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Online Savings & Money Market Account Rates 2020

Highest Online Bank Rates for Savings And Money Market Accounts - July 9, 2020

Savings Account National Average Rate: 0.12% ?

ONLINE BANKS APY? Vs. Nat'l Av.? MIN?
Sponsored Advertiser Disclosure

We are receiving multiple emails every day from readers of BestCashCow and RatesAndInfo.com, our subsidiary, who are furious about the pace of falling savings rates, money market rates and short-term CD rates.   While we are the most comprehensive and up-to-date source of these rates, we are not setting Fed policy or even having input into the rates at a single bank.(...read more in the Recent Articles section below the rate table).

Quontic Bank
1.30% 10.57x $150,000 Learn More
Vio Bank, A Division of MidFirst Bank
1.21% 9.84x $0 Learn More
First Foundation Bank
1.20% 9.76x $1,000 Learn More
SFGI Direct, a division of Summit Community Bank
1.16% 9.43x $500 Learn More
External transfers limited to $30,000 per week.
CIBC Bank USA
1.15% 9.35x $0 Learn More
Western State Bank
1.10% 8.94x $0 Learn More
Bank5 Connect
1.10% 8.94x $2,000 Learn More
Bank of Montreal
1.10% 8.94x $5,000 Learn More
Axos Bank, a division of Bofi Federal Bank
1.05% 8.54x $0 Learn More
Ridgewood Savings Bank
1.05% 8.54x $0 Learn More
Goldman
1.05% 8.54x $1 Learn More
Synchrony Bank
1.05% 8.54x $1 Learn More
Pentagon
Restrictions
1.05% 8.54x $5 Learn More
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.
ableBanking, a division of Northeast Bank
1.05% 8.54x $1,000 Learn More
TotalDirect, a division of City National Bank of Florida
1.05% 8.54x $2,500 Learn More
Rate available for new accounts only.
Amboy Direct
1.05% 8.54x $30,000 Learn More
CNB Bank Direct
1.02% 8.29x $25,000 Learn More
Discover Bank
1.01% 8.21x $0 Learn More
Promotional rate for new depositors only. Prior depositors may receive a lower rate.
Purepoint MUFG Union
1.01% 8.21x $10,000 Learn More
Heritage Bank National Association
1.01% 8.21x $230,000 Learn More
Capital One 360
1.00% 8.13x $0 Learn More
American Express Bank, FSB
1.00% 8.13x $0 Learn More
Barclays Bank Delaware
1.00% 8.13x $0 Learn More
Dollar Savings Direct, a division of Emigrant Bank
1.00% 8.13x $0 Learn More
Ally Bank
1.00% 8.13x $0 Learn More
Live Oak Banking Company
1.00% 8.13x $0 Learn More
Bank charges ACH transfer fees and routinely lowers rates for existing customers below those advertised. See reviews.
FNBO Direct
1.00% 8.13x $1 Learn More
Northern Bank Direct
1.00% 8.13x $1 Learn More
Comenity Direct
1.00% 8.13x $100 Learn More
CIT Bank
1.00% 8.13x $100 Learn More
Rising Bank, a division of Midwest BankCentre
1.00% 8.13x $1,000 Learn More
Citizens Access
1.00% 8.13x $5,000 Learn More
BankDirect, a division of Texas Capital Bank
1.00% 8.13x $10,000 Learn More
Prime Alliance Bank
1.00% 8.13x $10,000 Learn More
UFB Direct, a division of Axos Bank
1.00% 8.13x $25,000 Learn More
BAC Florida
1.00% 8.13x $100,000 Learn More
Incredible Bank, a division of River Valley Bank
1.00% 8.13x $300,000 Learn More
Sallie Mae Bank
0.99% 8.05x $0 Learn More
Bank holds inbound and outbound transfers for extended periods without paying interest. See reviews.
WebBank
0.95% 7.72x $1,000 Learn More
Transportation Alliance Bank, Inc. d/b/a TAB Bank
0.90% 7.32x $0 Learn More
Alliant
Restrictions
0.90% 7.32x $5 Learn More
Northfield Bank
0.85% 6.91x $0 Learn More
New money only.
My Savings Direct, a division of Emigrant Bank
0.75% 6.10x $1 Learn More
Rate not available in all states.
New account holders only.
TIAA Bank / Everbank
0.75% 6.10x $100,000 Learn More
EBSB Direct
0.62% 5.04x $2,500 Learn More
Amalgamated Bank
0.60% 4.88x $1 Learn More
Northpointe Bank
0.55% 4.47x $25,000 Learn More
Heritage Bank National Association
0.53% 4.31x $100,000 Learn More
Memory Bank, a division of Republic Bank & Trust Company
0.50% 4.07x $0 Learn More
Zions Bank
0.50% 4.07x $1,000 Learn More
Norwood Bank
0.50% 4.07x $10,000 Learn More
Susquehanna Community Bank
0.45% 3.66x $100,000 Learn More
OneWest Bank, a division of CIT Bank
0.40% 3.25x $100,000 Learn More
Cross River Bank
0.35% 2.85x $0 Learn More
CNB Bank Direct
0.26% 2.11x $100 Learn More
BankPurely, a division of Flushing Bank
0.25% 2.03x $0 Learn More
Promotional rate for new account holders only.
My Banking Direct, a division of New York Community Bank
0.25% 2.03x $25,000 Learn More
MainStreet Bank
0.20% 1.63x $1,000 Learn More
Clear Sky Accounts
0.15% 1.22x $1 Learn More
New Dominion Direct
0.15% 1.22x $100,000 Learn More
Dime Community Bank
0.05% 0.41x $0 Learn More
Charles Schwab Bank
0.05% 0.41x $0 Learn More
ETrade Bank
0.05% 0.41x $0 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, July 2020


Online Savings - 1.05% 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.


Online Savings – 1.00% 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.

What to watch for: Citizens Access has also been ahead of the curve in decreasing its savings rate with each 2020 Federal funds rate decrease and has become less rate competitive in recent months. All Citizens Access savings and CD products require a $5,000 minimum balance.


Online Savings Account – 1.00% 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.

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, as of 2020, Ally's savings and CDs rates are no longer competitive with its peers. 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 – 1.00% 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 become extemely competitive on both savings and CD rates.

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: Some have reported experiencing significant delays with both inbound and outbound transfers (during which time CIT makes the interest and not you). Also, CIT 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 – 1.05% 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: User reviews on BestCashCow have in the past highlighted the availability of customer service by phone, although recent reviews are uniformly negative about customer service and note that representatives cannot be reached by chat or email.

What to watch for: Synchrony is no longer one of the most rate competitive online banks. In user reviews on BestCashCow, many have expressed frustration with its deteriorating service and long delays in processing cash transfers.


Savings Account - 1.00% 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 has 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


5 Things to Consider As Savings, Money Market and Short-Term CD Rates Collapse

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

We are receiving multiple emails every day from readers of BestCashCow and RatesAndInfo.com, our subsidiary, who are furious about the pace of falling savings rates, money market rates and short-term CD rates.   While we are the most comprehensive and up-to-date source of these rates, we are not setting Fed policy or even having input into the rates at a single bank.   So, we are sorry that you opened an account at HSBC when they were offering 1.60% APY two weeks ago only to learn that you were earning 1.01% APY by the time that you had it funded.   But, as you are no doubt aware if you are paying attention to the news (not FOX news, but real news), there are people who are dealing with much greater hardships right now.

Here is what you can do with your cash going forward to try to protect yourself from savings rates that look poised to fall below 1%.

First, look at No Penalty CDs.   We’ve recommended No Penalty CDs for years.   They are a no lose situation since they lock in a rate of return, and allow you to cancel without a penalty anytime after one week.   Today, they are being offered by at least 6 banks: Ally, Marcus, Purepoint, CIT, CitizensAccess and CFG Bank.   An individual can protect their interest on up to $1.50 million in cash over the next years without going over FDIC limits.   A couple can protect up to $3 million.   See the rates on No Penalty CD and other special CD products here.

Second, consider 1-Year CDs.   Rates are probably going lower as we lead up to the election.   A 1.35% one-year CD is not attractive, but it is still better than zero.  And, remember that as rates come down, so too do the penalties for early withdrawals as they are ordinarily set in terms of three-months or six-months interest.  Some local banks and credit unions may be offering higher rates.  You should check those as well.

Third, avoid the temptation to chase much higher rates in products where the return is not guaranteed.    Anyone who ever invested in stocks like Teva, CenturyLink, GE or Kodak will tell you that dividend chasing is a fool’s game.  And, chasing structured instruments that could yield high returns but could also yield zero while impairing your liquidity is also a fool’s game.

Fourth, recognize where we are.  The Fed Funds rate is at zero and it could be there for a while.   Earning over 1% on your money is still over 1% more than zero.   And, it is important to keep your asset base growing.   The same folks who were excited about online savings accounts earning 2.50% last year when Morgan Stanley or Bank of America were offering 1.50% should recognize that the same online savings accounts are still offering spreads just as worthwhile to pursue.

Fifth, think about earning AAdvantage miles through a Bask Bank account. If you believe that you are ever going to be traveling again, then this is a good time to open an account that pays you miles instead of interest.   I wrote about Bask Bank several times here and here readers in the comment sections engaged in exercises of trying to determine the value before reaching the conclusion that the account was attractive when savings and CD alternatives were much higher.    Now that those rates have come down and Bask Bank’s offer remains the same until June 30, the opportunity is even more attractive.   $100,000 deposited for 1 year earns 100,000 miles.   BestCashCow conservatively values these miles at 1.90 cents each, but I can still find redemptions in business class seats to Hawaii and Europe where the value is well over 6 cents a point.   And, if you act before June 30, you will still be eligible for an additional 46,000 AAdvantage miles on the $100,000 balance over the next year in the form of a sign-up bonus, a feedback bonus and a balance bonus.   An additional benefit is found in the fact that Bask Bank’s 1099 will only report the miles at 0.42 cents each.

Learn more about Bask Bank's AAdvantage Miles-earning account here.

Times are tough and may get tougher, but save on!


Federal Reserve Has No Plans to Raise Interest Rates Any Time Soon

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

The Federal Reserve has left the Fed Funds rate at zero to 0.25%, and projected no plans to raise interest rates through 2022.   The good news is that it is still not considering negative interest rates in the US.

It is projecting a 6.50% decline in US GDP in 2020.

The Fed sees inflation well below its 2% objective and it sees unemployment at extraordinarily high levels so there is no pressure whatsoever to raise rates.   Meanwhile, it remains committed to using all sorts of tools involving its lending programs in order to avoid a collapse in the economy.

Against, this backdrop, it is very difficult to say that cash is exciting.   It is safe, it is stable, and it is still going to be trading at face value plus interest if the market loses half of its value as this Coronavirus-induced economic crisis continues.   But, compared with the performance of the stock market over the last several months, it is hard to make a compelling case for cash and holding large amounts of it carries the risk of a devaluation of your purchasing power.   I suggested recently that folks might want to resist the temptation to go completely into cash, even as the economy deteriorates.

There is another temptation that I also suggest that folks resist and that is the temptation to give up on cash and accept zero returns.   All major online banks are still offering yields of over 1%, and 1% is better than zero, especially when you factor in the value of compounding interest rates over time.   We received notes from lots of folks who were excited about earning 2.50% instead of 2% this time last year, and while savings and money market accounts feel like trash now, it is just as important in this environment that your cash resources are earning as much they can.   You can compare online savings rates here and you should also continue to check local savings rates where you live, here.

Savings alternatives that may preserve the value of your cash while giving you access to something else of value, instead of interest, could be particularly interesting to those whose primary goal is to preserve capital.   Bask Bank is offering an account that pays interest in the form of American Airlines AAdvantage miles at 1 point per dollar on deposit per year.   Bask Bank also offers bonuses that could total as much as 42,000 American AAdvantage points if you maintain a balance over $100,000 for over a year.   Since these bonus are due to expire at the end of June, I think that this is a good time for anyone planning to travel again in the future to look at accumulating miles through this program.   Learn more about Bask Bank's offer here.

While this remains a difficult time for savers, I’d encourage folks to look at remortgaging and home equity options, if they are at all inclined.


Savings Accounts May or May Not Be the Best Place to Be Right Now

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

Following the stock market’s incredible collapse in March and subsequent recovery, my inbox has been inundated with emails from readers writing to tell me that they are now 90% to even 100% in cash.

These emails come from people young and old, rich and poor, optimistic in their tone and pessimistic in tone.   Some include racist, conspiratorial rants as part of their justification.   Others are more rational.

I am not 100% in cash or even close.   I maintain a healthy portfolio of major pharmaceutical stocks and biotechs.   I own major technology stocks that I have no intention of selling.   But, outside of those sectors, my only exposure to equities is through Berkshire Hathaway.

Stock markets today are dramatically overvalued.   The S&P is trading at a trailing P/E of 20x.   While trailing earnings or even current earnings are not the only way to value a stock or an index, the other mechanisms take into account earnings growth and leverage.   Earnings will be down dramatically across the board in 2020 and probably into 2021, and the market is highly leveraged.   Therefore, there simply is no more favorable metric than the P/E ratio right now.

The problem with savings and money market accounts as a place to hang out is clear.   The longer that the Federal Reserve maintains the target Fed funds rate at zero to 0.25% (or lower), the more likely we are to see savings rates fall.   Over the last two weeks, virtually every major online bank lowered its savings rates by 20 basis points and it is increasingly difficult to get more than 1.30% on your savings.

Some have suggested that the outcome of the COVID-19 crisis will be a prolonged period of deflation in the US.   If we do enter a period of deflation, cash could be the single best asset to hold since it will maintain its real value ($1 tomorrow will be worth more than $1 today and commercial banking will never take your money and give you back less).

I personally do not see asset deflation in an era where the Federal government will be unable to have a balanced budget and where leverage rates are likely to need to remain very high throughout the public and private sectors.

In an environment where prices are increasing by more than what you are earning in a savings account, maintaining your money in savings accounts may not be a reliable intermediate or long-term strategy for maintaining value and purchasing power.

Savings accounts are calming and are a great place to hang out for short periods of time when the economy is going through a massive transformation.  The ability to earn a higher rate of return and maintain complete liquidity makes online savings accounts particularly interesting during this period.    But, people need to think a little more creatively about maintaining the real value of their money and that may involve investing in commodities such as gold, real estate, some equities and short or long term CDs.


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.

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