Updated December 15, 2017

Top 5 Best Online Savings Accounts: February 2018

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The best online savings accounts pay a good interest rate, are fully secured, and allow for flexibility. Find the best high interest savings accounts to consider.

Where is the Best Place to Open a Savings Account?

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Saving money is one of the smartest financial practices to have. But did you know that there's a, shall we say, dumb way of doing it?

Interest rates on the typical bank savings accounts are laughably low. The average national interest rate was only 0.06% as of December 11, 2017. Now, I spent years parking my hard-earned savings in that typical savings account you get with a bank checking account. And guess what? My savings just pretty much sat there, doing nothing. I didn't know any better. The $10 a year I was getting in interest was a joke.

And then I caught on. I could earn a LOT more in interest with online savings account options that pay over 10x the national interest rate. Why not let your hard-earned savings work for you instead of just sitting there?

Did you know: CIT Bank online savings account has a 1.55% APY. CIT Bank is FDIC insured. There are no fees to open or maintain the account. But there is a $100 minimum opening deposit requirement.

Visit CIT Bank's secure website for more info, including the online application.

Read on. I'm going to share my research and go over the top 5 online high yield savings accounts. Don't make my mistake. I'm still mad about all the interest I could have earned over the years. Use one of these to get the most out of your savings.

What to Look for in a Savings Account

Before we get into the recommendations, there are a few things you want to have in an online savings account:

  1. Security. My big hesitation was whether it's safe to store my money with someone else. No worries - the ones on this list are all FDIC insured, which means that if the bank defaults, the government will pay you back everything you had in the account (up to $250,000).

    Did you know: 8% of people don't have any banking accounts at all.

  2. Flexibility. Of course, you want to be able to remove your money at any time when you need to use it, without penalty. All of these allow you to transfer money to your existing checking account at any time.

    Note: Note that federal regulation limits how many times you can take your money out - you can make only 6 ACH withdrawals/transfers from a savings account per statement cycle. Also know that it may take a few days for electronic transfers to complete.

  3. Yield rate. After I'm sure my money is secure and that I can access it, really, all I care about is the interest rate. It's pretty obvious that you want the highest interest rate you can get.

But one thing to beware of: some accounts have a minimum balance requirement. If you don't maintain that balance, you'll have to pay a monthly fee. If you're just parking your money there (which is the purpose of a savings account), then this shouldn't be a problem. But to be fair, I'm including options with no account minimums as well.

Tip: Some online savings accounts give you extras like ATM access and bill pay. While these features are nice, you're probably already able to do those with your current bank account. So to me, it's not an important feature. But if these are important activities for you, do some further research to see which accounts below have those features.

Best Online Savings Accounts

With the above considerations in mind, here are our favorite online savings accounts.

Here are the top 5 online savings accounts to build wealth fast:

  • High Interest Rate: Popular Direct
  • For Kids: Salem Five
  • For Baby: Ally Bank
  • Best Money Market: Everbank
  • No Minimum Deposit: Synchrony Bank

Note: Information including interest rates, benefits and fees were updated on January 4, 2018 from published websites and are believed to be accurate, but not guaranteed.

Best Savings with High Interest: Popular Direct

1.50%, $5,000 minimum deposit:
The Popular Direct Savings Account is through Banco Popular North America (BPNA), a New York State chartered bank. It currently offers one of the highest rates at 1.50%.

The downside is that the minimum deposit is a whopping $5,000. And you must maintain a $500 balance in the account or else you'll be charged a $4 monthly fee. If you close the account within 180 days, there's an early closing fee of $25.

Did you know: Dollar Savings Direct, a division of Emigrant Bank, has a savings account with a 1.60% APY? It has no service fees and no minimum balance requirements. Emigrant Bank has been around since 1850.

Best Savings with ATM Card: Synchrony Bank

1.50%, $0 minimum deposit:
Synchrony (which used to be part of General Electric) doesn't require a minimum deposit or a minimum balance. And there's no monthly service fee. So this makes a solid choice for those who are just starting to save. The APY rate is a respectable 1.50%.

Another great feature with Synchrony is that it comes with an ATM card, so you can withdraw savings quickly (up to 6 per statement cycle) instead of having to wait a few days for the transfer to be completed.

Best Savings for Young Adults to Open: Salem Five Direct

1.50%, $100 minimum deposit:
If you have $100 to start with, Salem Five Direct (the online branch of Salem Five Cents Savings Bank based in Massachusetts) offers a higher APY at 1.50% (for balances up to $1,000,000). There is no minimum balance requirement and no monthly fees. Although you might not have heard of this bank, it's actually got a long banking history of over 160 years.

Did you know: Salem Five Direct also offers an eOne Combo option, where you can pair it with their checking account. The checking account has no minimum balance and a yield of 0.25% APY. Salem Five Direct never charges an ATM fee and will reimburse fees by other banks up to $15 per statement cycle.

Best Customer Service: Ally Bank

1.45%, $0 minimum deposit:
Founded in 1919, Ally Bank was previously General Motors Acceptance Corp. (GMAC), so it's got a pretty solid history. There is no minimum deposit required to open an account (but you must fund it within 30 days of account opening) and there is no monthly service fee. The rate is lower at 1.45% APY, but many people love Ally Bank for its incredibly user-friendly site and great customer service. A real human is available to help 24/7.

Best High Yield Money Market: EverBank Yield Pledge

1.41%, $5,000 minimum deposit:
This last one isn't technically a savings account, but rather a high yield money market account. But for this article, both pretty much serve the same purpose. You can also make up to 6 withdrawals/transfers per statement cycle.

Everbank gives you a first year introductory APY of 1.41% for balances up to $250,000. After that, the ongoing APY is currently 1.01%-1.21% (depending on your balance). Everbank promises that the yield of your account will stay in the top 5% of similar accounts offered in the U.S. banking market.

You also get ATM access and a debit card, so you have easier access to your money. Everbank never charges an ATM fee. And if you have over $5,000 in the account, Everbank will even reimburse 100% of the ATM fees charged by other U.S. banks.

Did you know: Everbank also offers a Yield Pledge checking account with an introductory APY of 1.21% for the first year, and 0.25%-0.71% after that, depending on your balance. Pretty awesome for a checking account.

Why Open a Savings Account

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The purpose of a savings account is to have somewhere secure to park money that you may need to use in the near future. Such as for a down payment for a house, for a big vacation, or for family planning. The reason why you want to put this kind of money in a separate account from your checking is because you don't want to accidentally spend it.

Did you know: 41% of Americans do not even have $500 in savings. And more than half (54%) have no savings strategy and don't know how to change the situation. Related: How to Save Money Fast.

Because you may need to use this money at anytime, you want an account that lets you transfer the money out without penalty or fees. This is the advantage of a savings account, as opposed to an investment account like a Roth IRA. Even though investment accounts may offer higher returns for your money, you may be penalized and take a tax hit if you try to take out the money early.

Tip: The best thing to do is to have enough in your checking account for everyday needs, and put money in savings for emergencies and any upcoming goals. After that, if you can, put money you don't need in the near-future in investments for long-term goals and retirement planning.

A high yield savings account is a surefire way to grow your money a little. But remember, it's not an investment account so you're not going to get rich off of it. And it's also not a checking account, so don't set one up if you need to make a ton of withdrawals.

Is an Online Saving Account Right for You?

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Before you stash your money into one of the above savings accounts, here are some things to consider:

  • Do you need quick access to your money? Remember, a savings account's purpose is to SAVE money, not spend it. So an online savings account doesn't make it easy for you to get at your money. If you want to make a withdrawal (like transferring money out to your bank account), it often takes 3 days or more before the transfer goes through. And you typically can only make 6 withdrawals a month.

  • Are you comfortable with web banking? Completely web-based banking means that there's no physical location where you can just stroll in and ask questions, make a deposit, withdraw money, etc. You also lose having a relationship with your local bank. Online banks do have customer support by phone (and many by web chat), but we all know how frustrating phone calls to banks can be.

  • What is your financial situation? Think about what your goals are and your personal financial situation. If your situation is tight and you don't have a lot of spare cash at the end of every month, it may not be worth it to open another bank account just to keep a small amount of money in. Keep in mind that like traditional savings accounts, online savings accounts will have restrictions such as minimum deposit, minimum balance, and limits on withdrawals.

    Did you know: 31% of people spend what they make per month, and 15% spend more than they make.

There Are Other Options Too

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If you're not sure if a savings account is for you, some other options include:

  • A money market account, which acts like a savings account, but gives you freer access to your money. You'll get a debit card, ATM access, and check writing abilities. But the interest rate may be lower. As we noted, Everbank provides a money market account with a high interest earning potential.

  • A CD (Certificate of Deposit) is for longer term savings. It may give you higher rates, but there are limitations on when you can take out the money (such as a 2-year CD, 5-year CD, etc.). And you'll often need a larger deposit to open a CD account.

  • A higher yield checking account if you need quick and frequent access to your money. It'll give you the flexibility to access your money any time you need with no restrictions. Most checking accounts don't give you any interest, but Everbank and Salem Five Direct both offer checking accounts with 0.25% APY (Everbank has a tiered system where the APY increases with a higher balance). See our list of the best online checking accounts.

Other Savings Account to Consider

  • Marcus by Goldman Sachs
    Goldman Sachs offers an online savings account through Marcus. Their rates are competitive with other high yield savings accounts. No minimum deposit to open. No service charges or internal transaction fees. Marcus does not offer a checking account, a mobile app or ATM network. There is a limit of $1,000,000 in combined deposits per account.

  • American Express Personal Savings
    Their rates are competitive with other high yield savings accounts. American Express offers mobile app access for this product. No minimum deposit. No monthly fees.

  • Barclays Online Savings
    The British bank Barclays offers a competitive rate on its online savings account. This gives you the pricing benefits of an online account with the backing of a large global bank. Barclays does not offer a checking account, a mobile app or ATM network for US customers. No minimum deposit. No monthly maintenance fees.

  • Live Oak Bank
    Live Oak Bank offers one of the highest rate on an online savings account that we have found. Live Oak is a smaller regional bank that is FDIC insured up to $250,000 per depositor. No minimum deposit. No monthly maintenance fees.

  • Alliant
    Alliant is a highly awarded online credit union known for online savings accounts. There are some eligibility requirements to open an account with Alliant. Check Alliant's website to see if you qualify. You can become eligible through a $10 charitable contribution. $5 minimum deposit to open, but this is covered by Alliant through a bonus. No monthly fees when you elect eStatements.

  • Digital Federal Credit Union
    DCU is a credit union that offers an online savings account targeted at new savers. Their accounts have a very high rate on up to a $1,000 balance. The remaining account balance has a lower interest rate. DCU does offer an ATM card. $5 minimum deposit. No monthly fees.

  • Capital One 360 Savings
    Capital One offers ease of use with its award winning mobile app and other tools. This account does offer a slightly lower rate than other online savings accounts. No minimum deposit. No monthly fees.

  • Salem Five Direct
    Salem Five Direct offers a competitive rate on its online savings accounts. Salem Five does offer an ATM card. $100 minimum deposit to open. No monthly fees.

  • USAA
    This is an offering only available to US Military and their families. This offering does not carry a rate that is competitive with other online savings accounts. $25 minimum deposit to open. No monthly fees.

  • SFGI Direct
    SFGI Direct is an offering from Summit Community Bank. Their savings accounts have a very competitive rate. $500 minimum deposit to open. No monthly fees.

  • FNBO Direct
    FNBO offers a competitive rate on its online savings accounts. $1 minimum balance to open. No monthly fees.

  • Sallie Mae
    Sallie Mae offers a competitive rate on its online savings accounts. No minimum deposit. No monthly fees.

Common Questions

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What is an APY?
Let's do the complicated answer first: APY stands for Annual Percentage Yield, which is the return you get over a 1-year period based on the interest rate and compounded interest (which means that your interest earns interest), and also based on the assumption that the funds will remain in the account for 1 year.

The simple answer is that, basically, 1.00% APY means 1% interest.

How are these online savings accounts able to offer such a high interest rate?
Online banks don't have physical locations, which means that they have much lower operating costs than brick-and-mortar banks. This means they can save on overhead and pass those savings onto customers by offering better rates.

Is my money safe in an online savings account?
As long as you pick one that is FDIC insured, then yes. This means that if the bank defaults, the U.S. government will pay you back every cent you had in the account, up to the FDIC maximum of $250,000. All the savings accounts in this list are FDIC insured.

Can I take my money out whenever I need to?
Federal regulation only allows you to make 6 withdrawals/transfers per statement cycle, before a fee kicks in.

What kind of withdrawals can I make?
There are 4 types of withdrawals you can make: online funds transfer (like to your own bank checking account), outgoing wire transfer, telephone transfer, and check request.

How do I make deposits?
You can transfer money from your own bank account, send a wire transfer, or send a check. A lot of online banks (like all the ones on this list) have mobile banking too, where you can deposit checks by taking a picture of it with your phone.

Bottom Line

A high-interest savings account is a great way to make your money grow a little bit. Not putting your savings into one is literally like leaving money on the table. I wish I'd known that sooner. But I hope you're all the wiser now and will consider it if you're still keeping your money in an account with non-existent interest.

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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January
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2018

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