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Not happy with your local bank’s options for a savings account? The good news is that you don’t have to go with a brick-and-mortar bank these days. Many online-only banks offer high-interest savings accounts and added benefits like no monthly fees, low (or no) minimum balances, easy account transfers and much more.
Unlike most standard banks that offer an interest rate of 0.1% and lower, many online-only options offer lucrative rates higher than 2.0%. And the best of these banks are financially sound, reliable and trusted by millions of consumers.
Here’s some important information you should know about online savings accounts before you open one.
Online banks vary in the way you can make deposits. All give you the option to mail in checks for deposit, but this is often impractical (and not secure). Fortunately, most allow you to link to your existing checking or other bank account, so you can transfer money into the online savings account.
Some offer a direct deposit option, and some also give you a mobile app or a mobile-friendly site where you can scan a check to make a deposit. And a select few online savings accounts give you in-network ATM depositing. Read our reviews below to find out which banks make deposits easiest.
It’s important to understand that savings accounts (regardless of whether they’re online or not) aren’t to be used like checking accounts. In fact, there are legal restrictions on how you can use them for regular transactions. Under Regulation D, the U.S. federal law limits you to 6 withdrawals or transfers from savings and money market accounts per calendar month. (Note: this limit doesn’t apply to withdrawals and transfers made at an ATM, by mail, in person at a bank or by phone if the check is mailed to the depositor.)
When you do need to withdraw funds, online savings accounts can vary in how you can access your money. All allow you to make a request in writing or over the phone to have a check mailed to you. Again, this isn’t very practical in many cases.
That’s why it’s important to have your online savings account linked to another account. This allows you to withdraw funds by transferring them from your savings account. But be aware that this could take 2-3 days to post. Most online-only savings accounts don’t give you ATM access unless they offer a separate online checking/debit account. We’ve noted these differences in each review.
Overdraft And Other Fees
Just like any other bank account, you will face fees in certain situations. For example, you’ll incur fees if you overdraft your account, have insufficient funds or a returned deposit, or you exceed the legal limit of withdrawals. These fees can vary widely by the online savings account you choose.
We’ve listed our top picks for the banks with the best savings account rates in descending order based on the annual percentage yield (APY), with the highest first. All banks in our reviews are members of the Federal Deposit Insurance Corporation (FDIC), which means your deposit accounts are insured up to $250,000 per depositor, for each account ownership category.
|Annual Percentage Yield||Minimum Deposit & Balance||Monthly Maintenance Fee||Mobile Check Deposits||ATM Access||Checking Account|
|CIT Bank||2.45%||$100 deposit each month OR $25,000 balance||None|
|Citizens Access||2.35%||$5,000 balance||None|
|PurePoint Financial||2.35%||$10,000 balance||None|
|Marcus by Goldman Sachs||2.25%||$0||None|
|HSBC Direct||2.25%||$1 balance||None|
|Ally Bank||2.2%||$0||None||via checking|
|Discover Bank||2.1%||$0||None||via checking|
|Alliant Credit Union||2.1%||$100 balance||$1 (can be waived)||via checking|
CIT Bank is usually your best bet for the highest savings account rates — as long as you can satisfy their requirements. They offer a very high 2.45% APY, but to get this rate you either have to maintain a $25,000 balance or make a $100 deposit every month. You’ll earn a variable rate (currently 1.17% APY) if you don’t meet these requirements. They also offer competitive CD rates. CIT Bank is a subsidiary of CIT Group Inc., a financial holding company founded in 1908, that has a solid reputation.
Citizens Access is the online division of Citizens Bank, which is located in more than 13 Eastern states. It offers one of the highest-yield online savings accounts you can find, but the catch is you have to deposit and maintain a $5,000 balance. If you fall below this balance, your APY drops to 0.25%. While they don’t have mobile apps, you can still make check deposits through their mobile-friendly website.
PurePoint Financial, a division of MUFG Union Bank, isn’t meant for beginning savers — they require a $10,000 deposit and balance to earn their extremely high 2.35% APY. Like Citizens Access, your APY drops to 0.25% if your balance falls below this requirement. You can deposit checks via their mobile-friendly website.
If you want a high-yield savings account but worry about the monthly limit of 6 withdrawals or transfers, Synchrony could be the perfect fit. Synchrony gives you a 2.25% APY with no minimums or fees and an ATM card tied directly to your savings account. You’ll incur no fees for using their in-network ATMs (those with Plus or Accel logos). And they reimburse you $5 per month for out-of-network ATM transactions.
Keep in mind; you shouldn’t use a savings account as you would a checking/debit account. This ATM card is intended for easier access to your funds, and Synchrony reserves the right to close your account if you regularly exceed the 6-transaction limit.
Marcus by Goldman Sachs is one of your best bets for a high-yield savings account with no fees and no minimum balance required — and backed by the well-known investment firm. It consistently offers among the best savings account rates. Marcus also offers strong CD rates for long-term savings and personal loans.
HSBC Direct is the online division of global giant, HSBC Bank, with over 39 million customers worldwide. They’ve raised their APY from 1.7% to 2.25%, making them a major competitor in the online savings account market. They’re also one of a handful of similar accounts to give you mobile check depositing.
Current HSBC customers take note: to create an HSBC Direct savings account, the money must be new to HSBC so you can’t transfer funds from another HSBC account.
Formerly GMAC, Ally Bank has over 1.5 million online customers in the U.S. They offer very competitive savings account rates with no deposit or balance minimums and no monthly maintenance fees. Ally online banking also offers credit cards and checking and money market accounts with access to ATMs across the U.S.
Barclays Bank has been a banking institution in the U.K. for more than 325 years and has a large global presence. It’s best known in the U.S. for its credit cards, but Barclays also offers strong online savings products for U.S. consumers, including its high-yield savings account and a line of high-interest CDs. Customer service is available via phone only.
Although Discover Bank’s savings rates aren’t quite as high as some others we review here, it could be your best option if you want to tie your high-yield online savings account to a rewards checking account with access to a large national ATM network. There aren’t many full-service online banks that give you such perks. Also, first-time savers with Discover can get a $150 or $200 bonus by depositing $15,000 or $25,000, respectively.
Chicago-based Alliant Credit Union offers a high-interest online savings account to members, but becoming a member is easy. All you have to do is donate $5 to their designated charity, Foster Care to Success (and they’ll even pay the donation on your behalf). You must maintain a $100 daily balance, but Alliant affords easy online and mobile banking and access to thousands of ATMs across the U.S. if you also open a checking account.
How Does Savings Account Interest Work?
Confused about how your savings account earns you money by just sitting in the bank? Check out this brief video from Discover.
Smart Options For Long-Term Saving
If you haven’t already started putting money away for retirement, you should seriously consider investing in a 401k or IRA retirement plan. Don’t know which type is right for you? Be sure to read our guide to the best retirement plans and tips to get started.
And if you want to start investing but don’t have much capital to go with a traditional financial advisor, consider going with a robo advisor. It’s an excellent option for beginners since these online platforms typically require very minimal funds and you can make changes to your portfolio online 24/7.
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