Best Online Savings Accounts of 2019

• American Express National Bank -- 2.10% APY
• Marcus Savings by Goldman Sachs -- 2.25% APY
• CIT Savings Builder -- 2.45% APY (tiered)
• Barclays Online Savings -- 2.20% APY
  
• Synchrony Bank High-Yield Savings --  2.20% APY
  
• Ally Online Savings -- 2.20% APY
• Discover Online Savings -- 2.10% APY
  
• Alliant High-Rate Savings -- 2.00% APY
  

Having a savings account is a critical step toward financial success. But it's not enough to have just any savings account. Only the best accounts will help you get off on the right financial footing.

You can get savings accounts from your local bank branch, and some of you might even be able to get a reasonably good deal from the bank down the street. But in our experience, online savings accounts have a lot of advantages over what you'll find inside a typical branch location.

To get the most from an online savings account, you have to be discriminating. There are dozens of online banks to choose from, but with some help, you can skip past some of the poorer options and get right to the best online savings accounts available. Below, you'll find our picks for the best online savings accounts, along with some tips about why they're worth pursuing further.

Put simply, an online savings account is a savings account offered by a bank that primarily does business over the internet. Some online banks do have at least one or two physical branch locations but do the vast majority of their business via internet. Others don't have any brick-and-mortar presence at all for customers to visit, instead having locations for customer service call centers, operational support personnel, and online bank executives.

Online savings accounts come in various types:

• Regular savings accounts --  Typically have low minimum balances and few restrictions on use, but pay lower rates of interest.

• High-interest savings accounts -- Pay more attractive interest rates, but they often require you to keep a higher minimum amount of money in the account or put limitations on how you use the money. Monthly maintenance fees for high-interest savings accounts are sometimes higher than on regular savings accounts.

• Money market accounts -- Combine some elements of checking and savings accounts. They pay attractive interest rates but also offering check-writing features that let you make a limited number of payments by check each month.

• Jumbo savings accounts -- Offer some of the best interest rates, but you'll typically have to deposit $100,000 or more to qualify.

• Certificates of deposit -- CDs require you to keep your money in the account for a set period of time. If you withdraw money early, you'll pay a penalty. The longer the time period for the CD, the greater the interest rate usually is.

Not all online banks offer every type of online savings account. However, you'll almost always find a regular savings account and CD options, and it's also common to see at least one higher-rate option available.

Online banks have grown dramatically in popularity over the years. But it's taken time for many bank customers to get used to the differences between online banks and financial institutions that have brick-and-mortar bank locations.

Early on, many bank customers were concerned about the potential for internet fraud, fearing that online banks weren't even legitimate institutions. To attract deposits, online banks responded by offering interest rates that brick-and-mortar banks couldn't match. They were able to do this because online banks don't have to pay the maintenance and upkeep associated with having so much physical real estate dedicated to bank branch locations.

Now, the banking world has turned upside down. Many people prefer the convenience of banking online, so much so that even traditional brick-and-mortar banks have had to create online systems to give their customers the same services that online banks have always provided.

Here are some of the pros and cons of online banks vs. brick-and-mortar banks, on a number of topics:

In the end, whether you prefer online savings accounts to brick-and-mortar accounts depends on what you want from your banking relationship. In the vast majority of cases, online banks can let you do just about anything a brick-and-mortar bank would -- and you'll earn better interest along the way.

One must-have feature that any good savings account has to have is deposit insurance from the Federal Deposit Insurance Corporation, or FDIC. Covered deposits are protected up to $250,000 against any problem that your bank might have, up to and including the complete failure of the entire banking institution.

The good news is that most online banks, including all the ones that offer the best online savings accounts, are covered by the FDIC. But if you have a lot of money to deposit, you have to be a bit careful. All of the accounts you have in the same name at the same bank are added together to calculate the $250,000 limit. So if you have two savings accounts -- each of which has $150,000 -- then the total of $300,000 leaves $50,000 at risk above the $250,000 limit.

However, you can get extra coverage if the names on the accounts are different. For instance, in the example above, if one of those accounts was an individual account while the other was a joint account with your spouse, then each would get separate $250,000 protection. That would protect the full $300,000 total amount.

The best online savings accounts have several attractive features. You won't necessarily need all of them, but it's good to know that when you do, you won't have to switch banks to get them. Here's a short guide, in rough order of importance.

Because online banks don't have branches for you to visit, it's vital to understand how to make deposits and withdrawals. Fortunately, most of the best online banks give you several ways to get money in and out of their online savings accounts.

For deposits, the following methods are often available:

To get access to your money, online savings accounts typically give you similar options:

There are a couple extra things to consider. First, the Federal Reserve limits withdrawals from savings and money market accounts, including those at online banks, to six per account cycle. Withdrawals above that limit typically incur fees and can lead to the closure of your account. Second, online banks are vigilant about hacking and fraud, and many require two-factor authentication and other security measures when you try to withdraw funds.

Calculations by author.

As you can see, the difference between a 2% rate and a 4% rate isn't all that big in the first year you save, adding up to just an $11 boost at the higher rate. But as time goes by, the power of compounding makes an increasingly large impact. By the time 10 years has gone by, getting a better rate has earned you almost $1,500 more in interest, and that difference grows to more than $7,000 in extra earnings over a 20-year period.

More important than what you can earn in a savings account is what you won't have to spend in unnecessary debt payments by having money available in an emergency. Even if you only earn 2% during a period of low rates, that's still a lot better than the 10% to 20% or more in interest you'd pay if you had to charge an unexpected expense to a credit card and pay it off over time. The peace of mind that an online savings account can give you has value above and beyond the interest you'll receive.

What it all comes down to is whether an online savings account will help you meet your financial needs. An online savings account is ideal for you if:

• You’re seeking some of the highest savings rates offered.

• You like being able to handle your finances via the internet.

• You're comfortable with using electronic fund transfers as your most frequent way of making deposits and withdrawals.

• You're okay with customer support via email, phone, or online chat and don't need much personal hand-holding.

On the other hand, an online savings account probably isn't right for you if:

• You need a lot of one-on-one personal attention.

• You need near-instantaneous access to large amounts of cash beyond what an ATM can provide.

• You don't have reliable internet access via computer or mobile device.

• You have a lot of special banking needs beyond simple deposits and withdrawals.