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A savings account can be an incredibly important part of your overall financial plan and an integral component of your personal financial resources.
The following is a list of the top 10 best high-yield savings account, which can help you earn more on your money.
Why Do You Need a Savings Account?
A savings account shouldn’t be all that you have—for example, you should also think about investing even if you don’t have initially have a lot of disposable income.
Before you start investing, however, you should try and have some savings put aside in case of an emergency or just to have a little financial cushion.
A savings account is where you put your money so that it’s stored without risk, and you can earn interest.
Unlike an investment account, a savings account is federally insured.
If you had your money in a bank that failed, but it’s insured by the federal government, you have coverage up to $250,000.
That security is one of the benefits of a savings account.
With an investment account, while you can earn more on your returns than you might with a savings account, there is a lot of risk which is why it’s good to have both if possible.
Another benefit of a savings account, aside from the security factor, is that it puts distance between you and the money you spend.
If your money is a little harder to access because it’s set aside in a savings account versus staying in your checking account, you’re less likely to touch it.
The following are some of the key things to know about a savings account.
You Can Grow Your Money
If you don’t create a financial strategy to grow your money, then you aren’t going to be able to keep up with inflation.
You’ll also never have more of a net worth than you can earn and set aside.
As part of any financial plan, you should have strategies in place that will allow your existing money to grow, and having a savings account is one part of that.
Online Banks Tend to Offer More Competitive Interest Rates
With a savings account, as compared to most checking accounts, you can earn interest on the amount you have deposited.
While the interest rates may not allow you to earn as much as you would if you were to invest in the stock market, you also don’t have to worry about losing your money.
Online banks almost always have the most competitive interest rates on their savings accounts because they don’t have the overhead costs of traditional brick-and-mortar banks.
Online banks usually have lower fees, and many online savings accounts don’t have any fees at all, like monthly maintenance fees.
They may also skip the initial deposit requirement traditional banks often require to open a new account.
Savings Accounts Have Limited Withdrawals and Transfers
Along with simply being a little more out of reach, savings accounts can be beneficial if you want to control your spending because there are federal laws that limit how many withdrawals or transfers you can make from an account within a month.
When you open a savings account, you can’t make any more than six transfers or withdrawals in a month period.
If you go beyond that, you may have to pay a fee.
It’s a good built-in way that savings accounts can help you keep more of your money set aside.
How Much Money Should You Have in a Savings Account?
The question of how much you should have in a savings account at any given time is one a lot of people ask.
There are varying opinions, but it really depends on your personal financial situation.
Before you can decide on a set amount you’d like to add or keep in savings, you should have a budget.
Your budget should outline what’s coming in financially versus what’s going out.
You should limit your spending and then determine how much you can reasonably contribute to a savings account initially when you open it, and also on a regular basis to grow your savings.
The general rule of thumb from many financial experts when it comes to how much you should have in savings is at least six months’ worth of expenses.
If you spend $4,000 every month and that’s what you need to survive, then you should have at least $24,000 in savings.
However, that’s considered the minimum, and it’s what you would use in case of an emergency.
If you’re in a position to save more, by all means, go for it.
You don’t necessarily have to keep all of your emergency savings in a savings account.
You might split it up between a savings account and a relatively safe investment account.
Regardless of the specific path you choose, what’s key is having an emergency fund that’s accessible when you need it and if you need it.
Before you start saving for retirement or choosing more aggressive investment strategies, you should try to build an emergency fund.
What Is a High-Yield Savings Account?
A high-yield savings account is one that pays a higher yield or interest rate on what’s deposited in your account than a traditional bank.
At traditional banks, the average savings account pays only a 0.10% APY, which is minuscule. It’s tough to grow your money at this rate.
A high-yield savings account is one that pays a higher interest rate for improved returns over checking accounts and other savings accounts.
Beyond the higher APY, high-yield savings accounts can be advantageous because they don’t usually have monthly fees like a traditional account, so you’re keeping more of your money in your account.
How Should You Choose a High-Yield Account?
With so many options for high-yield savings accounts both at brick-and-mortar and online banks, how can you choose the right account for your needs?
The following are key considerations you can use to compare different accounts.
- Annual Percentage Yield (APY): Undoubtedly the most important way to compare savings accounts is by looking at the APY, which is how much you’ll earn in compounded interest over a year. Compounded interest is what’s earned on your initial deposit in addition to the interest you earn on the interest itself.
- Compounding: Compounding interest is a good way to grow your money, but not all online savings accounts compound interest in the same way. Some will offer interest that compounds daily, while others will compound weekly, monthly, quarterly, or yearly. Daily compounding tends to be the best because the more often your interest compounds, the faster you can grow your savings.
- Minimum Deposit Requirement: If you have a fair amount of money you can put into a new savings account, this isn’t a huge concern for you, but some accounts require a deposit of $5,000 or $10,000 to open a new account, so this could count you out of certain high-yield savings accounts. Other accounts have no requirement for how much you have to deposit.
- Minimum Balance Requirement: In addition to some accounts requiring certain opening deposits, there may also be a minimum balance requirement. A minimum balance requirement may indicate that you have to keep your account balance above a certain amount or you’ll have to pay fees. You may not be able to earn the maximum APY if you don’t keep your balance above a certain amount either.
What Should You Know About Online Banks?
Since many of the top 10 best high-yield savings accounts are offered by online banks, are there things you should know about these companies?
An online bank is one where you manage your accounts entirely online or with the use of a mobile app.
This includes depositing checks, setting up bill pay, and transferring funds.
While a traditional bank typically offers online access, it’s not the same as an online bank where everything has to be done online.
Some of the pros of an online bank include:
- There are lower fees and higher interest rates almost always
- It’s convenient—you can do your banking from any place and at any time rather than worrying about driving to a branch during business hours
- Most online banks offer free ATM access throughout the country through networks like Allpoint
- Online banks put a lot of emphasis on security
The downsides of online banks to keep in mind include:
- You’re not going to get personalized customer service
- It can be cumbersome to deposit cash
- Online banks may not offer robust account options—for example, an online bank may have savings but not checking account options
What Are the Top 10 Best High-Yield Savings Accounts?
The following are the top 10 best high-yield savings accounts and some of the reasons they rank well.
1. Betterment Everyday
Betterment is known as an online investing platform and robo-investing resource, but fairly recently they introduced other account options as well including their Betterment Everyday Account.
You can earn up to 2.38% APY currently on a Betterment Everyday account, and there are no fees. The account also includes ATM fee reimbursement worldwide, no overdraft fees and no minimum balance requirements.
The Betterment Everyday account includes up to $1 million in FDIC insurance on savings accounts and the minimum deposit to open an account is only $10.
There is currently a waitlist for a new Betterment Everyday Checking account, and joining that waitlist is how you get the highest 2.38% APY.
If you don’t join the waitlist, you still get 2.13% APY on your savings deposits.
There are no minimum balance requirements, and if you have an investment account with Betterment, you can transfer between accounts quickly and easily.
2. American Express Personal Savings High Yield Savings Account
American Express is branching out and is no longer just a credit card company, as they’re proving with their High-Yield Savings Account. The current rate on the Personal Savings account is 1.90%, significantly higher than the current national average.
There are no monthly fees and there is no minimum balance requirement.
You can link your current bank account seamlessly with your American Express Personal Savings Account so you can make deposits and transfers. In fact, American Express offers the ability to link up to three of your current bank accounts.
The Personal Savings account earns interest daily which posts to your account monthly and you can set up automated recurring transfers.
There are no retail locations of American Express banks, so you need an external bank account that you can link to your high-yield savings account, or you can send a check by mail.
One of the downsides of this account, even though it is still a standout, is the fact that the mobile app doesn’t yet allow for mobile check deposit.
3. Ally Bank Online Savings Account
Ally has been an innovator among online banks. They have been leading the way in terms of online banking in general, and they have an online savings account with a competitive APY.
Currently, Ally’s Online Savings Account features an APY of 1.90% on all balance tiers.
There are no minimum balance requirements and no monthly maintenance fees.
The interest is compounded daily, and you can get customer service from Ally 24/7 via email, chat, or phone.
The Ally Mobile App has great digital banking tools, and you don’t have to meet any minimum opening deposit requirement.
To start an online Ally savings account, it’s incredibly easy.
You go to the website, put in some personal information and you fund your account.
There are several ways to deposit money into your Ally account, including using Ally’s eCheck Deposit feature on their mobile app. You can also use direct deposit, online transfers, wire transfers, or mail.
The Ally Mobile App is among the best in terms of making it simple and easy to bank. You can find ATMs near you, check your balances, pay bills, and transfer money between accounts.
4. CIT Bank Savings Builder
CIT Bank offers something called a Savings Builder Account, with up to a 2.30% APY. You can earn more than 25x the national average APY on this account.
There are no account opening or maintenance fees and interest compounds daily.
There are a few limitations to get the maximum APY of 2.30%, however. You either have to have a minimum balance of $25,000 to get the highest rate, or you have to make a $100 monthly deposit.
The minimum opening deposit amount is only $100.
There are different tiers with this account to be aware of. The base tier, which means you have less than $25,000 as your balance, still gets you an APY of 1.26%.
The upper tier is what gets you the APY of 2.30%.
While the $25,000 requirement can seem like a lot, remember you still get the maximum APY even if you don’t have that much in your account but commit to saving at least $100 a month.
This account can actually help motivate you to save each month to achieve the highest rate.
There are no ATM card or branches with CIT because it’s an online bank.
5. Discover Online Savings Account
Discover is another company that’s moved from being primarily a credit card company to an online bank. The APY on their Online Savings Account is 1.90% right now and interest is compounded daily and updated monthly.
There is no monthly fee, no minimum opening deposit, and no minimum balance requirement.
Discover has a great mobile banking app that can be used when you open a savings account.
You can use mobile check deposit by taking a photo of your check, and the Quick View feature lets you see the balance in your savings account without logging in.
You can quickly and easily transfer money between accounts on the Discover app too.
6. Synchrony Bank High Yield Savings
Synchrony is an online-only bank offering options including their High-Yield Savings as well as competitive Certificates of Deposit (CDs) and Money Market Accounts (MMAs).
The High-Yield Savings account from Synchrony currently has a 2.00% APY, and the CDs have an even higher rate of up to 2.55%.
The APY on the savings account is the same, no matter how much you deposit.
There is no minimum balance requirement, and you can access your cash via an ATM.
Synchrony does have a mobile check deposit feature, although it’s limited up to USD 10,000 per account. You can also deposit into your Synchrony account from a linked account, a direct deposit, a check that you mail to Synchrony or a wire transfer.
7. Vio Bank High-Yield Online Savings Account
Vio Bank is one of the lesser-known names in online banking, but they’re offering an incredibly competitive high-yield account right now.
With the High-Yield Online Savings Account from Vio, you have the opportunity to earn 2.52% on all balances.
You only need $100 to open an account, and there are no monthly fees.
According to Vio Bank, they regularly monitor other competitors to make sure their rates are among the highest in the country, and interest is compounded daily so you can grow your savings faster.
According to Vio Bank, they are a division of a financial institution with $20 billion in assets.
You can open a savings account with Vio in just a few minutes and in addition to their High-Yield Savings Account, they also offer a High-Yield Online CD with an APR ranging from 1.65% up to 2.00%.
8. Marcus High-Yield Savings
Marcus is the modern, high-tech and Millennial-friendly offshoot of Goldman Sachs. Marcus has been working to attract consumers interested in the online banking experience, and one of the signature accounts is their Online Savings Account.
The Marcus Online Savings Account has a rate of 2.00% APY, and you do have the comfort that comes with the name recognition of Goldman Sachs.
There is no minimum deposit required to open a Marcus online savings account, and there are no fees.
Along with online savings accounts, including CDs, Marcus also offers personal loans.
Core values that Marcus promotes as being part of how they do business include offering value to customers in their financial products, transparency, and simplicity.
9. Fitness Bank
Fitness Bank is a completely unique concept from the other online banks on this list of the 10 best high-yield savings accounts. Fitness Bank also happens to offer some of the highest rates, but rates are based on how many steps you take.
Fitness Bank is new, and they describe themselves as a lifestyle bank. They’re part of Affinity Bank, and Affinity Bank was born out of Atlanta Business Bank.
With Fitness Bank, when you sign up for an account, you download the Fitness Bank Step Tracker App and link it with your Garmin, FitBit or another fitness tracker.
You track your steps, and then your average daily step count is measured and you earn interest based on that.
If you take 12,500 steps or more a day, you can earn an APY of 2.75% on your deposits. For 10,000 to 12,499 steps you can earn a 2.50% APY, and for 7,500 to 9,999 steps a day, you can earn 1.75% APY. The lowest APY is 0.50%.
To open an account you need at least $100, and you need to maintain that balance to avoid the $10 maintenance fee charged monthly.
10. Citizens Access
Citizens Access has an online savings account with a 2.20% APR, although you do need a $5,000 minimum deposit. If you opt to open an account with Citizens Access, there are no fees and Citizens Access is an online-only fully digital bank.
To add money to an account, you can do an online funds transfer from another bank account, or you can deposit a check.
Citizens Access also offers CD and CD ladder products.
An online high-yield savings account can be a smart thing to consider.
A high-yield savings account can be a simple and no-risk way to set aside money not only for an emergency fund but perhaps something specific you’re saving for.
You’ll earn a little interest, and in some cases, a fair amount of interest without the fear that comes with investing in the stock market.