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Online Savings & Money Market Account Rates 2021

Highest Online Bank Rates for Savings And Money Market Accounts - April 19, 2021

Savings Account National Average Rate: 0.10% ?

 

BestCashCow.com has been monitoring the best savings rates nationwide for over 15 years, and for the first 14 plus, the situation for the consumer was very straightforward. You’d check to see what the best savings rate is on a site like ours or RatesAndInfo.com, click through to apply and, voila, you’d be making more interest on your cash than you could (...read more in the Recent Articles section below the rate table).

ONLINE BANKS APY? MIN?

Requires download of bank app and recording of over 12,500 average daily steps (or 10,000 if over age of 65). Inbound transfers are limited to $2,500/week and take 4 days.

| Mar 29, 2021

It seemed compelling but too many hoops with an app that didn't load right and I was never able to get the account funded. I will opt for a little less and maintaining my sanity. Read More

| Mar 20, 2021

Was rejected. Turned 64 a few days back and had not prior been rejected for anything ever?

External transfers are limited to $30,000 per week.

| Apr 03, 2021

Communication fails. I attempted to open an account online. Just reaching a person took way too long, Bank required loan pull from an existing account first--a potential red flag to both my investment comp... Read More

| Apr 19, 2021

more problems than i or anyone should have time for Read More

| Mar 29, 2021

Not the smoothest website, but good enough and they are staying competitive. I first opened the account 2 years ago after seeing it advertised here and have no had no reason to close. I have had both savin...

| Apr 19, 2021

If 0.60% is one of the best rates and it is, then I have nothing to complain about. It has been an easy enough experience.

New money only. External transfers limited to $10,000 per week.

| Mar 19, 2021

I feel like I may be trying my luck by commenting here. I've opened several accounts recently only to find that I am earning a much lower rate when I finally get to funding. This one seems different. Rate ...

| Nov 02, 2020

WARNING! I just opened a new account and at this time you CANNOT transfer or withdraw your funds via ACH through them. You may use an external bank's ACH to withdraw, however. No where on their website is ...

| Mar 31, 2021

It took 7 days to perform an ACH transfer. Even worse than Synchrony and Interactive Brokers which are both known con jobs. Closed account. Done. Read More

| Apr 10, 2021

This isn't a bank. It is a scam to get your personal information. It should not be listed here. They have no interest in doing business with you. Read More

| Dec 31, 2020

I’ve filed a complaint with the FDIC. This bank keeps rearranging my transactions, even if they’ve posted and are not pending. They also will deny a transaction and charge a non sufficient funds fee ... Read More

Alliant

Restrictions

0.55%

$5

Learn More

| Mar 06, 2021

No problems. Easy to open and use. Read More

| Apr 13, 2021

rate advertised not available for new customers Read More

| Dec 11, 2020

I did not like the rate drop yesterday fellas. This went from great to good to average to poor in no time! Read More

| Apr 27, 2020

I just deposited into their 1 yr. CD 2.28 (which is correct as of 4.27.20) and had relatively minor issues with the application. If you provide your callback no. a person will get back to you and explain t...

| Jul 24, 2020

Went to renew a cd at branch in Jacksonville Fl , on main street, they said I would have to keep driving around building , if any cars came in behind me. They have 2 drive throughs and wouldn't open other... Read More

| Feb 28, 2021

ACH transfers limited to $3,000, unsecured website, emailing acct numbers, hours to reach customer service. Need not say more.

| Dec 12, 2020

"keeping their savings rate competitive" - they aren't. Read More

| Nov 18, 2020

I've been very pleased over the first six months - now feel cheated by silent .05% drops. How difficult is it to send a blast email notifying customers as a courtesy?

| Nov 12, 2020

Rate has remained competitive and they are easy to work with.

Freedom Bank (NJ)

0.50%

$0

Learn More

| Apr 07, 2021

I have a few million dollars in cash across several online banks. It is not exciting with interest rates so low, but I will take 20 grand or so in interest, even if it is fully taxable over the $5 in inter... Read More

| Jun 20, 2018

great find Jason, looks like this really was a to good to be true rate Read More

Bank charges ACH transfer fees and routinely lowers rates for existing customers below those advertised.

| Dec 08, 2020

Everyone here in Boston raves about Salem Five but it is shithole operation filled with nasty entitled people. As for this online savings product, the fees are ridiculous, the transfer charges are obnoxiou... Read More

| Apr 22, 2015

Hello, I am interested in a line of credit against my home. I have a high interest credit card that I want to move to this credit. I have a wells fargo mortgage which is only a few years old which I do no...

| Jun 25, 2020

I can tell you nothing of this bank. I can tell you the rate posted here is incorrect (FIFTH one today!) I only wish I could review BestCashCow. Read More

| Aug 25, 2020

Bank is owned by a Florida bank and yet I wasn't able to open an account because I live in Florida. Go figure! Read More

Rate available for new accounts only.

| Apr 10, 2021

I opened an account a couple of years ago and had a dreadful experience. I saw two weeks ago that the rate was better than at Citizens so I closed that account for this one. I cannot access my money now or... Read More

| Feb 07, 2021

I cannot comment on Bankdirect, but I can comment on the Bask Bank subsidiary. Opening this account to earn AAdvantage miles is the best move I've made in years! I am getting 100,000 frequent flier miles... Read More

New account holders only.

| Jan 03, 2021

This is the worst online banking I have seen. Without any warning they restricted access to withdrawals to $1000. Representative said they implemented on ALL accounts for ALL customers due to “fraud”... Read More

CNB Bank Direct

0.49%

$25,000

Learn More

| Feb 28, 2021

The info in this comment is misleading. Bank is located in Willmar MN (not Minneapolis), but account may be opened online regardless of where you live. FDIC insures $250K, and eCentive account pays prem...

| Aug 04, 2020

Sallie Mae is going to absolutely be the right bank for you if you enjoy calling during normal business hours and speaking with a automated voice response system that gives you no information and refuses t...

| Apr 30, 2019

No issues. I feel confident using them. Read More

| Sep 06, 2020

Yes, Pentagon had good rate initially, but it disappeared at renewal. We have top credit score (835).

| Jul 21, 2020

Opened account a month ago. I've already seen the rate fall a couple of times, but have no other complaints. Easy process and a clear easy to use site (unlike Ally where I was before). Read More

Zions Bank

0.45%

$1,000

Learn More

Dime Community Bank

0.45%

$1,000

Learn More

Amboy Direct

0.45%

$30,000

Learn More

| Aug 10, 2019

I did not appreciate getting pulled into the 2.53% offer on $100k only to have the rate lowered by the time I finally got the money in.

Norwood Bank

0.45%

$100,000

Learn More

| Dec 05, 2020

I know rates are variable, at their discretion*, but in the time frame of 9 months their rates have dropped to 1/3 of what they were ! is that what some call a teaser rate in the beginning ??? Read More

| Aug 03, 2020

There is a lot to like about this account. American Express is a real organization and you are not playing with a bunch of amateurs like with a lot of these banks. However, they will be sure to lower the ... Read More

| Dec 11, 2020

All the good reviews on this site are planted by the bank. This is the worst. It used to be good and the transfer speed is good. Still they lower their rates below anyone else and do it without the notice ...

| Sep 14, 2020

two thumbs up Read More

| Mar 14, 2018

Poor service. Condescending attitude. Savings application denied without giving reason (Equifax file had a freeze because of hacking history) and not advising customer of need to unfreeze credit file for a... Read More

| May 04, 2018

I opened an account about 1.5 years ago and the employees have always been nice and never had an issue with any teller saying they will put a hold on my deposit or being rude in any way shape or form. But.... Read More

| Jan 23, 2021

In terms of service, you cannot do anything online. On every other bank, you can message someone online and get a quick response. You need to call Synchrony and speak with someone in the Philippines. N... Read More

| Jun 27, 2020

Agree with "Cannot recommend", this is a bricks and mortar bank with a very limited online presence. Read More

Inbound transfers limited to $25,000/day and $100,000/month.

| Mar 25, 2021

Completely excessive number of customer service phone calls after setting up account. Well meaning, but over the top.

| Aug 25, 2020

I cannot say that I am too happy about the rate, but the service on this one is excellent. Read More

| Feb 28, 2020

Purepoint is great. Only Citizens Access is better and I've had all of these. I have nothing to gain by saying this, but I would opt for Purepoint when the rates are comparable. Read More

| Sep 30, 2020

Website hasn't been working for over a week now. Just great how they manage to go down as rates start to fall. :) I am so very done with this nonsense. Read More

| Apr 18, 2018

Worst experience of my life. Did not fund and gave $25 to my own charity. Read More

| Mar 10, 2021

Northpointe -- my most favorite bank -- held their rate when others dropped -- nice people to deal with -- and -- COURAGE + INTEGRITY.

CNB Bank Direct

0.26%

$100

Learn More

| Nov 18, 2017

This is a decent account until you need to withdraw something and then it is hell on wheels. Read More

Promotional rate for new account holders only.

| May 08, 2019

One of the worst experiences I have ever had. Do not use them for loans, their servicing department is lazy, unorganized and terrible to work with. Sent in check over 3 months ago to get PMI removed and...

| Apr 08, 2019

Their online interface is circa 2004. They limit the number of accounts you can set up for ACH. And they sit on ACH transfers.... for days. Not sure if the good rates are worth it. Read More

| Sep 17, 2020

It is a complete game between MySavings, DollarSavings and Emigrant. Some days one has a competitive rate, the next day the rate on that one has dropped to zero and it is one of the other brands that has... Read More

New money only.

| Dec 26, 2018

I think it is 1% on 1-year CDs and 2% on anything between 1 and 4 years. Not great, but not the worst I have seen. Read More

MainStreet Bank

0.25%

$1,000

Learn More

| Aug 13, 2019

I filled out the application 10 days ago answering all questions and sent a file with a copy of my drivers license to Western Bank. I received an email saying that a banker would call me within one busines...

| May 19, 2017

Such a difficult experience and unpleasant experience that I would have been happier leaving my money at Wells fargo for 0.000001%. Read More

| Jan 04, 2021

The rate is 0.25% on balances under $300,000. Nobody in their right mind is going to go over $250,000 in this bank. Bestcashcow should remove it. Read More

| Mar 25, 2020

I was told on the phone by a bank rep that my present money market acct interest rate would continue at 2.25% until June 30, 2020 and would be FDIC covered up to $250,000. Please verify if this is true???...

| Jan 04, 2020

Be aware, when cd comes due, they mail a check to your home which takes 7-10 business days. That is a long time to have money not drawing any interest. Read More

| Feb 28, 2021

The info in this comment is misleading. Bank is located in Willmar MN (not Minneapolis), but account may be opened online regardless of where you live. FDIC insures $250K, and eCentive account pays prem...

Promotional rate for new depositors only. Prior depositors may receive a lower rate.

| Oct 08, 2018

Their promotional rate is just for a limited time and afterward their rate go down to close to 0.1% or so. For a consistently higher rate, look for more decent bank like CapitalOne360 or Discover. Read More

| Jul 28, 2020

Dropped rates again with restrictive transfer limits and poor service. Better rates and liquidity elsewhere. Beware!!! Read More

OneWest Bank, a division of CIT Bank

0.15%

$100,000

Learn More

Rate not available in all states.

| May 21, 2018

I wish I had never heard of or seen BBVA. It has been a disaster. Came to this site to find something else. Read More

| May 26, 2017

Before009 Read More

| Feb 12, 2020

WILL YOU CASH MY EE SAVINGS BONDS? PLEASE ADVSE.

| Sep 08, 2019

Opened an account and did $1000 for my initial deposit. If your balance averages below $1000 they charge you $10 a month. ETrade withdrew the $1000 from my checking account then, without reason, abruptly...

New Dominion Direct

0.05%

$100,000

Learn More

Edu

Restrictions

0.01%

$1

Learn More
All rates listed are Annual Percentage Yield (APY). The APY rate in a savings account or money market account is a variable rate that is subject to change at any point. The Min listed is the minimum deposit account balance required to obtain the rate listed.

Best Online Savings Account Rates

Finding the best high interest online savings or money market account is a highly subjective exercise. The best account for your neighbor may not be the best account for you. To help you determine which account is best for you, we have created the following 7 point checklist:
  • A competitive interest rate. BestCashCow maintains the most comprehensive list of deposit account rates. The rates above are the best available rates for online savings accounts. In order to ensure that your money continues to grow over time, you may wish to avoid banks which rely heavily on very short term promotional rates (such as EverBank). If you open an account with a promotional rate or even if you open an account where the rate isn’t promotional in nature, you should check back with BestCashCow regularly to be sure that your bank continues to offer one of the most competitive rates.
  • Full functionality through online and mobile access. Most of the accounts listed above have robust websites and mobile access that enables full functionality. Read the comments from other users before opening an account as they often highlight problems with access.
  • Assess how the bank provides customer service. Many of the leading online banks now have customer service representatives who are U.S. based and available 24/7 with low wait times. This is often a distinguishing feature that makes a well-recognized bank significantly more attractive than a smaller bank trying to enter the online banking arena.
  • Absence of fees. Be sure that you are opening an online account with a bank that doesn’t charge fees and has very low minimum balance requirements. American Express, CIT, GS Bank, Barclays and Ally are all well known for low minimum requirements and the absence of any unusual monthly fees.
  • Easy Access to your Cash through Immediate Online Transfers. The reason why you keep money in savings is for access in an emergency or to take advantage of immediate financial opportunities. You need access to your cash. Yet, some banks impose strict limits on the amount of cash that you can access from your account in a single transfer or limit the numbers of transfers you can conduct over a given time period. Other banks can delay your transfers for days while they make money on the float. You should check with the bank where you are considering opening an online account to understand the restrictions before you open an account. You may also read the comments from other users above as they can highlight which banks enable the best access to your cash.
  • Stay within FDIC limits! See the section above and read this article.
  • Use the BestCashCow Savings Calculator to see how important it is to be maximizing your interest on savings accounts over time.

Expert Reviews of Well-Known Online Banks, April 2021


Online Savings - 0.50% APY, $1 minimum


Great for: Competitive CD Rates with no transaction fees ever.

Overview: Marcus is the online bank of Goldman Sachs. Throughout 2018, it consistently offered one of the highest online savings rates, but it has been quick to lower its savings and CD rates in 2019 and 2020. Marcus has a highly rated mobile app.

Highlights: Marcus is very highly rated in customer reviews on BestCashCow. Users cite the consistently high savings rates, lightening fast ACH transfers, the ease of web access, strong customer service and the absence of any fees ever.

What to watch for: Marcus has been quicker than many competitors to lower its savings rate. No ATM access.


Online Savings – 0.40% APY, $5,000 minimum


Great For: High Savings and CD Rates with no transaction fees ever

Overview: Citizens Access is a relatively new entrant in the online banking space, but is a subsidiary of Citizens Bank, one the largest, oldest and most well established US banking institutions.

Highlights: Citizens Access never charges any monthly fees. Its user reviews on BestCashCow have been outstanding. It was ahead of the curve in increasing its savings rates in anticipation of each Federal funds rate increase in 2018, although it may not be as competitive as interest rates in 2021 and 2022. Citizens Access also allows customers to set up online savings and CD accounts in the name of a personal trust (this remains rare among online banks).

What to watch for: Citizens Access was quick to drop its online savings rate in 2020. Its CD offerings, including its No Penalty CD products, have gone from compelling to particularly weak. All Citizens Access savings and CD products require a $5,000 minimum balance.


Online Savings Account – 0.50% APY, no minimum


Great For: Sometimes competitive savings rates and No Penalty CD rates with 24/7 Customer Service

Overview: Ally’s strong advertising campaigns and name recognition has made it one of the most recognized online banks. Until 2019, the savings rate was competitive. The bank also offers competitive CD products (with modest early withdrawal penalties) and no penalty CDs (with no early withdrawal penalties).

Highlights: BestCashCow user reviews cite a strong mobile app and the ease of getting into and out of No Penalty CD products. Ally often offers new and existing users a 1% cash promotion for bringing new deposits, and regularly gives existing depositors a 5 basis point step up for renewing CDs and No Penalty CDs.

What to watch for: Ally is the former GMAC Bank, having been spun out following the 2009 financial crisis, and may continue to have significant exposure to used automobile loans. Depositors should therefore be especially cautious as we roll through the COVID-19 pandemic and should always maintain their deposit balances within FDIC limits. In addition, some customers complain about waiting hours to reach customer service by phone at all hours. Others have expressed frustration about being inundated by Ally's nonstop cross-selling of auto loan, personal loan, credit card and online trading products.


Money Market – 0.45% APY, $100 Minimum


Great For: Competitive savings rates, great customer service

Overview: CIT Bank is a nationwide direct bank and is a division of CIT Bank, N.A., a large financial institution focused on equipment leasing that required a financial bail out from the federal government in 2009. The bank was an early entrant into the online banking space, and offered competitive savings and CD products to US customers through the internet for many years. In 2020, it has matched the savings and money market rates of other well known online banks.

Highlights: User reviews left on BestCashCow’s savings table are consistently strong with users highlighting strong and responsive customer service by phone when necessary.

What to watch for: CIT's website lacks some of the functionality that you will find on other leading online banking interfaces and seems more like 2011 than 2021. For example, it isn't possible to designate whether you want a CD to renew or to be transferred to another account until after the CD has matured. Additionally, some have reported experiencing significant delays with both inbound and outbound transfers (during which time CIT makes the interest and not you). Also, CIT now owns OneWest Bank and those with accounts at both banks should add their deposits together to be sure they do not exceed FDIC coverage.


High Yield Savings – 0.50% APY, no minimum


Great For: Stronger CD rates than many other well-known online banks.

Overview: Synchrony Bank is the former GE Capital Retail Bank that has now been spun off completely into its own institution. In the past, Synchrony offered competitive online savings and CD rates, but it is no longer competitive. Even though Synchrony is an entirely independent entity now and should not have exposure to GE's troubles, there may still be hidden exposure and depositors should remain well within FDIC insurance limits.

Highlights: Online savings accounts can be opened for IRAs and trust accounts (which is ordinarily not possible at leading online banks). Upon setting up an account, you may also add up to 10 beneficiaries. Your account may be linked with up to 10 external accounts at other banks and transfer limits are quite high (up to $500,000 inbound daily and $250,000 outbound daily). Synchrony offers ATM access and will reimburse up to $5 per statement cycle in other banks' ATM fees.

What to watch for: User reviews cite the inability to reach US-based customer service reps by phone, and note that the system does not have chat or internal email functionality. The banks is also widely associated with long delays (up to 6 days) in processing inbound and outbound cash transfers. The bank also charges a $25 outbound wire transfer fee.


Savings Account - 0.40% APY, no minimum


Good for: Solid APY with No Minimum Balance

Overview: Barclays Bank Delaware is a division of the often-troubled UK-based Barclays PLC. In the US, its brand recognition emanates from its acquisition of Lehman Brothers, its name on an arena in Brooklyn, and its role as one of the credit card issuers for American Airlines. The US subsidiary does not have a branch network and the absence of those costs sometimes enables it to pass along competitive savings and CD rates to its customers.

Highlights: Barclays offers savings accounts with no minimum to open, 24/7 access to funds, online transfers to and from other banks, direct deposit and a mobile app.

What to watch for: Barclays Bank Delaware was not consistently competitive in raising its savings rates as the Federal Reserve increased rates in the late 2010s, but it aggressively cut its savings rate in 2019 and 2020. While it used to be a very strongly reviewed bank by BestCashCow’s users, more recent reviews cite slower ACH transfers than some competitors. With uncertainty around Brexit, BestCashCow strongly recommends that depositors at this U.S. subsidiary maintain deposits strictly within FDIC limits.

Why You Can Trust BestCashCow

Every year, Americans collectively lose at least $80 billion in income just by putting their savings in the wrong bank accounts. BestCashCow is the most comprehensive and unbiased bank rate site on the Internet and our mission is to help you to avoid your share of these losses. We monitor over 30,000 rates from over 8,000 FDIC-insured banks and 7,700 NCUA-insured credit unions. Take a few minutes to explore the table above to see the best savings rates currently offered by online banks, or use the tabs to explore local bank rates or local credit union rates if your prefer to do your banking locally.

By using BestCashCow to move your money to a new bank from one with a low savings rate you may be able to boost your annual interest earned from savings by more than 10X. Banks are always competing for your money. Take advantage of it!

You can learn more about BestCashCow here.

Recent Articles


An Entirely New Risk to Applying for Online Savings Accounts

BestCashCow.com has been monitoring the best savings rates nationwide for over 15 years, and for the first 14 plus, the situation for the consumer was very straightforward.

You’d check to see what the best savings rate is on a site like ours or RatesAndInfo.com, click through to apply and, voila, you’d be making more interest on your cash than you could possibly be making anywhere else.

Recently, we’ve seen an influx of so-called “fintechs” in the financial space.  Fintechs are designed to do nothing that a traditional bank cannot do.  They basically lend and borrow money (without the consumer protection of the FDIC or NCUA), facilitate financial transactions, etc.  From a consumer standpoint they offer ease of use (an IPhone application) and sometimes lower transaction costs.  In return, the consumer is forgoing the regulatory protections and parting with their personal identifying information (address, social security number, drivers license) and willingly or unwillingly creating a trove of information that can be used to market to them.

And, in the post-Facebook world, this personally identifying information has real value.  Anyone who questions whether real value can be made off of this information need only look at the types of travel rewards that major credit card companies offer just to get a credit card in your hands.   (Compare all of the best credit card sign-up bonuses here).

Against this backdrop, smaller banks are struggling to compete.   Yet, many of these banks do not need new deposits (or customers) as they are also flush with cash and the entire economy is awash in liquidity.   Hence, we are now getting reports of smaller lesser-known online banks that are “offering” savings rates or CD rates that are well above those of their larger competitors, and are walking people through the online application process and summarily rejecting all applicants (or the vast majority of applicants), either through an outright rejection notice or through never responding (and denying any knowledge of the application).   Unfortunately, this is an easy way for them to build their valuable databases with your personal information and that is worth more to them right now than having you as a customer.

It pains us to see this occurring with regulated banks and credit unions.   And, it pains us to expose that this is happening.  But, we have received so many reports from readers of this happening in 2021 and we’ve seen it from own experiences.   So, yes, it is happening.

And, the question becomes what you can do as a customer to protect yourself and your personally-identifying information.   We recommend the following steps.

1.  Err towards the better-known, more established online banks.  These banks are always competitive over the long-haul and they don’t refuse customer accounts. While you may make a few basis points less, these banks are not going to take your information and refuse you as a client.  You’ll find at least thirteen of these to choose from: Marcus, Ally, Synchrony, CIT, CitizensAccess, American Express, Purepoint, CapitalOne, Barclays, CIBC, TIAA, Sallie Mae and Discover.  On the credit union side, places like Navy Federal Credit Union, Pentagon or Alliant are not going to deny your application if you meet the Field of Membership Requirements.

2.  Consider established banks with strong local or national reputations that are spending large amounts of money to establish national online brands.  These banks are also unlikely to refuse you as a client.   In our observation, there are currently at least eight of these that are currently among the most competitive savings and CD issuers nationally, include Comenity Direct (New York), Amboy Direct (New Jersey), Live Oak Bank (North Carolina), Salem Five (Massachusetts), CFG Bank (Maryland), First Foundation (California), Merrick (Utah), Zions (Utah), TAB Bank (Utah).

3.  Read the reviews on banks and credit unions that you have not heard of.  Except in egregious situations where we are inundated with customer complaints and the bank or credit union has refused to provide an explanation, BestCashCow is not going to remove savings and CD offerings from our site.   But, unlike sites like Bankrate or Nerdwallet, we do offer verified customer reviews, linked from our table of the best online savings rates.   You should read these.  If people are reporting that they are unable to open accounts (either through the bank’s outright rejection or non-response), you should take these reports seriously.

It seems absurd to imagine that a bank would want just your personal information and not want your hard earned money, especially when you are essentially offering to lend it to them at below 1% or a fraction of the current inflation rate (thanks Federal Reserve!)  But, yes, this is really happening.


Federal Reserve Ends March Meeting Without Any Plans to Raise Interest Rates in 2021

The Federal Reserve concluded its 2-day March meeting today with no change in the Fed funds.

The median forecast is for no change in interest rates through 2023 with 4 Fed officials seeing rate hikes in 2022 (up from 1 previously), and 7 Fed officials seeing them in 2023 (up from 3 previously).

It is surprising that the Federal Reserve members remain so dovish with so few hawkish members wanting to move interest rates to address inflation, which it now predicts will be above 2.40% in 2021, before  dipping slightly below 2.00% in early 2022 and again rising to a level which is moderately and sustainably  above 2%.

The Fed’s new policy, first articulated in December, of moving away from its dual mandate and decoupling short-term interest rates from inflation, is forcing people into high-risk investments in order to maintain the purchasing power of their savings.   Earning a fully taxable 0.40% or 0.50% on your deposit accounts will lead to a diminution in your real value when measurable inflation is much higher.

The Federal Reserve continues to be concerned with downside risks to GDP and labor markets by COVID-19.   Chairman Powell is also clearly concerned above virus variants and does not want to take his foot off of the accelerator when it comes to market accommodation and Federal Reserve interventions until we are well clear of the virus.  The Fed therefore is prepared to let the market run hot.  While this policy may be appropriate in order to assure the economy gets through the COVID-19 era without economic scaring, it is also pushing capital towards equity valuations that make little sense, and products like bitcoin and non-fungible tokens (NFTs) that make even less.   Even those who know to be cautious when they hear the mantra “this time is different” are having a difficult time resisting the temptation to jump into frenzies in order to maintain the real value of their assets.. 

While it isn’t a good time to be a saver, it isn’t a great time to be a bond investor either.   A lot of people are getting excited about the steepening of the yield curve with the 10-year US Treasury yields at 1.68% and the 30-year US Treasury yields at 2.44%.   I think that these rates should not be bought as they are more than likely to go higher in the very short term.

Compare savings rates here.

Compare 1-year CD rates here.


Bask Bank Is A Very Compelling Option For Anyone Looking to Travel in the Post-COVID-19 World

Rate information contained on this page may have changed. Please find latest savings rates.

We are still in the midst of an horrific pandemic but we have vaccines going in arms now and that is a good time to look at how and when you are going to travel when this pandemic ends and it becomes easier to do so.

I last wrote in some detail about Bask Bank's proposition in February, having first written about it in December 2019.

I found Bask Bank very compelling when it was launched by Texas Capital Bank back then.   It provided a chance to earn lots of American Airlines AAdvantage® miles instead of cash.   Since I frequently have extracted 5 to 6 cents in value per mile when redeeming AAdvantage® miles for tickets to Hawaii or Europe, I advised folks to consider seriously stocking up on this AAdvantage currency with rates so low.

The comments to these two articles are full of analyses by readers comparing interest income with miles, both before and after considering tax consequences (Bask Bank will send you a 1099 that reports all miles earned at 0.42 cents per mile).  While I found Bask Bank to be instantly compelling since I value AAdvantage® miles so highly and did not view a detailed pricing mechanism, these readers’ analyses showed that in many scenarios they were effectively purchasing AAdvantage® miles for under a cent a piece when compared to the prevailing interest rates at the time.

Since those articles were written, we went through a period where nobody was thinking about traveling or earning airline miles.   But, as we come out of that period, it is clear that American is going to survive and AAdvantage® miles will again have value to those who want and need to travel by air.

At the same time, interest rates have come down dramatically and they aren’t about to rise any time soon.  While the small promotions that Bask Bank offered earlier in the year are largely expired (you will still earn 1,000 AAdvantage® miles for a new account with over $5,000), Bask Bank is still offering 1 point per dollar on deposits annually.   Since the best online savings rate is now 0.75% APY and most of the top online one-year CD rates are below that level (compare online CD rates here), those who crunch numbers will find that you can now effectively buy (or earn) AAdvantage® miles at well under 1 penny a point.

And, for anyone who travels or is familiar with the American AAdvantage® program, that is a no-brainer.

 


Product Information For High Interest Online Savings Accounts

How Do Online Savings Accounts Work

Over the last two decades, online banks have emerged to offer depositors higher rates on their online savings and money market accounts than are available in the major money center banks and in smaller brick-and-mortar banks. Since these online banks do not have expensive branch networks to maintain, they usually pass some of their savings back to depositors in the form of higher rates. All online banks and local banks listed on BestCashCow are FDIC Insured.

Unlike certificates of deposit (CDs) or time deposits, money in savings and money market accounts accrue interest on a daily rate. The best yielding savings rates can conceivably change from day-to-day with new online banks emerging or existing banks more aggressively seeking to raise the capital accounts. It is important to check back on BestCashCow regularly to be sure that your savings accounts continue to earn the most competitive rates, no matter what the rate environment is.

The table above lists the highest yielding online savings account rates.

Recent Performance of Online Savings And Money Market Accounts

BestCashCow data shows that the highest yielding online savings account and money market rates increased through 2017 and 2018. Rates have stabilized with the best rates well above 2.00% in mid-2019, and the next move in the Fed Funds rate as set by the Federal Reserve is uncertain.

The average online savings or money market rate exceeds the national average rate quite dramatically. The graph below shows how the average rates for online savings and money market accounts have trended over the last several years.  Even while online savings rates have improved, the the average rate of all online and locally offered savings accounts in the BestCashCow rate database has increased more slowly and now sits at 0.22%. (The BestCashCow rate database, the largest in the US, contains rates on over 2,000,000 bank products from all 8,000 banks and 7,700 credit unions in the US.)

Online Savings and Money Market Average Chart 2020

Best High Yield Savings or Money Market Accounts

Depending on where you live, there may be banks and credit unions offering rates still higher than the best online savings rates. Check BestCashCow’s list of the highest yielding local bank rates and the highest yielding credit union rates.

Best Online Bank Accounts with High Interest Rates

In the above table, you will find a list of the highest online savings account rates, ranked in descending order by interest rate currently offered. Online bank accounts are slightly different in terms of their features and the services offered. By reading the reviews of each bank, accessible from the rightmost column, you will be able to determine which bank is the best for you. Please also refer to the section below entitled “Best Online Savings Account Rates".

Are Online Savings Accounts Safe?

All bank accounts listed on BestCashCow are insured by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC is a federal government chartered institution that provides insurance to a maximum amount of $250,000 per individual per institution (or $500,000 for joint account holders). All deposits (CDs, Checking, Savings Accounts) held in the same type of ownership at a single financial institution are only insured to $250,000. However, funds held in different types of ownership (Individual, Joint, Trust, Retirement) may fall under separate FDIC insurance provisions. BestCashCow.com strongly recommends that you deposit savings in only FDIC insured institutions and that you do not exceed FDIC coverage limits. Please visit the FDIC's website to determine your coverage limits based on your circumstances.

Advantages of Online Savings Accounts:

  • Higher interest rate.
  • Often top notch online functionality with 24/7 access, 365 days a year. You can check your balance, update your contact info, make transfers, and order deposit slips at any time. For more pressing issues, customer support is also usually accessible 24/7, so you can talk to an actual human instead of your computer screen.
  • Superior online and mobile access. Many traditional banks have been slow to adopt the best web and mobile features to improve the customer experience online. 
  • Easy money transfer capabilities to and from a primary checking account.
  • Liquidity. Depositors can withdraw their money at any time.

Disadvantages of Online Only Banks:

  • A variable interest rate. While most leading online banks have not lowered rates significantly in past years, any savings rate can conceivably be lowered at any time.
  • There are often new entrants to the market that can disappear as quickly as they arrive on the scene.
  • Interaction is only via phone or Internet. You cannot walk into a branch and talk to a customer service representative if you have a problem with your savings account. Nonetheless, the leading, high profile online banks provide virtually instant phone access at all hours to a representative. However, interaction with some of the smaller online banks can be more difficult as it is ordinarily limited to business hours in their area of operation.
  • You cannot get cash or cashier's checks instantly as you can in a branch bank, and matters where you need to rely on the US Postal system can lead to significant delays and obstacles.
  • There is no opportunity to build a relationship with a banker should you need a loan or additional services in the future.

What is the best account for easy access?

Depending on where you live and how accessible the branch is, you may find that the best account for easy access is through a local bank or credit union. However, today many high yielding savings and money market accounts provide such easy accessibility, including through mobile apps, and can enable such easy transfers to a correspondent account at a local bank through ACH transfers, that more and more people are opening accounts for cash and savings that they do not need immediately.

Is a high-yielding online savings account your best option?

High-interest savings accounts are always an ideal place to keep your emergency fund or any money to which still you need ready access. Your money will be safer than if you stuffed it under your mattress, and it will grow a bit, too. Investors will find that keeping large amounts of money in savings and CDs provides them with lower returns but cushions them against market crashes like we experienced in 2000 and 2001 and again in 2008 and 2009.

To see how savings and money market accounts compare with CDs or time deposits and bonds, view the BestCashCow income guide here.

Frequently Asked Questions About Online Savings Accounts

What is a savings account?

A savings account is one of the simplest types of bank accounts. It allows you to store cash securely and earn interest on your money.

What is a money market account?

The differences between a savings account and a money market account are largely arcane. Some savings accounts are limited by US federal regulations to six outbound transfers per month (the bank may allow additional access for a fee). Money market accounts are technically not bound by those limitations and offer more ways to access deposits by issuing checks and debit cards. Prudent consumers will compare the two interchangeably, focusing primarily on rates and service among FDIC-insured banks (or NCUA-insured, for credit unions). Consumers who maximize their use of online savings and money market accounts access these accounts through ACH transfers that are easily set up on the online bank’s website so the additional ways to access deposits that money market accounts offer are rarely valuable.

How to Open a Savings Account?

The process of opening an online savings account or money market account is usually very simple. Banks ordinary ask you a few questions to verify your identify. These questions include seeking information from a state or government issued ID, such as a driver’s license. Due to increased US anti-money laundering rules and Department of Homeland Security requirements, it is very likely that you will also be asked to produce a photocopy of your license and a picture taken from your iPhone or other smartphone and emailed to the bank will ordinarily suffice. The bank may ask for information regarding a correspondent account from which you intend to have them draw the money to provide the initial funding. You therefore will need the ABA number and account number from an existing account that you have. They will verify this account by having you log back in to confirm the amounts of one or two small deposits to your correspondent account before they draw the funds from this account. Finally, many banks do a “soft” credit pull from Experian, Equifax or some other credit rating agency. While your credit rating will ordinarily not be affected, the application process may involve your answering questions about where you have lived, loans you may have had, past employers or cars you may have owned. Many people do not enjoy providing the amount of personal information required over the internet; therefore, some of the larger online banks have 24-7 customer service to guide you through the process. You can see the experiences of others with a given online savings bank that you are considering by reviewing the comments left in BestCashCow’s table above.

Are online savings rates always better than rates at brick-and-mortar banks?

No. Online banks often offer higher savings and CD rates because they have lower expenses by not having to maintain brick-and-mortar locations. You should also check rates at local banks and credit unions. Unlike other websites, BestCashCow.com compiles all of these rates, listing them in an unbiased manner that shows the proximity of each bank or credit union to you. Please access these rates using the tabs above.

Why do savings rates vary so much?

Even though rates are at levels that are historically very low, there is competition for your money. Like any active marketplace, there are buyers and sellers of goods and services at different prices.

How do I choose the right savings or money market account?

Begin your search with the table here on BestCashCow.com. In addition to checking online savings rates, you should also check local bank rates and local credit union rates.

What is the Best Fixed Rate Savings Account?

BestCashCow strongly encourages people to avoid very short-term promotional rates. The very nature of a savings or money market account is that the rate can change from one day to the next. Savings rates may be guaranteed not to change for some very short length of time, but they are not fixed. If you require a fixed rate or greater certainty that the rate that you are making will not change, you should consider CDs, which represent a time deposit, for some or all of your savings.

Should I consider CDs?

If you are unlikely to require access to your cash for some time, you may also consider certificates of deposit (CDs). While CDs have penalties for early withdrawal that may even eat into your principal, the rates on 2, 3, 4 and 5 year CDs are ordinarily significantly higher than savings rates. CDs also offer the certainty of rate stability for the term of the CD. Several sections and articles on BestCashCow can also help you to identify your proper cash allocation between savings and CDs.

With savings rates at such low levels, does earning a higher savings rate or the best savings rate really mean anything to me?

Even a difference of a couple of basis points (hundredths of a percentage point) can really add up over time, especially on large sums of money. You may wish to familiarize yourself with the BestCashCow Savings Calculator in order to understand the importance of compounding interest at higher rates on your savings over time.

If you have not accessed the BestCashCow Savings Calculator or mastered the magic of compounded earnings, here is the plain and simple truth:
  • $250,000 deposited at a major money center bank like Chase, Citibank, Bank of America or Wells Fargo is likely earning less than 0.10% APY. That money is therefore making no more than $250 a year in interest.
  • That same $250,000 deposited at a leading online bank is earning over 1% or over $2,500.
  • Even though the increased earnings from high yield savings (in this example, $2,250 annually) is fully taxable at the federal and state and local levels, wouldn’t you like to be earning that extra income from high-yielding savings accounts?

What does APY mean?

“APY” stands for annual percentage yield. Savings rates are displayed in terms of APY to indicate the effective annual-interest return, including the compounding of interest, over the course of a single year. $100,000 deposited in a savings or CD account with a 1.20% APY will earn $1,200 in the course of the year, but monthly interest in the first few months may be less than $100 a month (this also depends on the number of days in the month). Hence, the APY rate is ordinarily a couple of basis points above the real interest rates. Unlike with a CD, your actual APY in a savings account or money market account may vary if the rate changes.

Are you still hesitant to open a high interest-earning online savings account?

Here are some common reasons people hold off:
  • You need to make more than six withdrawals a month. Avoid potential problems by opening a high earning online money market account (some of the best rates available in the table above are actually from online money market accounts), opening a savings account at a bank which does not enforce the 6 transfer limit, tying your account to a correspondent bank’s money market account or checking account at a major money center bank (like Chase, Citibank, Wells Fargo, or Bank of America) where you make one larger transfer each month.
  • You like having access to a physical branch. Find out what the minimum balance required to avoid fees on your account at your physical branch, then transfer the excess balances to a high yielding online savings or money market account. You’ll continue to have access to the physical interaction and services of the bank with which you are used to banking, but you will also be dramatically increasing the interest earned on cash you don’t need over time.
  • You need to deposit large sums of cash or checks in excess of the online bank’s mobile deposit limit. In this case, you need access to a physical branch. See point 2, above.
  • You want one institution to handle all of your financial matters. Most online banks do not offer mortgages, credit cards and brokerage services. There is no financial advantage to keeping all of your financial transactions in one or even a handful of institutions.

What is a health savings account?

A health savings account (or HSA) is a tax advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to this kind of account are not subject to federal income tax at the time of deposit. According to IRS Publication 969 (2016), the interest or other earnings on the assets in the account are tax free and distributions may be tax free if you pay qualified medical expenses or other expenses not covered by health insurance such as dental or vision care. Due to the tax advantages of a health savings account, these accounts should be set up separately through banks offering them (such as Chase or Bank of America) and their assets should not be comingled with a high yielding online savings account. We know of no online banks currently offering HSAs.

What is an education savings account?

Education savings accounts, such as Coverdell Education savings accounts and 529 plans, are accounts that allow family members to obtain certain tax advantages through setting aside funds for a child’s future education. 529 programs are administered at the state level and you must invest in programs they administer; Coverdell education savings accounts are move flexible (and generally follow the same rules as IRAs), however we know of no online banks currently offering Coverdell Education savings accounts.

What is a child savings account?

A child savings account is a savings account in the name of the child with a parent or guardian named as the custodian on the account until the child reaches the age of 18 or 21 (depending of the child’s state of residency). A child savings account can be a great way to teach your child the importance of saving money from a young age. More information on child savings accounts can be found here. Ally and Capital One 360 are among the few online banks offering child savings accounts.