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Best High-Yield Savings Accounts in July 2021: Compare APY, Features and Terms

We'll help you understand the fees, interest rates and features of the top high-interest savings accounts.

Advertiser Disclosure: At Slickdeals, we work hard to find the best deals. Some products in our articles are from partners who may provide us with compensation, but this doesn’t change our opinions.

Axos Bank

axos bank 300 300

0.61% APY

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Nationwide

0.70% APY

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CIT

0.40% APY

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Marcus

0.50% APY

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UFB Direct

0.20% APY

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Slickdeals updates average percentage yields (APY) periodically. The rates in this article are accurate as of June 2021.

Traditional savings accounts are not the ideal environment to help your money grow over time, but the new trendy online versions are changing that. With the increasing number of online savings accounts offering what appear to be amazing interest rates (with caveats like minimum balances and transactions, of course), you can grow that nest egg you’re sitting on. But how do you pick the right one?

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Axos Bank High-Yield Savings Account

AXOS
Credit: Axos

About Axos Bank: Not only does this online bank offer popular free checking and high-yield checking accounts, Axos typically offers among the highest APYs on the market. Savings accounts are an excellent place to store your emergency fund and other short-term savings, but the average savings account interest rate in the U.S. is a measly 0.70% APY, according to the Federal Deposit Insurance Corporation. That’s what makes the Axos High Yield Savings account APY so special.

Axos High-Yield Savings

  • Interest Rate: 0.61% APY
  • Compounding Period: Daily
  • Fees: No monthly fees or minimum balance requirements
  • ATM Access: Yes
  • Can you bank in person? Not really. While there is one branch in San Diego, California, Axos Bank is primarily an online bank.
  • Can you bank online? Yes

UFB Direct High-Yield Savings Account

ufb
Credit: UFB Direct

About UFB Direct: The UFB Direct High Yield Savings Account offers one of the more competitive interest rates for people with a five-figure savings balance. The APY for balances of $10,000 or more is 0.40%. Plus, it offers all of the resources expected from online banks, included mobile tools, as well as some you wouldn’t expect, like a free ATM card.

UFB Direct High Yield Savings

  • Interest Rate: Up to 0.20% APY
  • Compounding Period: Daily
  • Fees: No monthly fees or minimum balance requirements
  • ATM Access: Yes
  • Can you bank in person? Not really. While there is one branch in San Diego, California, UFB Direct is primarily an online bank.
  • Can you bank online? Yes

CIT Online Savings Accounts

CIT BANK
Credit: CIT Bank

About CIT Bank:

CIT is an online bank that specializes in online savings accounts, CDs and Money Markets. While it can be easily mistaken, CIT is not related to Citibank. CIT stands for Commercial Investment Trust, and was founded in 1908.

CIT Bank is FDIC insured and offers two kinds of savings accounts. One option is the Savings Builder Account, which requires a minimum monthly deposit of $100 or a minimum account balance of $25,000 in order to earn the highest APY. The other option is a High Yield Savings Account, and while it offers a lower APY compared to the Savings Builder, it does not have the same maintenance requirements.

CIT Savings Builder Account

  • Interest Rate: 0.40% if you meet either one of two criteria:
    • at least $25,000 in the account
    • at least $100 per month deposited

If you fall short of either on a monthly basis, your rate will drop to a lower APY.

  • Compounding Period: Daily
  • Fees: None
  • ATM Access: None
  • Can you bank in person? No. CIT does not have brick-and-mortar banks.
  • Can you bank online? Yes.

If you deposited $15,000 into the Savings Builder account in one lump sum, you’d need to contribute an additional $100 per month to maintain the higher rate. The account compounds interest daily and pays out interest monthly.

If you do not meet the account criteria, your interest rate is determined after an evaluation period.

The Takeaway: CIT offers some of the best APYs in the business, but its rules are somewhat complex. Depending on how much work you want to do to save, this might be a slightly more high-maintenance account than you need or want.


Nationwide My Savings

nationwide logo
Credit: Nationwide

About Nationwide: Love getting high returns for your money? Who doesn’t? With Nationwide My Savings you can earn 0.30% APY when you also open a My Checking account and set up a $1,000 direct deposit. If you don’t want to open a checking account, you can still earn 0.20% APY on all balances with a My Savings account. No minimum balance requirements, no maintenance fees and interest compounded daily.

Nationwide My Savings

  • Interest Rate: 0.20% — 0.30% APY
  • Compounding Period: Daily
  • Fees: No monthly fees or minimum balance requirements
  • ATM Access: Yes
  • Can you bank in person? No, this is an online-only account.
  • Can you bank online? Yes

Synchrony High-Yield Savings Account

synchrony
Credit: Synchrony

About Synchrony: Synchrony is an online bank that offers Online Savings Accounts, CDs, Money Markets and IRAs. Synchrony Financial also offers retail credit cards for companies like Gap, JCPenney, and Lowe’s. It used to be a part of GE and was spun off as a separate entity.

Synchrony is FDIC insured and has been in business for the last 85 years (under GE). All rates are subject to change at any time.

The High-Yield Savings Account

  • Interest Rate: 0.50% APY
  • Compounding Period: Daily
  • Fees: None
  • ATM Access: Yes. Synchrony says that it doesn’t charge fees for ATM usage and will refund up to $5 per ATM fee that other banks charge. It uses the Accel Network of ATMs.
  • Can you bank in person? No. Synchrony is an online-only bank.
  • Can you bank online? Yes.

The Takeaway: You can get an ATM card for this savings account, but remember, like all savings accounts, you can only have six transactions within a statement cycle. If you go beyond that, Synchrony could close your account for misuse. You can access your money via ATM, online, or via phone, while funds transfers are handled through a linked Synchrony account, via EFT, or using the mobile app. Synchrony also offers customers what they call “Perks” for keeping money in the account. You can learn more about the perks, here.


HSBC Direct Savings

hsbc
Credit: HSBC

About HSBC: HSBC is a brick-and-mortar bank that offers a direct savings account online. By size, it is the 14th largest bank in the U.S., and launched this particular online savings account in 2018. HSBC also offers other kinds of savings accounts (that are very different from the one outlined below) in its brick-and-mortar banking offices, so be sure to do your homework before signing up.

HSBC is FDIC insured and has been in business since 1865. It has more than 200 branches all over the U.S. All APY rates are subject to change at any time.

HSBC Direct Savings

  • Interest Rate: 0.15% APY
  • Compounding Period: Monthly
  • Fees: Zero monthly maintenance fees. Only $1 required to open an account.
  • ATM Access: None
  • Can you bank in person? No. While HSBC does have branches around the country, this online account only allows online and telephone communications.
  • Can you bank online? Yes

The Takeaway: HSBC’s direct savings account offers a good return, but there is a minor catch — the account must be opened with money transferred from outside of HSBC, and you cannot be an HSBC customer already.


Ally Online Savings Account

ally
Credit: Ally Bank

About Ally Bank:

Ally is one of the most well-known online banks in the business, and it has some of the best customer service, too. Offerings include savings, checking, CDs and investing accounts.

Ally Bank has been in business since 1919 and began its life as an automobile financing company, GMAC, which was owned by General Motors. It changed its name to Ally bank in 2009 and went public in 2014.

Ally Bank is FDIC insured.

Ally Online Savings Account

  • Interest Rate: 0.50% APY
  • Compounding Period: Daily
  • Fees: No hidden fees
  • ATM Access: Yes. The same six-transaction rule that applies for all savings accounts applies to the Ally account, too. Ally will refund up to $10 per month in ATM fees and uses the Allpoint ATM system. You need to have a checking account to get an ATM card, however.
  • Can you bank in person? No. Ally does not have brick-and-mortar banks.
  • Can you bank online? Yes, and they have an easy-to-use app to deposit checks.

The Takeaway: Ally Bank offers one of the easiest and clearest online banking options out there. They offer a variety of options, too, and make it really easy to get your money should you need it.


Marcus High-Yield Online Savings Account

marcus bank
Credit: Marcus

About Marcus:

Marcus is a Goldman Sachs product. Marcus is the company’s consumer brand, but does not currently offer ATM cards, access to ATMs or any other sort of real-life banking interaction. It’s all online.

Marcus obviously has its roots in Goldman Sachs which has been around since 1869 when Marcus Goldman opened the bank in New York. Marcus was the name of the personal loan branch, and in 2017, adopted the name for its online banking arm.

Marcus is FDIC insured.

Marcus High-Yield Online Savings Account

  • Interest Rate: 0.50% APY
  • Compounding Period: Daily
  • Fees: None. Just keep $1 in your account to earn the APY.
  • ATM Access: None. You can get your money via EFT or wire. Deposits are made via wire, EFT or mailed checks.
  • Can you bank in person? Nope.
  • Can you bank online? Yes, but Marcus doesn’t offer a mobile app.

The Takeaway: Marcus is backed by one of the most well-known financial institutions, and offers one of the best APYs in the industry. If you need easy access to your money though, this probably isn’t for you.


Barclays Online Savings Account

BARCLAYS
Credit: Barclays

About Barclays:

Barclays is a big, old British bank that has been around for 325 years. Really. They have a relatively small presence in the U.S., but they are growing. According to MagnifyMoney, it uses the savings deposits to fund its American credit card business. (Read that twice so you understand it.)

Barclays is FDIC insured.

Barclays Online Savings Account

  • Interest Rate: 0.40% APY
  • Compounding Period: Daily
  • Fees: None. Just keep $0.01 in your account to earn the APY.
  • ATM Access: None. Also, if you go over the six-per-cycle transaction limit, there is a $5 per transaction fee.
  • Can you bank in person? No.
  • Can you bank online? Yes, there’s also an app for depositing checks and managing your account.

The Takeaway: A big old bank that offers a really good APY. Just know where your money is going. (Read the part about funding a credit card business one more time.)


Discover High-Yield Online Savings Account

DISCOVER
Credit: Discover

About Discover:

Discover Bank is the online bank that is owned by Discover Financial, the people behind the popular Discover credit card. The company plays in the student loan, personal loan, home loan, and credit card business.

Discover is FDIC insured.

Discover High-Yield Online Savings

  • Interest Rate: 0.40% APY
  • Compounding Period: Daily
  • Fees: None, unless you go over the six transactions per cycle, or overdraw your account.
  • ATM Access: None, unless you have a Discover Checking account that is linked. Then you can move money to your checking account and withdraw it. Discover has 60,000 no-fee ATMs.
  • Can you bank in person? No.
  • Can you bank online? Yes, and Discover also offers an app for depositing checks and managing your account.

The Takeaway: A straight-forward way to earn a decent APY on the cash you need to stash. You can access the money by opening a Discover Checking account and withdrawing (no more than six times per cycle) through your checking account. The fees are also laid out clearly ($15 per transaction over the allotted six, $30 for insufficient funds) on the savings page, too.


American Express National Bank Personal Savings

american express
Credit: American Express

About American Express, Member FDIC: While you may know them as a credit card company, American Express also offers savings accounts. The bonus of going with an AmEx savings account is that it easily links with the accounts you already have, and you can connect more than one account to it.

American Express is FDIC insured and has been in business since 1850.

American Express® Personal Savings

  • Interest Rate: 0.40% variable Annual Percentage Yield (APY).
  • Compounding Period: Daily
  • Fees: None
  • ATM Access: None
  • Can you bank in person? No. American Express does not have brick-and-mortar buildings for customers.
  • Can you bank online? Yes.

The Takeaway: While AmEx doesn’t offer a way to get your money from the savings account directly, it’s just as convenient to withdraw it through your linked checking accounts. The American Express Personal Savings account offers an excellent way to save, get a competitive interest rate, and work with a well-known financial institution.


MySavingsDirect Online Savings Account

my savings direct
Credit: iStock.com/evgenyatamanenko

About MySavingsDirect:

While it may just look like a web-address-turned-bank, MySavingsDirect is a branch of Emigrant Bank, which was founded in 1860. It doesn’t offer any kind of checking account, so you will need to have an outside one to fund your savings account.

MySavingsDirect is FDIC insured.

MySavingsDirect Online Savings Account

  • Interest Rate: 0.25% APY
  • Compounding Period: Daily
  • Fees: None. There’s no minimum balances, and no fees for excessive withdrawals.
  • ATM Access: None.
  • Can you bank in person? No.
  • Can you bank online? Yes, but the site did give me pause. It looks like something from the early 2000s, and there’s no mobile app. Initial account funding requires an ACH transfer from an existing bank account, and since MySavingsDirect doesn’t offer automatic deposits, you’ll need to move money manually from a linked checking account for subsequent deposits. Withdrawals can be made via ACH. Remember, these take time to process, so you should be patient.

The Takeaway: MySavingsDirect used to be known for having the highest APYs in the space, and it does top out this list. It’s a good alternative if you live in a state where PNC has an outpost and want a very competitive savings rate, though you have to be OK with a dated-looking website and restrictions on how you can fund your account.


CIBC Agility Online Savings Account

CIBC bank
Credit: CIBC Bank

About CIBC Bank:

CIBC U.S. is the American arm of a Canada-based bank. CIBC has been in the U.S. market since 1991, and is headquartered in Chicago.

CIBC is FDIC insured.

CIBC Agility Online Savings Account

  • Interest Rate: 0.52% APY
  • Compounding Period: Monthly
  • Fees: You need a minimum of $1,000 to open an account. Make more than six transactions per cycle, and you’ll be charged $10 per transaction. Keep a minimum of $0.01 in the account to earn the APY.
  • ATM Access: None
  • Can you bank in person? CIBC has branches in the Midwest, but the Agility Online account can only be accessed online.
  • Can you bank online? Yes, and there’s also an app. You can fund your account with recurring transfers from a linked account, direct deposit, or mailed check. Money transfers can be made between CIBC checking accounts and the Agility account.

The Takeaway: It’s not the highest interest rate, but it is pretty darn close. CIBC has very few locations, mostly in the midwest U.S., and since this is an online-only account, the locations won’t do you much good anyways. Our takeaway? If you want a place to put some money and just let it sit, this is a pretty good bet.


Citi Accelerate Savings Account

citi bank
Credit: Citibank

About Citibank:

Citibank is the retail banking outfit of Citigroup. It’s one of the few large banks offering a good rate on a high-yield online savings account. There are more than 4,600 Citibank branches all over the world.

Citibank was founded in 1812 as the City Bank of New York. Citibank is FDIC insured.

Citi Accelerate Savings Account

  • Interest Rate: 0.40% APY with caveats. It’s only available in 41 states, and you have to open it with a choice of one of five banking packages from Citi.
  • Compounding Period: Daily
  • Fees: No minimum to open, but must maintain a balance of $500 or more to avoid the $4.50 monthly fee.
  • ATM Access: Yes, but only because you have to sign up for the other banking packages that generally include a checking account with ATM access. Fees for accessing a non-Citibank ATM are $2.50 per transaction.
  • Can you bank in person? Yep.
  • Can you bank online? Yes, and through the mobile app.

The Takeaway: If you already have a checking account that you like, Citi’s Accelerate probably isn’t for you. You are also out of luck if you don’t live in one of the 41 states where the account is available.


Citizens Access Online Savings Account

citizen access bank
Credit: iStock.com/evgenyatamanenko

About Citizens Bank:

Citizens Bank is the 13th largest bank in the U.S., and Citizens Access is its online arm which currently only offers two options for online banking: a savings account and a CD.

Citizens Access is FDIC insured and has been in business (online) since 2018. Citizens Bank has been around since 1828.

Citizens Access Online Savings Account

  • Interest Rate: 0.40% APY
  • Compounding Period: Daily
  • Fees: Minimum opening balance of $5,000 and maintain a minimum of $0.01 to earn the APY. No other fees. If your balance goes below $5,000, you earn only 0.25% APY according to MagnifyMoney.
  • ATM Access: None.
  • Can you bank in person? No.
  • Can you bank online? Yes, and through the mobile app. You’ll need to connect a checking account, use the app to deposit, or you will need to mail in a check to open the account. To get your money out, move it back to your external banking account via transfer.

The Takeaway: If you plan to park your money for some time, Citizens Access is a good bet. For those who need to use the money (and cause the balance to dip below the $5,000 mark), other banking products may be better.


PurePoint Online Savings Account

pure point
Credit: PurePoint Financial

About PurePoint Financial:

PurePoint is part of MFUG Union Bank and has 22 banking offices in Dallas, Chicago, Miami, New York, and Tampa.

PurePoint has been around since 2017.

PurePoint Online Savings Account

  • Interest Rate: 0.40% APY
  • Compounding Period: Daily
  • Fees: Minimum opening balance of $10,000, and maintain a minimum of $0.01 to earn the APY. If your balance goes below $10,000, you earn 0.25% APY. Any transactions over the allowed six per cycle, and you’ll be charged $10 per occurrence. Otherwise, no fees.
  • ATM Access: None.
  • Can you bank in person? In 22 select locations, yes.
  • Can you bank online? Yes, though there is no mobile app.

The Takeaway: If you can stash that $10,000 minimum and keep it there, then this isn’t a bad bet. If you plan to go below the $10,000 limit, look elsewhere for a more flexible savings account.


Aim for These Four Key Features in Online Savings Account

Any excellent savings account will have the following key characteristics:

  • A competitive interest rate
  • A safe place to keep your money (FDIC insured)
  • No Fees (or very minimal fees)
  • Easy Access and liquidity

Like any financial decision, you need to be sure that the account you choose is right for you.

Frequently Asked Questions

While savings accounts have existed for decades, many people aren’t as familiar with online high-yield savings accounts. Here are some of the more common questions people ask about high-yield savings accounts.

How Does A High-Yield Savings Account Work?

A High Yield Savings Account is a savings account that offers a much higher interest rate than a traditional brick-and-mortar bank. Typically, high-yield savings accounts are available through online banks. With less overhead costs than a conventional bank, online banks offer extra perks to customers, like lower fees (or no fees) and higher interest rates on deposit accounts. The national deposit rate currently sits at 0.07%, but you can find high-yield savings accounts that offer upwards of 1.00% APY and higher.

Similar to other savings accounts, high-yield savings accounts are subject to Regulation D, which limits the number of withdrawals and select bank transactions to six per monthly statement cycle. Most banks charge a penalty fee if you exceed the monthly transaction limit.

What Should I Consider When Choosing a High-yield Savings Account?

One of the primary factors to consider when choosing the right high-yield savings account is the interest rate. A higher interest rate will maximize your deposits so you can reach savings goals. Some banks offered tiered interest rates based on your account balance, with the best rates reserved for higher balances.

Beyond interest rates, you should also consider what fees the bank charges, minimum deposit requirements, minimum balance requirements, and what withdrawal options are available. Check account details before applying for a new high-yield savings account.

How Much Interest Can I Earn With a High-Yield Savings Account?

If you deposited $10,000 into a high yield savings account with a 0.50% APY, with no other deposits, you would earn just over $50 in the first year. Over five years, you would earn $253.10 in interest if you didn’t deposit another penny into the account.

$50 isn’t a massive influx on cash, but it’s much more than you would earn with a traditional savings account. At 0.07% APY, you would only earn $7 the first year and $35.06 over five years.

Does the APY for High-Yield Savings Accounts Change?

Yes, like most bank deposit accounts, high-yield savings accounts feature variable interest rates that change over time. Rate changes for high-yield savings account typically mirror the federal funds rate set by the Federal Reserve. As the federal funds rate rises and falls, so do rates on high-yield savings accounts and other deposit accounts.

What Are Typical Fees Associated With a Savings Account?

The most common fee associated with savings accounts is a monthly maintenance fee or service fee. Many banks charge a maintenance fee that helps cover bank operating costs. Maintenance fees are more common with traditional banks, but some online banks charge them too. Some banks offer a way (or ways) to waive monthly fees, usually by meeting account deposit or balance requirements.

How Often Can I Withdraw From a High-Yield Savings Account?

High-yield savings accounts are subject to Federal Reserve Board Regulation D, which limits savings accounts to six withdrawals or transfers per statement period. Transactions that may fall under this regulation with your bank include:

  • Electronic funds transfers (EFTs)
  • Automated clearing house (ACH) transfers
  • Wire transfers
  • Third-party checks
  • Debit card transactions
  • Overdraft transfers

Other transactions, like ATM and in-person transactions, typically fall outside of Red D restrictions.

Banks may charge a fee or pursue other actions (like close your account) if you go over the statement transaction limit during the statement period.

Why Do Online Banks Pay More Interest?

Online banks can afford to pay higher interest rates because they don’t face the same overhead costs as a traditional bank. With no bank branches and fewer employees, online banks often pass savings along to their customers through fewer fees and higher rates on deposit accounts.

Are Online Savings Accounts Safe?

Like traditional banks, online savings accounts are FDIC-insured up to $250,000 per depositor. Online savings accounts through credit unions are also insured up to $250,000 per depositor but are backed by the National Credit Union Administration (NCUA). You can verify that your online bank is safe through the FDIC BankFind tool.

Is It Safe to Bank Online Or On My Phone? Online banks also employ the latest encryption technology and other security measures to ensure that your funds and personal information are protected at all times when you are banking.

What is the difference between a high-interest savings account and a money market account?

High-yield savings accounts and money market accounts are both types of savings accounts offered by banks and other financial institutions. Both typically come with higher interest rates and the same monthly transaction limits. Money market accounts generally offer some checking account features like a debit card and check-writing privileges. High-yield savings accounts rarely come with either of those options, although some banks offer them.

How Do I Open a High-Yield Savings Account?

Most banks allow you to open a high-yield savings account online. In most instances, you’ll need to provide personal information, like your full name, address, phone number, and social security number or driver’s license number, to verify your identity. You will also need bank account information for whatever source you’re using to fund your new account.

Common High-Yield Savings Terms You Should Know

Here are some common saving terms related to savings accounts you should know.

Annual Percentage Yield

The annual percentage yield, or APY, is the amount of compound interest earned by an account in a year. APY is calculated by the interest rate and the number of times interest is paid annually.

ACH Transfer

An ACH transfer is a form of electronic payment that transfers money between banks. The process occurs through an Automated Clearing House (ACH) network and is either a direct deposit or direct payment. Bank online bill pay systems utilize ACH for transactions. Employers use ACH transfers to pay employees via direct deposit. ACH networks batch ACH transactions together and transfer them three times each day.

Wire Transfer

A wire transfer is a form of electronic payment between one bank account and another bank or financial institution through a secure wire network. The bank acts as a middleman between the payment sender and recipient. Payment for the wire transfer is made by the sender upfront at the bank.

Mobile deposit

A Mobile deposit is a check that is deposited digitally through a bank or other financial institution’s mobile app or online platform. Bank customers use their phone’s camera to snap photos of the check’s front and back as part of the deposit process. Most online banks and many traditional banks offer mobile banking now and mobile deposits.

Minimum account balance

The minimum account balance is the minimum balance you must maintain in a bank account to avoid monthly maintenance fees or receive extra benefits like earn interest. Not all banks require a minimum account balance.

Minimum Deposit

The minimum deposit is the lowest deposit amount required to open a new account at a bank or other financial institution. Minimum deposit requirements vary between banks. Some online savings accounts have no minimum deposit requirements, while others require deposits of thousands of dollars to open a new account.

Compound Interest

Compound interest is interest that you earn on your original deposit and interest added to your account. Interest typically compounds daily or monthly and is added to your account balance each compounding period.

What Can You Use A High-Yield Savings Account For?

A high-yield savings account can help you reach short and long-term savings goals. You’ll reach your goals faster than you would with a traditional savings account, thanks to some of the best interest rates on the market. Here are some ways people use high-yield savings accounts to reach their savings goals.

  • Emergency fund
  • Travel fund
  • Downpayment on a house
  • Save for a new car
  • Wedding fund
  • College savings

Alternative Options for Online Savings Accounts

Online savings account aren’t the only option you have to optimize your savings online. Online banks offer other bank account products that earn higher interest rates than accounts at a traditional bank. Here are some accounts to consider.

High-Yield Checking Account

Some online banks offer high-yield checking accounts. The great thing about these types of accounts is that you still earn a competitive interest rate and gain access to checking account features like a debit card and a checkbook.

While high-yield savings accounts are subject to Reg D transaction limits, checking accounts are meant for everyday banking, so there aren’t any transaction limits. You can use a high-yield checking account for everyday transactions while still earning interest on the account balance.

Money Market Accounts

If your bank doesn’t offer a high-yield checking account, opening a money market account might be the next best option. Money market accounts are hybrid bank accounts that offer the competitive rates of a high-yield savings account with the best checking features like a debit card and ATM access. Some money market accounts come with check-writing privileges too.

As a savings product, money market accounts do have the same monthly transaction limits (six per statement period) as a savings account. Your bank may charge a fee or close the account if you go over the limit.

Money market accounts make the perfect vehicle for savings goals like an emergency fund or travel fund. You get increased savings, but in a more versatile (and accessible) account than a high-yield savings account.

Certificates of Deposits

Certificates of Deposit, or CDs, are timed deposit accounts that earn interest. The bank essentially pays you a higher rate to deposit funds and leave them untouched for a set amount of time. CD terms typically range from as short as one month to five years, although some banks offer CD terms as long as ten years.

Opening a CD is an excellent option for individuals who have extra funds they don’t need access to for a while. Don’t tie up funds you’ll need soon because most banks charge a penalty for withdrawing funds before maturity.

CDs offer a unique savings option called a CD ladder. You can build a CD ladder by opening multiple CDs of varying term lengths. As a CD matures, you can roll the funds into another CD with longer terms or close the CD if you need the funds at that point. Building a CD ladder lets you take advantage of higher rates without tying up all of those funds long-term.

Benefits of High-Yield Savings Accounts

There’s a lot to like about high-yield savings accounts. Here are some of the benefits to opening a high-yield savings account.

  • Higher interest rates
  • Few or no monthly fees
  • FDIC-insured
  • Funds are still accessible
  • 24/7 online and mobile account management

Drawbacks of High-Yield Savings Accounts

High-yield savings accounts are a great option but aren’t perfect for everyone. Here are some of the drawbacks of high-yield savings accounts.

  • Same transaction limits of a traditional savings account
  • Not a long-term investment option
  • Most online banks don’t have physical bank branch locations
  • It can often take up to 48 hours for transfers
  • Most online high-yield savings accounts don’t come with debit cards
  • The highest interest rates are often reserved for large account balances

The Differences Between Online Savings Accounts and Traditional Savings Accounts

There’s no denying it, these types of savings accounts have taken off in the last few years. Nearly every bank offers some form of them, but what’s the difference between an online savings account and one of those regular ones you sign up for in person?

The main difference between online savings accounts and “traditional” savings accounts is how you access them. Since most “traditional” savings accounts require that you go to a physical location to open them, you can have regular access to the bank and banking personnel should you need to speak to someone. Online banks, however, do not have any physical locations that you can visit. You have to either call or work with them online to solve any issues. Additionally, most brick-and-mortar banks have an extensive network of ATMs while online banks may have very limited ATM availability.

Additionally, it’s essential to understand a little about how interest rates are determined. The Federal Open Market Committee (FOMC) at the Federal Reserve, commonly referred to as “The Fed,” sets interest rates. The Fed will meet roughly eight times in 2019 and make determinations about what the economy may need to keep firing on all cylinders. The FOMC uses various rates to keep the economy correctly tuned, and the federal funds rate generally nudges banks to increase or decrease the rate of earnings on your savings accounts.

When the FOMC sets rates, those rates generally trickle down to banks and the rates they offer customers, but that’s where online banks and brick-and-mortar banks begin to differ. Despite a long period of rate hikes, most brick-and-mortar banks have not passed along the increased earning potential to consumers. Online banks, on the other hand, have been able to increase their rates because they have less physical infrastructure to maintain. In fact, according to LendingTree, the average savings rate you could get from a brick-and-mortar in December 2018 was 0.26% APY (Annual Percentage Yield), whereas online savings accounts were offering 1.25% APY. That’s a significant difference!

Online savings accounts also typically offer lower fees, or no fees and the convenience of banking — you guessed it — online.

Bottom Line

An online savings account is your best option to maximize savings thanks to ultra-competitive interest rates and few or no fees. Many online savings account come with no or low minimum opening deposit requirements, so almost anyone can open one right now. Whether you have a specific savings goal in mind or just want to have an extra cash cushion available, online savings accounts are a great option.

Online savings accounts make sense for people who don’t need access to in-person banking services. While online savings accounts earn higher rates, they aren’t meant as a long-term investment strategy. They aren’t a substitute for retirement savings and investment accounts.

Compare the best online savings accounts above to find the account that fits your specific banking needs.

Methodology

There’s no shortage of interest-earning savings accounts. You can get one from one of the big banks like Chase, Capital One and Wells Fargo, online-only banks and your local credit unions.

We made our choices for the best high-yield savings accounts by focusing on a few different factors.

For example, most people want accounts that earn a high interest rate, but with uncomplicated eligibility requirements.  We also focused on accounts that offer free transactions, good online banking options, high transaction limits, no or low minimum balance requirements and more.

While we work hard on our research, we do not always provide a complete listing of all available offers from credit-card companies and banks. And because offers can change, we cannot guarantee that our information will always be up to date, so we encourage you to verify all the terms and conditions of any financial product before you apply.

Ryan Tronier

Ryan Tronier is a personal finance editor and writer. He has worked in journalism and publishing for nearly two decades before becoming Slickdeals' Personal Finance and Credit Card Editor. Ryan's work has appeared in publications like USA TODAY, NBC News, Sapling and Techwalla. Find him online at ryantronier.com.

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