Don’t expect the savings accounts at your brick-and-mortar bank to reflect the fact that the Federal Reserve has raised interest rates six times in the past two years. Savings account rates have been near historic lows for years and will likely stay that way for a while.
But there are still plenty of high-interest savings accounts available online. While the interest earned isn’t going to fund your retirement, it can still add up, particularly on higher balances. We’ll help you find the right one with our top choices.
The Simple Dollar’s Top Picks for High-Interest Savings Accounts
Compare the Best High-Yield Savings Accounts
We examined several of the most popular online banks to find the best high-yield savings accounts for 2019. All of these FDIC-insured banks offer high savings account interest rates, low or no minimum balances, and no account maintenance fees.
We’ll also give you a primer on high-yield savings accounts, including what that interest rate really means and whether online banking is a smart choice for you.
MySavingsDirect: Best for Big Returns
You won’t get a flashy website or lots of other banking options with MySavingsDirect, an online division of Emigrant Bank. But if you’re just looking for a basic savings account with a high interest rate, you’ll get 2.40% APY on its High Interest Savings Account.
Even better? You won’t pay any monthly maintenance fees or any other hidden fees, and you don’t need a minimum balance to open the account. You can access your money by making electronic transfers from up to two linked external checking accounts.
PNC Bank: Best for a Traditional Bank Experience
PNC Bank’s High Yield Savings Account offers a whopping 2.35% APY, charges no monthly fee, and doesn’t require a minimum opening balance. And if you live in one of the 19 states where the bank has branches, you can choose to bank online or at a local branch.
You can make deposits into the account through transfers from an account with PNC or a different bank, mobile check deposits, wire transfer, or even by mail.
The only major drawback is that if you don’t live in one of the 19 states where the bank has a physical presence, online is your only option.
Synchrony Bank: Best Bonus Perks
Synchrony Bank High Yield Savings Account offers an impressive 2.05% APY. There’s no minimum balance required to open an account.
You can make deposits and withdrawals via electronic transfers, over the phone, or with an optional ATM card. There’s also a convenient mobile check deposit feature, and you can get up to $5 in ATM fees reimbursed each billing cycle.
Depending on your balance and the length of time you’ve had your account, you may also qualify for Synchrony’s Perks program, which includes travel discounts, a dedicated customer service phone number, and unlimited ATM reimbursements.
Barclays: Best for Fully Online Banking
If you’re looking for an online bank that’s a little better-known, British megabank Barclays might fit the bill.
Its U.S. division offers an Online Savings Account with 2.05% APY, no minimum balance, and no monthly maintenance fees. You can make deposits via mobile check deposit, direct deposit, electronic transfer, or mail.
If you have a savings goal in mind, you can use the bank’s Savings Assistant calculator to help you find out how long it will take to reach your goal.
Salem Five Direct: Best for ATM Fee Reimbursement
Salem Five Direct, the online division of Massachusetts-based Salem Five Bank, is offering a juicy 2.05% APY on its eOne Savings Account on all balances up to $1 million. The rate is only available to new customers after July 2, 2018.
There are no account minimums or monthly maintenance fees, but it does require a $100 minimum deposit.
The bank offers free mobile banking and deposits through its mobile app, and you can pair the savings account with a free, interest-earning (0.25% APY) eOne Checking Account. That account offers no-fee ATM withdrawals and reimburses ATM fees charged by other banks up to $15 per month.
Discover Bank: Best for Heavy ATM Users
For easy ATM access, Discover Bank features free withdrawals at 60,000 ATMs nationwide. There’s no minimum to open an Online Savings Account with Discover Bank, but you’ll get a healthy 2.10% APY. There’s no ongoing minimum balance or monthly maintenance fee, either.
Discover has 24/7 customer service and a convenient mobile-banking app that allows mobile check deposit. You can also make deposits via electronic transfer, direct deposit, and mail.
If you need a checking account, the Discover Cashback Debit account offers 1% cash back on up to $3,000 in purchases each month.
Best Savings Account Interest Rates: See How They Compare
As you consider which savings account is best for you, compare their rates along with other features that can provide ongoing value. Here’s a quick summary of our favorites.
|APY||Other Notable Features|
|MySavingsDirect||2.40% APY||No monthly maintenance fee, minimum balance requirement, or hidden fees.|
|PNC Bank||2.35% APY||No monthly maintenance fee or minimum balance requirement; has branches in 19 states.|
|Synchrony Bank||2.05% APY||No minimum balance requirement and you can qualify for Synchrony's Perks program (travel discounts, ATM fee reimbursements, and identity theft resolution services).|
|Barclays||2.05% APY||No minimum balance or monthly maintenance fees plus mobile deposit and other online banking services.|
|Salem Five Direct||2.05% APY||No monthly maintenance fees and mobile app with online checking and up to $15 in monthly ATM fee reimbursements.|
|Discover Bank||2.10% APY||No minimum balance or monthly maintenance fee and free withdrawals at 60,000 ATMs nationwide.|
What Is a High-Interest Savings Account?
High-interest savings accounts, also often called high-yield savings accounts, offer an interest rate much higher than the national average.
With many online savings accounts, for instance, you can easily earn an interest rate of 2.00% APY or higher. That’s much higher than the national average of 0.09% as of December 2018.
To give you an idea of just how much that higher rate can mean for you, let’s assume you make an initial deposit of $5,000 and don’t touch it for five years. We’ll also assume that you don’t make any more deposits and interest is compounded (added to your balance) daily. Here’s what you’ll earn:
- At 0.03% APY (a typical savings account interest rate at very large brick-and-mortar banks), you’ll have $5,007.50 after five years.
- At 0.09% APY (the national average), you’ll have $5,022.55 after five years.
- At 1.50% APY (a competitive high-interest savings account rate from an online bank), you’ll have $5,386.42 after five years.
- At 2.00% APY (a competitive rate from the best online savings accounts), you’ll have $5,520.40 after five years.
As you can see, the difference between a high-yield savings account and lower-yield options amounts to several hundred dollars in this example. Your extra earnings can be even more substantial if you keep more cash in a savings account and let it grow over a longer timeline.
Is a High-Yield Savings Account Your Best Option?
High-interest savings accounts are an ideal place to keep your emergency fund or any money to which still you need ready access. Your money will be safer than if you stuffed it under your mattress, and it will grow a bit, too.
Regardless of where you open a savings account, federal regulations limit you to six withdrawals or outgoing transfers each month (excluding ATM withdrawals). Exceed that number, and you could be charged a fee.
Remember, there are fewer ways to get your money from a savings account versus a checking account. You may not be able to write checks or get a debit card for your savings account like you can with a checking account. But if you opt for checking, you may get a very low interest rate or none at all.
A money market account may be a happy medium between the two: You’ll still earn a decent interest rate, but you’ll often have check-writing and debit card privileges, too.
Another common savings option is a CD, which is short for certificate of deposit. The best CDs may earn a higher interest rate than savings accounts, particularly at brick-and-mortar banks. This may not be the case online, however, where you can find several high-interest savings options.
Note that you may need a bigger initial deposit to open a CD, and you have to agree not to touch your money for a specific term. Otherwise, you’ll be on the hook for an early-withdrawal penalty.
Many experts suggest that you shouldn’t keep too much cash in savings, since your earnings will barely keep up with inflation. If you truly want to grow your money over the long term, you’ll need to consider more sophisticated investments. An easy way to start investing, even on a tight budget, is through your workplace retirement plan, or with an IRA or Roth IRA.
Pros and Cons of Online Savings Accounts
If you’re wondering whether it’s worth moving your savings online to take advantage of a high-interest savings account, here are some of the benefits to consider:
- Interest rates: Online banks offer savings account interest rates many times higher than the national average on savings accounts, which was 0.09% APY as of December 2018, according to the FDIC. In fact, it’s still not uncommon for some of the biggest banks to offer just 0.01% APY.
- Low or no fees and minimums: Many online banks don’t charge the monthly account maintenance fees you find at brick-and-mortar institutions. Several, like most of the banks on our list, also don’t require a certain minimum balance to open or maintain the account.
- 24/7 account access: If you like to do your banking at unconventional hours, that’s not a problem online. You’ll be able to print statements for free whenever you need them and may have access to conveniences like account alerts and online bill pay. These tools are often better at online banks, which have optimized their technology to keep customers happy.
Of course, there are also some drawbacks to banking online:
- Harder to deposit and access your money: While direct transfers from external accounts are convenient, you could be looking at longer hold times before your money is available — five days is typical. Even banks with mobile check deposit may not allow checks over a certain amount to be deposited that way, meaning you’ll have to mail larger checks. Also, your online bank may not allow cash deposits.
- Lack of in-person service: Sometimes you just want to talk to a real person, and do it in person. While online banks offer varying degrees of customer service, you won’t be able to talk to a teller or a bank manager. A personal relationship with your bank can come in handy if you ever have problems or need a bit of extra assistance.
- Lack of other products: If you only need a savings account, you might not care whether your bank offers other account options or products such as loans and credit cards. However, there’s something to be said for the convenience of keeping your banking with just one or two institutions.
When a High-Interest Savings Account Is Right for You
|You want access to your money fast||High-interest savings accounts allow you to withdraw funds quickly. While CDs and retirement accounts may yield higher returns in the long run, you aren’t allowed to touch your money for a specified period. If you’re young, it’s important to put some savings aside in long-term retirement accounts such as IRAs and 401ks (typically through your employer), because your interest will have that many more years to compound on itself.
That said, it’s always smart to have an emergency fund—about three months worth of living expenses that you can access quickly if your financial situation takes a downward turn. High-interest savings accounts are great for emergency funds. While the returns may not be as great as some of your longer-term savings options, there’s far more ease of access.
|You don’t want to pay brick-and-mortar fees||As long as you’re okay with longer hold times on your money and interacting with customer service representatives online, you can’t beat the low (or no) fees of online high-interest savings accounts. Brick-and-mortar institutions will vary in their required fees, but many online banks (including most of those listed in this article) don’t charge monthly account maintenance fees at all.
An online high-interest savings account gives you the added benefit of 24/7 account access. Do your banking in your pajamas at 2:00 a.m. — whatever works for you! These online institutions also offer the most up-to-date electronic tools, such as account alerts and online bill pay. Because these banks operate completely online, they understand the importance of these technologies for their customers.
|You have another account linked to a debit card||High-interest savings accounts aren’t linked to debit cards and typically don’t offer check writing abilities. Checking accounts will give you these capabilities. If you already have a checking account, consider opening an online high-interest savings account to store the money you won’t need immediate access to. The interest rates are typically much higher than those offered through brick-and-mortar institutions.|
When a High-Interest Savings Account Is NOT Right for You
|You need to make more than six withdrawals a month||High-interest savings accounts typically cap off withdrawals at six times per month. If that sounds like it could be an issue for you, a money market account may be a good alternative. While the interest rate is lower, you can access your money as often as you’d like.|
|You like having access to a physical bank branch||Most of the best online high-interest savings accounts are accessible and convenient. But they won’t give you the personal interaction you might prefer when it comes to money matters. That said, physical bank branches often require large minimum deposits but provide lower interest rates.
The trade-off may be worth it, however, if you have enough money to meet the minimum deposit requirement of brick-and-mortar institutions and you plan to diversify your savings with some higher interest, higher-risk alternatives (like stocks). Feeling confident about your savings choices is just as important to your quality of life as interest rates and ease of access.
|You need shorter hold times on your money||Depositing into an external high-interest savings account typically involves a five day waiting period before your money is available. If that makes you uneasy, a physical branch may be a better alternative.|
|You need to deposit large checks or cash frequently||Some online banks offer mobile check deposit, but you should be aware that most online institutions impose amount limits to money deposited electronically. In these situations, you may have to mail in larger checks.
Sometimes even cash deposits are prohibited altogether for a high-interest savings account. Consider the methods you plan on using to deposit money into your savings account—if you think you’ll be dealing in hard cash often, you should look into opening a checking or savings accounts at a physical branch.
|You want one institution to handle all your money matters||While high-interest savings accounts are a great, low-risk way to store your money, it’s smart to diversify your savings plans. There are a lot of traditional banks that offer a wider variety of products to help you expand your financial horizons.|
Personal Savings Calculator
To help you determine what kind of account and what rates to generally look for considering your needs, we’ve created this personal savings calculator.
Remember, High-Interest Savings Accounts Aren’t Your Only Option
Savings accounts are popular because they keep your money safe and often offer higher rates than checking accounts. With the advent of online banking, you can get even more value with an online savings account. Some of the best savings account interest rates come from Synchrony Bank, Discover Bank, and the other banks on our list above.
It’s not necessarily best to keep all your money in just a savings account, though. It’s a good idea to use one in tandem with a checking account to maximize your banking options. Also, other savings products, including CDs and money market accounts, can potentially offer better rates. Just be sure to understand what kind of flexibility you have before you get one.
As you compare high-interest savings accounts, make sure to think about all aspects of the account. While getting the highest rate is nice, you may find extra value in the features of a bank with a lower yield. Take your time and do the research, and you’ll find the right one for you.