If you have large amounts of cash in a large bank, or any bank with low savings rates, you are making less in interest than you could be and should be making. There are FDIC- insured banks that will pay you more through higher savings rates on your deposits. Take a few minutes to explore the table below that presents an unbiased list based on the best savings rates currently offered by online banks. 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!
May 28, 2017
Savings Account National Average Rate: 0.13% ?
|ONLINE BANKS||APY||Vs. Nat'l Av.||MIN|
|Receive Up to $400 Cash Bonus (See Disclosures). Member FDIC.|
|Dollar Savings Direct||1.30%||10.16x||$0||
|Cross River Bank||1.26%||9.84x||$0||Reviews|
|Purepoint MUFG Union||1.25%||9.77x||$10,000||
|My Banking Direct||1.15%||8.98x||$25,000||
|Dime Community Bank||1.10%||8.59x||$1,000||Reviews|
Valid for new accounts and new money only.
|Barclays Bank Delaware||1.05%||8.20x||$0||
|Sallie Mae Bank||1.05%||8.20x||$0||
|Goldman Sachs Bank||1.05%||8.20x||$0||
|Ridgewood Savings Bank||1.05%||8.20x||$0||Reviews|
|American Express Bank, FSB||0.95%||7.42x||$0||
|FNBO Direct||0.95%||7.42x||$1||Reviews (1)|
|Clear Sky Accounts||0.90%||7.03x||$1||Reviews (2)|
|My Savings Direct||0.85%||6.64x||$1||
|Colorado Federal Savings Bank||0.85%||6.64x||$2,500||
|Mutual of Omaha Bank||0.77%||6.02x||$1,000||Reviews|
|Capital One 360||0.75%||5.86x||$0||
|Bank of Internet||0.75%||5.86x||$100||Reviews|
|New Dominion Direct||0.70%||5.47x||$50,000||Reviews|
|CNB Bank Direct||0.26%||2.03x||$100||Reviews|
Online banks have over the last two decades 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.
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.
BestCashCow data has shown that the highest yielding online savings account rates have increased over the past year. The Federal Reserve remains committed to raising The Fed Funds Rate over the next year. This should cause leading savings rates to continue to increase through 2017, 2018 and into 2019.
The table above lists the highest online savings account rates.
The graph below shows how the average rates for online savings and money market accounts have trended over the last several years.
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.
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 High Interest Savings Account".
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.
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.
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.
Savings Rates at Most Recognized Online Banks
To see how savings and money market accounts compare with CDs or time deposits and bonds, view the BestCashCow income guide here.
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.
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 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.
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.
No. Online banks often offer higher savings and CD rates because they have lower expenses from 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.
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.
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.
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.
Even a difference of a couple of basis points (hundredths of percentage points) 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 are too lazy to access the BestCashCow Savings Calculator or to bother with the magic of compounded earnings, here is the plain and simple truth:
“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, of 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.
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 an 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.
Education savings accounts, such as Coverdell Education savings accounts and 529 plans are accounts allowed family members to obtain certain tax advantages through setting aside 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 following the same rules as IRAs), however we know of no online banks currently offering Coverdell Education savings accounts.
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.
Find out how much extra money you can earn by moving your bank money into an account that pays more.
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