7 Best Online Savings Accounts for March 2020
Kailey is an industry specialist covering bank accounts, credit cards, and all things personal finance. Her work has appeared on USA Today, CNN Money, Fox Business, and MSN Money.
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A high-yield savings account is a great way to put your money to work for you without risking it in the stock market. These accounts can have APYs that are over 20 times the national average savings account APY of 0.08%. If you're interested in one of these accounts, check out our list of the best high-yield savings accounts of March 2020 to find the one that's right for you.
The CIT Bank Savings Builder account employs a tiered APY system that can net you up to 1.75% APY if you maintain a balance of $25,000 or more or have at least $100 in deposits every month. Customers with balances of $25,000 or more are also eligible for a $150 sign-up bonus when they enter promo code BONUS20 on their applications. New customers with a balance of $50,000 or more can earn $300 using the same code. Read our full review to learn more.
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 yield, available to anyone who maintains a balance of $1 or more. Read our full review to learn more.
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. Account holders can also earn a bonus when using offer code ASCENT320, applying by April 6, 2020, and making a deposit by April 20, 2020: Earn a $150 bonus when depositing at least $15,000 or earn a $200 bonus when depositing at least $25,000. 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.
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.
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.
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What you should look for in a savings account
A great high-yield savings account should check the following boxes:
- High APY: Yield isn't everything, but all other factors being equal, you obviously want to get the highest possible return on your savings.
- Low fees: With no brick-and-mortar locations, online banks are able to pass on those savings to you in the form of higher APYs and lower fees.
- Flexible deposits and withdrawals: All savings accounts should give you easy access to your funds. Many online banks have nationwide ATM networks, and others reimburse fees from using other banks' ATMs. Some also enable you to deposit cash into your account.
What is a high-yield online savings account?
Online savings accounts are offered by banks that primarily or solely do business online. Some have a few branch locations, but, typically, many customers choose to bank online rather than visiting a branch. Some customers may not even live close to a brick-and-mortar location.
There are several types of online savings accounts, including:
- Regular savings accounts: These generally have low or no fees or minimum balance requirements and place few restrictions on access to funds, but they don't have the highest APYs.
- High-interest savings accounts: These accounts offer much higher APYs than regular savings accounts, but they may also place more restrictions on accessing your money, and they may require you to keep more money in your savings account to earn the high rate.
- Money market accounts: Money market accounts offer the higher APYs typically associated with high-interest savings accounts, as well as some features common to checking accounts, such as check-writing capabilities and debit cards.
- Certificates of deposit (CDs): These accounts offer some of the highest APYs around, but they require you to keep your money in the account for a set period of time. Withdrawing it before the time is up results in a penalty.
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.
What are the differences between an online savings account and a traditional savings account?
Online banking has grown dramatically in popularity over the years. Early on, many bank customers were concerned about the possibility of hackers gaining access to their information. To attract deposits, online banks responded by offering interest rates that brick-and-mortar banks couldn't match. They could do this because online banks don't have the maintenance and upkeep costs associated with the physical real estate dedicated to bank branches.
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 online banks have always provided.
Here are some of the key differences between online and brick-and-mortar banks as they pertain to savings accounts:
- 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 always available to conduct regular business. 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: Brick-and-mortar banks have extensive networks of proprietary ATMs that most online banks don't have. However, many online banks offer rebates for ATM fees that you might have to pay to use another bank's ATM.
- Customer service: Online banks typically have call centers that provide service on an extended schedule, with a few giving 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 rely on as their main competitive advantage against their internet-focused rivals.
- Account access: Most online bank transactions require customers to transfer funds electronically, which 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 that goes beyond what an ATM can provide, brick-and-mortar banks give you the chance to go to a branch and immediately withdraw as much as you need in whatever form works best.
Whether you prefer brick-and-mortar or online banks depends on what's most important to you in a bank. Unless it's really important to you 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 while enabling you to earn a higher APY in the process.
Is an online savings account FDIC-insured?
Every good savings account has to have deposit insurance from the Federal Deposit Insurance Corporation, or 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 banking institution.
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 careful about where you put it. 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.
How to pick the right high-yield online savings account
There are several factors you need to keep in mind when choosing the best high-yield savings account for your money. Here's a look at all of them, in rough order of importance.
Look for FDIC insurance
As mentioned above, it's essential that your online bank be FDIC-insured. Going without deposit insurance is a risk you don't want to take, especially with an internet-based financial institution.
Avoid unnecessary fees
Most online banks don't charge the monthly maintenance fees, account inactivity fees, statement fees, and other miscellaneous charges common with brick-and-mortar banks. Just about the only exception is an overdraft fee, but that's pretty rare with savings accounts.
Look for accounts with flexible deposits and withdrawals
Your online savings account should enable you to quickly deposit and withdraw funds. Electronic fund transfers are an inexpensive way to make deposits and withdrawals, especially if you have an existing relationship with a brick-and-mortar bank. Online banks enable you to set up direct deposit for your paychecks, and many offer bill-pay services as well. You might need to open a related online checking account to make money transfers as convenient as possible, but that's usually a simple process.
Online banks should also have ways to get money out of ATMs cheaply, either through a partnership with a major ATM network or by reimbursing fees charged by out-of-network cash machines.
Find a high interest rate
The best online savings accounts have APYs that are close to the highest available. You don't have to pick the highest available rate, because often, you'll find that changes in promotions can shift the order among the top-ranking online banks. As long as you're within striking distance of the best rate, you should do fine.
Find a bonus
You can sometimes get bonus deals by opening an online savings account, although this practice is more common among checking accounts. Some accounts offer extra cash if you deposit a certain amount within a month or two of opening the account and then keep it there for a set number of days or months. However, read the fine print, because some deals require you to make certain transactions you might not otherwise need to do, such as setting up direct deposit or making a certain number of monthly debit card purchases.
How to make deposits and withdrawals with an online savings account
While most online banks don't have branches you can visit, they still offer several ways to deposit funds into your savings account and withdraw them later when you need them.
You can deposit funds in any of these ways:
- Electronic funds transfer from another bank account
- Direct deposit from your employer
- Wire transfers
- ATM deposits
- Mobile check deposit through a mobile app
- Mailing checks to your online bank's mailing address
Online banks typically give you these options for withdrawing money:
- Electronic funds transfer to another bank account
- Wire transfers
- ATM withdrawals
- Debit card purchases
- Check withdrawals (usually limited to money market accounts)
- Requesting a mailed check from your online bank
There are a couple of other 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 cause your bank to close your account. Second, many online banks require two-factor authentication and other security measures when you try to withdraw funds to help protect your money against fraud, so you may have to jump through a couple of extra hoops.
How much you can earn in an online savings account
How much you'll earn depends on how much money you put into the savings account and the APY the account offers. To give you some idea of how much your money could grow to, consider the following table, which shows how much you'd have if you invested $100 per month in an online savings account and earned various APYs.
|Time||1% APY||1.5% APY||2% APY|
Early on, the difference between a 1% rate and a 2% rate isn't all that significant. But by the time 10 years has gone by, getting a better rate has earned you $668 more in interest, and that difference grows to nearly $3,000 in earnings over a 20-year period.
More important than earning interest is that your funds are still available to you in an emergency. Even if you earn only 1% 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 an online savings account can give you has value above and beyond the interest you'll receive.
Is a high-yield online savings account right for you?
If any of these statements apply to you, a high-yield savings account may be the perfect home for your money:
- You'd like to earn a high APY on your savings.
- You like being able to manage your money from wherever you are.
- You typically deposit or withdraw funds using electronic funds transfers.
- You don't need to speak to customer support often and you're comfortable using email, phone, or live chat support when you need assistance.
But online savings accounts aren't right for everyone. Here are a few signs one of these accounts isn't a good fit for you:
- You value in-person interactions when it comes to managing your money.
- You sometimes need to withdraw more than a few hundred dollars at a moment's notice.
- You don't have reliable internet access or you're not that comfortable using the internet.
- You have special banking needs that go beyond simple deposits and withdrawals.
Most online savings accounts don't charge fees for routine transactions, whereas savings accounts from brick-and-mortar national banks tend to include more fees. Monthly maintenance fees and account inactivity fees are the most common.
Brick-and-mortar and online banks can both charge paper statement fees, but many banks waive this fee when you opt in to electronic statements.
It's rare, but some banks do charge account closing fees, mostly when closing an account within a short time frame of opening. Ask your bank for a copy of its fee schedule to learn about all fees associated with your account.
Yes. Online savings accounts offer some of the highest interest rates you'll find for your extra cash, as well as flexibility in accessing your money. Easy access to your deposits isn't a feature you can expect with other interest-earning accounts, such as a certificate of deposit.
Yes and no. Most online savings accounts include FDIC insurance, which covers up to $250,000 in total deposits per depositor. Although unlikely, bank failures do occur. Deposits in excess of the coverage limit could be at risk in the event of a default.
Savings accounts differ from checking accounts in two main areas.
- APYs: It's not uncommon for a checking account to offer APYs as low as 0.01%, particularly with brick-and-mortar national banks. Online savings accounts offer rates upwards of 2%.
- Withdrawal limitations: Checking accounts don't limit the amount of monthly withdrawals, so they're the best option for your daily spending. Savings accounts are restricted to six withdrawals per month. Many banks charge a fee when surpassing that limit.
Other than that, the two account types mirror each other in features, including potential fees and funding and withdrawal options.
|CIT Bank Savings Builder||1.75%||Limited time cash sign up bonus & high APY. Use code SPRING20 when applying to qualify|
|Barclays Online Savings||1.60%||High APY and low fees|
|American Express National Bank||1.70%||High APY and low fees|
|Discover Online Savings||1.50%||Cash sign up bonus - Use promo code: ASCENT320 to qualify.|
|UFB Direct High Yield Savings Account Review||1.70% for $10,000+ balances||High APY|
|Vio Bank High Yield Online Savings Account||1.75%||High APY and low fees|
|Marcus by Goldman Sachs Online Savings Account||1.70%||High APY and no fees|