Best Savings Account in 2016

In a low rate environment, the best savings accounts are likely online

Looking for places to grow your money without much risk is difficult these days, but finding the best savings account might be a good place to start. Although your money will be safe there, the average American is hardly capitalizing getting rich on rates today.

A great place to start looking for better savings accounts is online. This year, I switched to Ally Bank for my main savings account. Why? At 1.00% interest I’m earning roughly 16 times the national average. I found Ally’s user interface to be super easy and it’s been considered one of the best online banks for years. This is a must because I tend to set up automatic transfers often and I need my bank accounts to talk to each other easily.

If you want to keep tabs on the lowest rate, check out this tool (below) that includes a list of banks and displays daily rate updates for all the best savings accounts.




The key to finding the best online savings account is to look for rates close to 1% APY - roughly 16 times the national average!

According to the FDIC, current average savings account rates are still a paltry 0.06%. Many of the nation's biggest banks have rates as low as 0.01%. That’s a hard pill to swallow for savers who expect a safe place to park their cash.

The Best Savings Accounts for 2016

I always like to start my searches with the online tool above to get the lay of the rate land at any given time. Rates change all the time, so interest rate is only one factor to consider, but it is a good starting point. From there, its much easier to compare account features to match preferences.

I took some of the best high yield savings accounts, and analyzed all of their other features to determine who each account is best for. With this guide, you should be able to find the right account for you.

Federally insured by the FDIC
APY: 0.99%

Learn More at Ally Bank

Ally
All-Around Best Savings Account

Ally Bank is formerly known as the commercial financing and leasing giant GMAC which, a decade ago, may have made it an unlikely candidate as the best savings account. Today, however, Ally’s online offering is its key to winning consumers’ deposit dollars. Their savings account currently yields 0.99%, which is high by today’s standards.

With Ally Bank, you can deposit checks with the mobile app by taking a picture and link to any number of external accounts to move money around easily. I receive paper checks on some rental properties I manage, so I like that I can just deposit them quick with my phone. I’m then able to transfer the money to another account. All of these features come with no minimum deposit and no monthly fee.

Why You’ll Like Ally

  • No minimum deposit to open
  • No monthly maintenance fees
  • Earn a higher rate than traditional savings accounts
  • Deposit checks remotely with Ally eCheck Deposit℠
  • Grow your money faster with interest compounded daily
  • Your deposits are insured by the FDIC up to the maximum allowed by law

What to Watch Out For

  • Ally is online only – no physical branches

Best Savings Account/Checking Account Combo: Capital One 360

Federally insured by the FDIC
APY: 0.75%

Learn More at Capital One

Capital One 360
Best Savings Account/Checking Account Combo

If you’re looking for an all around online bank, then Capital One 360 is a great choice. With Capital One 360, you have access to savings, checking, CDs, mortgages and investment accounts. Additionally, Capital One offers auto loans and credit cards.

You can get into more detail by reading our Capital One 360 Review.

With a Capital One 360 Savings Account, you’ll also gain access to other perks. In addition to fee-free savings, Capital One offers an array of online and mobile banking services and tools that can help you keep an eye on your money.

Why You’ll Like Capital One 360

  • No monthly fees and no account minimums
  • A great everyday interest rate on your money
  • The opportunity to earn a tiered sign-up bonus based on the amount of your initial deposit
  • 24/7 online and mobile account access
  • Customer service with a live agent
  • Easy mobile check deposit with Checkmate

What to Watch Out For

  • If you’re looking for the highest yield, you may be able to get a better rate

Federally insured by the FDIC
APY: 1.05%

Learn More at Synchrony

Synchrony OptimizerPlus
The Best Savings Accounts with No Monthly Fee (tie)

The Synchrony online savings account offers one of the highest yields in the nation at 1.05%. This account carries a monthly fee of $5, which is modest by comparable standards. The fee is waived if you maintain just a $50 average balance per month. OptimizerPlus rewards long-term customers with perks on travel discounts, ATM fee reimbursements, and special rate offers.

Synchrony OptimizerPlus at a Glance

  • Well above average rates
  • FDIC insured
  • Free Identity Theft Resolution Services

Federally insured by the FDIC
APY: 1.05%

Learn More at CIT Bank

CIT Bank
Best Online Savings Account for High Balances

CIT’s savings account offers a tiered interest rate structure, so higher balances earn higher interest. Currently, their industry best 1.05% APR goes to customers who can maintain a balance of $25,000 or higher in the account.

CIT’s lower rates are still some of the best around (1.00% APY for no minimum balance), so if you plan on growing your savings significantly in the near future, it might pay to open this account now and take advantage of the tiered structure as your savings grows. CIT Savings has no monthly fees and requires just $100 to open a new account.

CIT at a Glance

  • Minimum deposit of only $100
  • Premium rate for accounts with a daily balance of $25,000 or more
  • No account opening or monthly maintenance fees
  • Daily compounding to maximize your earning potential
  • Make deposits and withdrawals easily by linking to your existing accounts at another bank
  • Manage your account and view statements online

Federally insured by the FDIC
APY: 1.00%

Learn More at Barclays

Barclays
The Best Savings Accounts with No Monthly Fee (tie)

Barclays is a relative newcomer to the U.S. online banking market. They are actually a British bank that has been around since 1690! Their savings account rate is currently one of the best in the nation, at 1.00%. There’s no minimum balance requirement or monthly fee. Even with no monthly fee and high rates, Barclays manages some great online banking features like online transfer, external account linking, and remote deposit using your smartphone or home computer scanner.

Barclays at a Glance

  • No minimum balances to open
  • No monthly maintenance fees
  • Daily compounding

Federally insured by the FDIC
1st-yr APY: 1.11%

Learn More at Everbank

EverBank
The Best Savings Accounts for Check Writing

EverBank is built to give you a better banking value. Not only do they provide check writing through their money market account, they make a pledge that their rate will always be in the top 5% of competitive bank offers nationwide. For first-time clients, EverBank offers 1.60% Bonus Interest Rate for the first six-months on all balances, and a promotion yield of 1.11% on balances over $150,000 for 12 months. $1,500 is needed to open an account, but simply having a positive balance will waive any monthly fee. In the tech department, EverBank delivers mobile check deposit and other features on iOS and Android.

Note: Federal regulations limit the number of electronic, telephone, and check transactions you can make with your Money Market account to six withdrawals per monthly statement cycle.

Why You’ll Like EverBank Money Market Account

  • Great bonus rate opportunity
  • Mobile check deposits
  • Anywhere, Anytime access
  • 4 Star stability

What to Watch Out For

  • Ongoing rate, after bonus period is only 0.61%

Understanding Interest Rates

Due to the extremely low interest rate policy (which directly impacts your bank’s savings rates) from the Federal Reserve, low interest rates on savings accounts will be here for a while. Rates have even been dropped further going into this year.

The Fed Funds rate is the rate that banks lend money to each other overnight. This rate, which affects all other interest rates, has been held artificially low in my opinion, and is now effectively zero.

As I mentioned, there are some accounts that pay yields closer to 1% and others with short-term promotions that pay even greater than that. These accounts can provide some relief, especially to seniors who have retirement incomes that may have been decimated by low interest rates.

The best savings accounts are mostly found online where costs are much cheaper than traditional brick-and-mortar banks.

Where to Look for Savings Account Options

Deregulation has enabled many different types of finance companies to compete for savings deposits. In addition to your traditional local bank, you may be surprised to find that you can open a savings account with one of these types of companies:

  • Auto finance companies (Ally - formerly GMAC)
  • International banks (Barclays)
  • Large commercial finance companies (CIT, GE Capital - now Synchrony)
  • Credit card companies (American Express, Discover)
  • Insurance companies (USAA, Farmers Insurance)
  • Online brokerages (Charles Schwab, Fidelity)
  • Smaller regional banks with internet banking arms (EverBank)
  • Credit unions

Why choose an online savings account?

Today, almost every financial institution with personal banking products has an online presence. People simply want to bank when they want, where they want, and how they want with minimal interference. The best online savings accounts deliver this experience through several key advantages.

Advantages of Online Savings Accounts

Higher yields: Online banks boast less overhead because they don’t need to maintain physical branches. Online banks are able to pass on this savings to their savings account holders in the form of higher interest rates.

A word of caution: These rates can and do change. As with any savings account, banks often run promotions to get you hooked, then lower the rates later. However, the best online savings account will still handily beat out the yield of a traditional bank over the long term.

24/7 access: You can check your balance, update your contact info, make transfers, and order deposit slips at any time. Most online accounts will give you access to your account 24/7, 365 days a year. This enables you to access your information when you want. For more pressing issues, customer support is also usually accessible 24/7, so you can talk to an actual human instead of your computer screen.

Self-maintenance: Why drive to a branch and talk to a banker to transfer money, update personal information, make payments, or check your balance? You can perform all of these functions and more from your computer screen or mobile device without even getting dressed.

Superior online and mobile experience: Many traditional banks have been slow to adopt the best web and mobile features to improve the customer experience online. Because online banks’ users are exclusively on the Internet, greater attention is paid to the usability of the website and mobile tools.

More Banking Guides

If you're still looking for banking options, here are some other useful guides on other important banking accounts:

Personal Savings Calculator

To help you determine your savings needs, we've created this savings calculator that will help you determine you personal savings goals.


How I found the best high yield savings accounts online

Here is how I got started:

  • I started my search by first looking at different offers from traditional banks.
  • I realized that other types of financial institutions also offer savings accounts online so I expanded my search beyond traditional banks.

Once I had a good list of online accounts built up, I started adding filters to my search. First and foremost, I filtered by APY. Any bank not advertising an APY over 0.6% was eliminated from the list.

The APY rate of 0.6% is a good starting point because it is approximately 10 times the national average, so I felt comfortable drawing the line here.

My next steps were to add in additional, more granular criteria:

  • I looked for accounts that advertised low monthly fees, plus easy ways to have those fees waived.
  • You’ll notice that not one of the best savings accounts mentioned here carries a mandatory monthly fee. This still left me with many possibilities.
  • I then analyzed other factors, such as low minimum balances, low administrative fees, and superior mobile tools.

Understanding that rates and banks change over time, I decided to develop situational groupings to display where certain accounts currently held an advantage over others.

Mainly, I grouped the best online savings accounts the following criteria:

  1. High balance: I found that some savings accounts were better for people who carried high balances.
  2. No monthly fees for any balance: You shouldn’t have to carry a high balance to avoid a monthly fee!
  3. Check writing ability: Some people like the ability to write a check from their savings account -- a great feature to have if your account is online.

From this process, Ally came out as the all-around best for the majority of people. While the Ally Bank Online Savings Account does not have every feature (it lacks check writing), it has a solid combination of high yield, no fees, low minimum balance, and technical prowess.

Written by Michael Gardon
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