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A savings account is a safe way to grow your wealth while keeping your money accessible. You can get a savings account with a brick-and-mortar bank, but the best online savings accounts can offer much better APYs. Some of them offer more than eight times the national average APY of 0.06%, as reported by the FDIC. If you're interested in growing your savings, here are some features to keep in mind while looking for the best savings account:
- High APY: The top savings accounts should include a high APY in range of our picks.
- No monthly maintenance fee: Most top savings accounts won't charge you a monthly fee just to have an account.
- FDIC insurance: FDIC insurance protects your money up to $250,000 per account per depositor against bank failure.
Our best savings accounts all offer these essentials, as well as other valuable benefits. Check out our picks below to get started and read further to learn if a high yield, online, or traditional savings account is right for you.
The Ascent's best high-yield and online savings accounts:
- Up to 0.61% APY: Axos High-Yield Savings (Member, FDIC)
- 0.50% APY: Marcus by Goldman Sachs Online Savings Account (Member, FDIC)
- 0.40% APY: American Express National Bank (Member, FDIC)
- 0.51% APY: Vio Bank High Yield Online Savings Account (Member, FDIC)
- 0.40% APY: Discover Online Savings (Member, FDIC)
- Up to 0.40% APY: CIT Bank Savings Builder (Member, FDIC)
- 0.50% APY: Ally Online Savings (Member, FDIC)
- 0.50% APY: Synchrony Bank High-Yield Savings (Member, FDIC)
Rates as
of Nov. 2, 2021
The Ascent's best savings accounts of December 2021
Below you'll find quick reviews of our best online and high-yield savings account picks for this month. Click through to the full reviews to learn more.
Best for: High APY
Axos High-Yield Savings
-- Up to 0.61%
Axos Bank packs in one of the highest current APYs we've seen for balances up to $25,000. Also important, the account doesn't charge monthly maintenance fees or have a minimum balance requirement. Plus, it comes with a free ATM card for those who request it, so you can quickly withdraw funds directly from your savings account.
Read our
full review
to learn more.
Best for: No monthly maintenance fee
Marcus by Goldman Sachs Online Savings Account
-- 0.50%
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.
Best for: No monthly maintenance fee
American Express National Bank
-- 0.40%
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. It also allows customers to make up to nine withdrawals or transfers from their savings account every month without paying a fee, which is more than what most of its competitors offer.
Read our
full review
to learn more.
Best for: High APY
Vio Bank High Yield Online Savings Account
-- 0.51%
The Vio Bank High Yield Online Savings account offers a high 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.
Best for: No monthly maintenance fee
Discover Online Savings
-- 0.40%
The Discover Online Savings account is a top choice for customers looking for a quality online savings account with a high APY. Discover takes the no-fee approach to the next level with none of the monthly fees or hidden fees that you might see with other banks. Discover offers a top-rated mobile app that lets customers stay connected to their savings from almost anywhere.
Read our
full review
to learn more.
Best for: No monthly maintenance fee
CIT Bank Savings Builder
-- Up to 0.40%
The CIT Bank Savings Builder account employs a tiered APY system that can net you up to 0.40% APY if you maintain a balance of $25,000 or more, or if you have at least $100 in deposits every month. The latter qualification is likely what most savers can maintain, making its highest APY tier widely available.
Read our
full review
to learn more.
Best for: No monthly maintenance fee
Ally Online Savings
-- 0.50%
Importantly, Ally Online Savings includes a high APY. Not to be overlooked, it also includes no monthly maintenance fees, no minimum balance requirements, and useful desktop and mobile tools to make hitting your savings goals easier.
Read our
full review
to learn more.
Best for: No monthly maintenance fee
Synchrony Bank High-Yield Savings
-- 0.50%
Synchrony's banking products share a common thread: Each tends to be among the best we've seen, all while cutting fees. Synchrony High-Yield Savings is no different. Beyond a high APY and no monthly maintenance fee, account holders get a somewhat rare savings account perk: ATM access.
Read our
full review
to learn more.
How does a savings account work?
A savings account is a type of bank account that pays you interest. You'll earn more interest than you would with a checking account in exchange for limited access to your funds. You can put as much money as you'd like into a savings account, but by federal law (regulation D), you can only make up to six free withdrawals per month. Exceeding this amount could result in extra fees.
Banks use your savings to fund loans for their customers. Borrowers then pay interest on the loan, and your bank sends some of that interest to your savings account. A larger balance or a higher savings account interest rate results in more interest.
Some savings accounts may charge monthly maintenance fees. They're unlikely to 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 deposit accounts, traditional savings accounts and online savings accounts are usually backed by the Federal Deposit Insurance Corporation (FDIC). This protects your money, up to $250,000 per person per bank, against bank failure. So you won't lose your hard-earned cash even if your bank closes its doors.
What is a high-yield savings account?
A high-yield savings account is a savings account with an APY that's far higher than a traditional savings account. There is no clear boundary separating high-yield accounts from their lower-earning peers. But the APY on the best high-yield savings accounts can be up to eight times higher than the national average (and sometimes even higher).
High-yield savings accounts are most commonly found at online banks. Without a large branch network to maintain, they're able to pass their savings on to you in the form of higher APYs and lower fees.
Most online savings accounts carry the same FDIC insurance as a traditional bank. But because these banks don't have branches, you often have fewer options for accessing your funds. This shouldn't pose a serious issue for most people, though, as these accounts are intended for saving, not frequent spending.
What is the difference between an online savings account and a traditional savings account?
Traditional savings accounts are usually offered by brick-and-mortar banks. Online savings accounts don't have the overhead of running physical branches and so can offer higher interest rates. As such, the best online savings accounts are often high yield. Early on, many bank customers were concerned that hackers might gain access to their information. As a result, online banks attracted deposits by offering interest rates that brick-and-mortar banks couldn't match.
Now, the banking world has turned upside down. Many people prefer the convenience of online banking. Indeed, traditional brick-and-mortar banks have created online systems to give their customers the same online services.
Here are some of the key differences between savings accounts at online and brick-and-mortar banks:
- Interest rates: The best online banks still offer far better rates than their brick-and-mortar counterparts, especially on basic savings accounts. Many brick-and-mortar banks pay next to nothing in interest, relying on other features to bring customers in.
- Hours of operation: Online banks are more convenient for conducting regular business at any time (although hours can vary if you need to talk to a real person). You don't have to worry about branch location hours or what transactions your brick-and-mortar bank will let you do through an ATM.
- ATM networks: Unlike online banks, brick-and-mortar banks have extensive networks of proprietary ATMs. However, many online banks partner with a nationwide fee-free ATM network or offer ATM fee rebates.
- Customer service: Online banks typically have call centers that provide service on an extended schedule, and a few give their customers 24/7 support. Some also offer online chat assistance. However, no online bank can match the in-person relationships brick-and-mortar banks offer. These are their main competitive advantage over their internet-focused rivals.
- Account access: Most online bank transactions require customers to transfer funds electronically. This typically takes a couple of days to complete. Wire transfers are available for more time-critical needs, but you'll often pay an extra fee. When you need quick access to your money and an ATM won't cut it, brick-and-mortar banks let you immediately withdraw as much as you need at a branch.
The type of bank that's best for you depends on which features are most important to you. Unless you really need to be able to visit a branch and speak to a live person, an online bank should be able to satisfy your needs most of the time. Plus, you can earn a higher APY in the process.
The best savings accounts have a high APY, no monthly maintenance fees, and FDIC insurance. Keep those things in mind as you compare your savings account options.
TIP
Is an online savings account FDIC-insured?
Every good savings account has to have deposit insurance from the FDIC. This protects covered deposits up to $250,000 against any problem your bank might have, up to and including the complete failure of the entire financial institution. Most online banks, including those that offer the best online savings accounts, are covered by the FDIC.
Savings account terminology
Here are a few key terms to know before you open a savings account. These are important terms for online savings accounts, traditional savings accounts, and high-yield savings accounts.
APY: This stands for "annual percentage yield." People often use this term interchangeably with interest rate, but the two aren't the same. APY takes into account the actual interest rate as well as how often that interest compounds. A higher APY means more interest for you.
Monthly maintenance fee: This is a fee your bank charges 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 high-yield savings accounts, both online and traditional, will meet the following criteria:
- FDIC insurance: Most banks should offer FDIC insurance. It's unlikely you'll ever use it, but it's risky not to have it. If your bank fails and your funds aren't insured, you lose your money.
- 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 on the market, 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. Also, check to see if there's a minimum balance requirement on the account.
- Accessibility: Make sure you're comfortable with the ways you can deposit money into your savings account and withdraw it when necessary. You likely also want a bank with an online portal and mobile banking so you can manage your funds remotely.
TIP
How to get extra FDIC insurance
You can get FDIC coverage beyond the $250,000 limit if you spread your money between multiple accounts or multiple banks. For instance, you could get $750,000 in coverage at a single bank by putting money into a joint savings account using your and your spouse's names, and an individual certificate of deposit (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 high-yield savings account for?
A savings account is a good place for money you don't need for everyday spending but aren't willing to risk on the stock market. It's a good idea to keep your emergency fund in a savings account, as well as money you're saving toward a large purchase in the next few years. (Tip: Use our emergency fund calculator to help determine how much you should have saved.)
Investing these funds is not usually a good idea. There's a chance you could earn a higher rate on your money, but there's also a risk your investments could lose money, particularly over the short term. You could be forced to sell your assets at a loss when you need money, and even then, it can take time to get the funds. With a savings account, your money's always right there when you need it.
Savings accounts aren't good places for cash you need to access on a day-to-day basis, 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. That's because savings account interest rates are usually lower than the return you can get on the stock market.
Alternatives to consider
One of these other bank accounts might suit you better if our best savings accounts don'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 a high-yield savings account. But it 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'll pay a withdrawal penalty.
Money market accounts: A money market account offers the high interest rate you find with savings accounts and CDs as well as some checking account features. Some offer ATM cards, checks, or both so you can withdraw funds directly from this account. Be aware, you're still limited to six penalty-free withdrawals per month.
Checking accounts: Checking accounts rarely earn interest, and when they do, their rates are usually lower than high-yield savings accounts. But these accounts have no withdrawal restrictions, and most include an ATM card, debit card, and checks for easy access.
Savings vs. checking vs. CDs: Which should you pick?
Choosing the right home for your money is essential if you want to minimize frustration and earn the most interest. This chart provides a quick overview of some of the key features of the best savings accounts, checking accounts, and CDs.
| Features | Savings accounts | Checking accounts | CD account |
|---|---|---|---|
| Interest rates | Offer higher APYs than most checking accounts and some CDs in exchange for restricted withdrawals | Typically offer a low interest rate, if any | May offer a better rate than savings or checking accounts in exchange for withdrawal restrictions (depending on the CD term and bank) |
| Variable or fixed interest rates? | Variable | Variable | Fixed for the CD term |
| Liquidity | Fairly high, but fewer withdrawal options and penalties for excessive withdrawals | High -- several deposit options, and no restrictions on withdrawals | Depends on the CD type, but typically low, with penalties for early withdrawals |
| ATM card? | Possible, but rare | Yes | No |
| Check-writing capabilities? | No | Yes | No |
How to open a savings account online or in person
To open a savings account, visit a branch (if your chosen bank has them), or fill 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 from the ongoing minimum balance required to avoid monthly maintenance fees. If you're transferring the funds from another bank account, you'll need to know its routing and account number.
Other savings accounts
While our savings account picks are the best options for most people, we recognize that everyone's situation is unique, and other options may be worth reviewing. In addition to our top picks, here are several other savings accounts we considered for inclusion on this shortlist.
- Alliant High-Rate Savings: 0.55% APY
- Bank7 Savings Account: 0.45% APY
- Barclays Online Savings: 0.40% APY
- Capital One 360 Performance Savings: 0.40% APY
- Chime Savings Account: 0.50% APY
- Citi Accelerate Savings: 0.50% APY
- First Foundation Bank Online Savings: 0.50% APY
- HSBC Direct Savings: 0.15% APY
- Prime Alliance Personal Savings: 0.60% APY
- UFB Direct High Yield Savings Account: 0.20% APY
- Varo Savings: 0.50% APY
| Offer | APY | Best For |
|---|---|---|
| Axos High-Yield Savings | Up to 0.61% | High APY |
| Marcus by Goldman Sachs Online Savings Account | 0.50% | No monthly maintenance fee |
| American Express National Bank | 0.40% | No monthly maintenance fee |
| Vio Bank High Yield Online Savings Account | 0.51% | High APY |
| Discover Online Savings | 0.40% | No monthly maintenance fee |
| CIT Bank Savings Builder | Up to 0.40% | No monthly maintenance fee |
| Ally Online Savings | 0.50% | No monthly maintenance fee |
| Synchrony Bank High-Yield Savings | 0.50% | No monthly maintenance fee |
FAQs
-
Savings accounts earn interest over time on money you don't plan to spend immediately. How much interest you earn depends on the balance in your savings account and the interest rate. In exchange for this interest, you agree to limit your monthly withdrawals from your savings account.
-
Yes. 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 is pretty slim. It could be possible if you incur a lot of fees, your identity is stolen, or a hacker gains access to your bank account.
As long as you are aware of the fees your bank charges (and ways to avoid them) and you protect your personal and account information, your savings account should only make you money.
-
The best savings accounts have:
- High APY: The top savings accounts should include a high APY in range with our picks.
- No monthly maintenance fee: Most of the best savings accounts won't 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.
-
A high-yield savings account is a savings account that offers a much higher APY than average. The national average savings account APY is currently 0.06%, but some high-yield savings accounts offer APYs that are eight times that rate. This means your savings can grow more quickly.
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.
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