer money from outside their bank. Money from your HSBC checking account cannot be transferred to your savings account. There is also no ATM support or physical card to withdraw your savings.
The better than average APY and big-name brand can make this account great if you can stick through the first 180 days. The interest is credited monthly, which is excellent as you can see your savings increasing more regularly.
MySavingsDirect is an online banking division of Emigrant Bank. They have been around since 1850, so they have some experience in the banking field.
There is no minimum account balance, and there is a high APY of 2.40%. There are also no monthly service charges.
The downside to this account is that it severely hampers accessibility. There is no ATM support and no mobile app; you are stuck with a web browser for managing your savings. This, for some, might be a fair trade-off in return for a high-interest rate.
Like HSBC, the interest is credited monthly, which can be an excellent motivator for saving, especially with such a high-interest rate.
Popular Direct is an FDIC-insured bank. They have made this list because their savings account offers one of the highest rates of APY. Saving with Popular can net you an APY of 2.55%. However, to gain access to this high-interest rate, you must be able to provide a minimum deposit of $5,000. Once you have an account, you should keep the balance above $500. Otherwise, a $4 penalty fee will apply.
A high minimum deposit is not the only downside to this account. Popular is once again a single online savings account, which on its own, is not a bad thing. Unfortunately, there is no checking account available, and it is not possible to use ATMs.
If you can meet the high minimum deposit, then this is an excellent account for building up your savings. Other options are less exclusive and still offer high returns.
Pure Point Financial
Pure Point consistently amounts to the top APY savings accounts, with an interest rate of 2.15%. However, this savings account isn’t for everyone. There is a very high minimum deposit amount required — $10,000.
If your account drops below this amount, then the APY also drops to 0.25%. Despite the high requirements, there are no monthly fees.
There is no ATM support with this account, nor mobile app, which makes it not easily accessible. Despite no mobile app, mobile banking through a browser is still possible. You can use your phone’s browser to even cash checks.
As with Popular Direct, if you can meet the high minimum deposit, then this is a good account.
Synchrony is very popular among customers, as it is an overall good savings account. The preference for online banking means they can offer an interest rate of 2.15% APY. Synchrony is also insured by the FDIC, ensuring the safety of your money.
The interest rate is high, but unfortunately, Synchrony has had some poor reviews about its customer service and banking website. Additionally, there is only one physical branch located in New Jersey.
Despite those two marks against Synchrony, it can still be the right choice for those who want a simple saving experience.
Also, a nice added personal touch is that Synchrony customers are eligible for discounts on travel and leisure. That is on top of three free wire transfers per statement cycle and unlimited free use of ATMs (through reimbursement).
There is no monthly service fee, and only $1 is needed to open a savings account.
Digital banks are dominating this list, and UFB Direct is just another example. They offer a high APY of 2.25% with no monthly fee. There is also no minimum deposit required to open an account.
However, there is a catch. To earn the 2.25% interest, you must have $10,000 or more in your account. Anything under that amount nets 0%. They are FDIC-insured, so your money is protected, but the high account balance requirement can be off-putting.
Popular Direct offers a higher percentage APY of 2.55% with half the minimum required amount. Popular does have penalty fees if your balance is below their requirement, while UFB does not.
UFB Direct, however, does charge a penalty fee of $10 when you make more than six transfers per month.
Vio Bank is a relatively new division of MidFirst Bank. It was recently established in 2018. MidFirst Bank, however, is not new to the banking game and has been an FDIC-insured bank since 1934. Vio Bank’s high-yield online savings account has one of the highest APY, with its interest offered at 2.52%. Even better than the high-interest rate is that the interest applies no matter the balance. There are no monthly fees to worry about, and there is a low minimum opening deposit of $100.
There are two possible fees to consider, but you can avoid them easily. The first is a dormant account fee of $5 per month. This fee is charged if your account has not logged a transaction in over a year. The second fee is a $10 transaction fee if you withdraw from the account more than six times in a monthly statement period.
This is an excellent account with low fees and high-interest rates. Unfortunately, there is no ATM network connected to this account and no physical location to deposit cash into the account.
WebBank, another FDIC-insured bank, is based out of Salt Lake City and was established in 1997. There are no monthly fees to worry about, which should be standard for savings accounts. There is a minimum balance of $1,000 required, and the account pays a high APY of 2.20% interest. Compound interest is also offered, which can take this amount even higher.
There are downsides to this account. If you fail to keep a minimum of $1,000, then the account will be closed, and the money will be returned to you.
There is no app or ATM support, which means that you have to make all deposits with a wire transfer or an ACH. ACH is a standard electronic transfer from one bank to another.
The Best Savings Account
The best savings account should have a high-interest rate and no fees. Popular Direct holds the record for the highest interest rate at 2.55% APY. Unfortunately, a high initial deposit amount can place this account out of some people’s reach. Even if you can reach that deposit amount, you still need to keep your balance over $500. That’s not impossible, but not ideal if you need to make an emergency withdrawal. They charge a $4 fee if your balance drops below that amount.
A better alternative would be a Vio bank. They offer an attractive 2.52% APY, which comes with a low $100 opening deposit amount. After that, there is no need for a minimum balance.
There are two fees, but they shouldn’t be of concern as you can avoid them easily. Simply make sure you don’t withdraw money more than six times a month, and do not forget about your account for a year. The lack of ATM access and cash deposits can be inconvenient, but a standard checking account can fill that hole in your banking requirements.
Some accounts offer lower to no fees but lower interest rates. Other accounts come with a card and ATM access. This can be beneficial, depending on your situation, but savings accounts are for saving, so immediate access should not be vital.
Do You Have a Savings Account?
If you have already opened a savings account, please share with us which option you chose. How much APY are you getting, and do you earn a satisfactory amount out of the interest rate? According to your needs and lifestyle, do you prefer using a physical bank, or does a virtual one with a mobile app work fine for you? We look forward to reading your responses!