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- Best Savings Accounts
Best Savings Accounts of July 2020
By: Kailey Hagen
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A savings account is a great way to put your money to work for you without risking it in the stock market. Some savings accounts can have an APY (annual percentage yield) that is more than 20 times the national average APY of 0.06%. If you're interested in growing your savings, the following key features are what we think makes for a great account:
- High APY: An APY above 1% is good, but even higher rates are possible with The Ascent's top picks.
- No monthly maintenance fee: It's commonplace for market-leading savings accounts to not charge a monthly maintenance fee.
- FDIC insurance: Whether you're putting money aside to build an emergency fund or wanting to earn more interest, security is important.
Our picks of the best savings accounts below all offer these essential features, among other market-leading benefits. Check out the picks below to get started and read further to learn if a savings account is right for you.
Coronavirus considerations for savings accounts
Interest rates are changing due to the novel coronavirus and we want to ensure you have access to additional helpful resources. If you'd like to learn more about coronavirus and your money, please visit our coronavirus hub.
The Ascent's picks of the best savings accounts of July 2020:
- 1.00% APY: American Express National Bank
- 0.95% APY: CIT Bank Savings Builder
- 1.01% APY: Discover Online Savings
- 1% for $10,000+ balances APY: UFB Direct High Yield Savings Account
- 1.00% APY: Barclays Online Savings
- 1.11% APY: Vio Bank High Yield Online Savings Account
- 1.05% APY: Marcus by Goldman Sachs Online Savings Account
- 1.00% APY: Capital One 360 Performance Savings
- 1.21% APY: Varo Savings
Rates as
of July 9, 2020
American Express National Bank
-- 1.00%
Good for: High APY and low fees
![Logo for American Express National Bank]()
You probably know American Express as a popular credit card issuer, but its savings account is garnering a lot of positive attention because of its low fees and high APY, available to anyone who maintains a balance of $1 or more. Read our full review to learn more.
CIT Bank Savings Builder
-- 0.95%
Good for: Low fees
![Logo for CIT Bank Savings Builder]()
The CIT Bank Savings Builder account employs a tiered APY system that can net you up to 0.95% APY if you maintain a balance of $25,000 or more or have at least $100 in deposits every month. Read our full review to learn more.
Discover Online Savings
-- 1.01%
Good for: No fees
![Logo for Discover Online Savings]()
The Discover Online Savings account is one of the best choices if you want an account that won't nickel-and-dime you with bank fees. Couple that with a high APY and there's a lot of potential to make money with this account. The highly rated mobile app rounds out the feature set and helps you stay connected to your money wherever you are. Read our full review to learn more.
UFB Direct High Yield Savings Account
-- 1% for $10,000+ balances
Good for: High APY
![Logo for UFB Direct High Yield Savings Account]()
The UFB Direct High-Yield Savings account offers one of the highest APYs of any savings account, though only those with $10,000 or more in their account will earn this rate. If you meet this criterion, you can't do much better, especially when you consider that this account offers a complimentary ATM card to give you easy access to your funds. Read our full review to learn more.
Barclays Online Savings
-- 1.00%
Good for: Low fees
![Logo for Barclays Online Savings]()
Barclays Online Savings offers low fees, a high APY, and a well-rated mobile app for managing your funds from anywhere. Plus there are no minimum balance requirements, so everyone can enjoy its high APY. Read our full review to learn more.
Vio Bank High Yield Online Savings Account
-- 1.11%
Good for: High APY and low fees
![Logo for Vio Bank High Yield Online Savings Account]()
The Vio Bank High Yield Online Savings account offers among an industry-leading APY to all account holders, and it doesn't charge monthly maintenance fees. This makes it a great fit for anyone hoping to grow savings over time. Read our full review to learn more.
Marcus by Goldman Sachs Online Savings Account
-- 1.05%
Good for: No fees
![Logo for Marcus by Goldman Sachs Online Savings Account]()
The Marcus by Goldman Sachs Online Savings account is a newer entrant to the market, but it's already proven that it's here to stay with a competitive APY, low fees, and no minimum balance requirements. Read our full review to learn more.
Capital One 360 Performance Savings
-- 1.00%
Good for: No fees
![Logo for Capital One 360 Performance Savings]()
The high APY, quality mobile app, and lack of fees makes this a compelling pick. The addition of a bonus worth up to $500 makes it that much more enticing. To qualify for the bonus, you'll need to open a new 360 Performance Savings account by June 10, 2020 and use code SCORE500, deposit at least $10,000 within 10 days of account opening, and maintain the required daily balance for at least 90 days after the initial funding period. When qualifying, you'll earn $100 for every $10,00 deposited with a maximum bonus of $500.
Varo Savings
-- 1.21%
Good for: High APY and no fees
![Logo for Varo Savings]()
Varo's modern spin on banking means it has a high-quality mobile app and no monthly maintenance fee. Not to be left overlooked, you can earn 1.21% APY on balances over $10,000 and 2.80% on balances up to $10,000 (with qualifying activities).
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How does a savings account work?
A savings account is a type of bank account that enables you to earn interest on your money in exchange for limited fund access. You can put as much money as you'd like into a savings account, but by federal law, you can only make up to six free withdrawals per month. Exceeding this amount could result in extra fees.
Banks use your savings to help fund loans for other customers. Borrowers must pay back what they borrowed with interest, and your bank passes along some of those earnings to you in the form of interest on your savings account. A larger balance or a higher savings account interest rate results in more interest.
Savings accounts may have monthly maintenance fees, and they usually do not include ATM cards or check-writing capabilities, so if you want to withdraw money from the account, you must do so via automatic bill pay or transfer the funds to a linked checking account.
Like other types of deposit accounts, savings accounts are typically backed by the Federal Deposit Insurance Corporation (FDIC). This protects your money, up to $250,000 per person per bank, against bank failure. So if your bank goes under, you won't lose all of your hard-earned cash.
Savings account terminology
Here are a couple of key terms you should know if you plan to open a savings account.
APY: This stands for "annual percentage yield." People often use this term interchangeably with interest rate, but the two are not exactly the same. APY takes into account how often interest compounds, in addition to the actual interest rate. A higher APY means more interest for you.
Monthly maintenance fee: A monthly maintenance fee is a fee your bank charges you to maintain your savings account. Some banks, especially online banks, don't charge this fee, and others will waive it if you meet certain requirements.
Liquidity: Liquidity refers to how easy it is to turn your money into cash. Highly liquid accounts make this simple, while low-liquidity accounts make it a lot more challenging to get cash when you need it.
What should I look for in a savings account?
The best savings accounts will meet the following criteria:
- FDIC insurance: Most banks should offer FDIC insurance. It's not likely you'll ever use it, but you don't want to get caught without it. If your bank fails and your funds aren't insured, you lose them.
- High APY: APYs fluctuate from bank to bank and over time, so there's no solid definition of a high APY. You don't need the highest rate available right now, but you should choose one that's close to the highest around. This will earn you more interest.
- Low fees: Fees can eat into your profits and possibly cost you more than you're earning in interest. Check your bank's fee schedule to learn about any costs associated with the account, and avoid a monthly maintenance fee if you can.
- Accessibility: Check with the bank to learn about the ways you can deposit money into and withdraw it from your savings account, and make sure you're comfortable with them. You likely also want a bank with an online portal and mobile app for managing your funds remotely.
TIP
How to get extra FDIC insurance
You can get extra FDIC coverage beyond the $250,000 limit depending on the accounts held at a single bank. For instance, you could get $750,000 in coverage at a single bank by putting money into both a joint savings account under yours and your spouses name and an individual CD in just your name. That's because the $250,000 limit is per depositor, per account category. Spreading the funds across depositors and account categories increases coverage within a single bank.
What should I use a savings account for?
A savings account is a good place for money you don't need for everyday spending but want quick access to. You should keep your emergency fund in a savings account, as well as money you are saving for a large purchase in the next few years. Investing these funds is usually not a good idea -- while there's a chance you could earn more money than you would with a savings account, there's also a risk of losing money when investing, particularly over the short term. You could be forced to sell your assets at a loss when you need money, and even then, it takes some time to get the funds you need. With a savings account, it's always right there when you need it.
Savings accounts are not good places for money you plan to use for everyday spending, because withdrawals in excess of six per month could bring fees. They're also not the best choice for money you don't plan to use for decades, because savings account interest rates are usually lower than the return you can get from investing.
Alternatives to consider
One of these other bank accounts might suit you better if a standard savings account doesn't sound like a good fit.
CD accounts: A certificate of deposit (CD) is a special type of savings account that offers a higher interest rate than savings accounts, but doesn't allow you to access your deposit plus earnings for a set number of months or years (your CD "term"). If you withdraw your money before this deadline, you will pay a penalty in lost interest.
Money market accounts: Money market accounts offer the high interest rates you find with savings accounts and CDs as well as some checking account features. Some offer ATM cards and checks so you can withdraw funds directly from this account, though you're still limited to six withdrawals per month.
Checking accounts: Checking accounts rarely earn interest, and when they do, their rates are usually lower than savings accounts. But checking accounts have no restrictions on withdrawals, and most include ATM cards and checks for easy access.
Savings vs. checking vs. CDs: Which should you pick?
Choosing the right home for your money is essential for minimizing frustration and earning the most interest. This chart provides a quick overview of some of the key features of savings accounts, checking accounts, and CDs.
How to open a savings account
You can open a savings account by visiting a bank branch if your chosen bank has one, or filling out an online application form. You will need to provide some personal information, including:
- Your address
- Your Social Security number
- A government-issued ID, like a driver's license or a passport
If you are opening a joint savings account, both parties will need to provide this information.
Your bank may also require a minimum deposit to open the account. This may be different than the ongoing minimum balance required to avoid monthly maintenance fees, if your bank charges these. If you're transferring the funds from another bank account, you'll need to know its routing and account number.
Coronavirus and savings account rates
As the economy has slowed, the Federal Reserve has cut interest rates to spur economic growth. The downside is savings account interest rates are variable and have declined from above 2% for some banks. The Ascent's coronavirus resource hub can help if you're needing assistance on how to manage your money during the pandemic.
FAQs
-
You place money you don't plan to spend immediately in a savings account and it earns interest over time. How much depends on your balance and the savings account interest rate. In exchange for this interest, you agree to limit your monthly withdrawals from your savings account.
-
Savings account funds are FDIC-insured up to $250,000 per person per bank, so there's no risk of losing money if your bank goes under. The risk of losing money with a savings account at all is pretty slim, but it is possible if you incur a lot of fees or if your identity is stolen or a hacker gains access to your online account.Â
As long as you are aware of the fees your bank charges (and methods of avoiding them) and you protect your personal and account information, you should only make money with a savings account.
-
Your bank may have minimum balance requirements you must meet in order to own the account or earn the advertised interest rate. Failure to meet these requirements could result in additional fees or a lower interest rate.Â
Ideally, you should keep your emergency fund in your savings account, as well as any money you're saving for a large purchase within the next few years.
| Offer | APY | Best For |
|---|---|---|
| American Express National Bank | 1.00% | High APY and low fees |
| CIT Bank Savings Builder | 0.95% | Low fees |
| Discover Online Savings | 1.01% | No fees |
| UFB Direct High Yield Savings Account | 1% for $10,000+ balances | High APY |
| Barclays Online Savings | 1.00% | Low fees |
| Vio Bank High Yield Online Savings Account | 1.11% | High APY and low fees |
| Marcus by Goldman Sachs Online Savings Account | 1.05% | No fees |
| Capital One 360 Performance Savings | 1.00% | No fees |
|
Varo Savings |
1.21% | High APY and no fees |
About the Author
Kailey has been writing about banks, credit cards, loans, and all things personal finance since 2012. She also writes for The Ascent's parent company, The Motley Fool. Her work has appeared on USA Today, CNN Money, Fox Business, and MSN Money. She's a graduate of the University of Wisconsin and happily lives in the woods of northern Wisconsin where she grew up.
