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Online Savings & Money Market Account Rates 2020

Highest Online Bank Rates for Savings And Money Market Accounts - January 26, 2020

Savings Account National Average Rate: 0.18% ?

Sponsored Advertiser Disclosure

There are very few things or people that get my attention on CNBC.   I usually find myself switching over to Bloomberg when Joe Kernen or Jim Cramer start rambling.    I guess neither were around on Christmas Eve morning because I ended up leaving the channel where it was to catch the tail end of a discussion between David Faber and Jim ( more in the Recent Articles section below the rate table).

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.
External transfers limited to $30,000 per week.
TotalDirect, a division of City National Bank of Florida
2.10% 11.48x $5,000
Brio Direct, a division of Sterling National Bank
2.05% 11.20x $25
Quontic Bank
2.05% 11.20x $100,000
Memory Bank, a division of Republic Bank & Trust Company
2.00% 10.93x $0
First Foundation Bank
2.00% 10.93x $1,000
Vio Bank, A Division of MidFirst Bank
1.95% 10.66x $0
BMO Harris Bank National Association
1.95% 10.66x $5,000
Prime Alliance Bank
1.95% 10.66x $10,000
Northpointe Bank
1.95% 10.66x $25,000
SFGI Direct, a division of Summit Community Bank
1.91% 10.44x $0
Salem Five Direct
1.91% 10.44x $100
CNB Bank Direct
1.91% 10.44x $25,000
Transportation Alliance Bank, Inc. d/b/a TAB Bank
1.90% 10.38x $0
Ridgewood Savings Bank
1.90% 10.38x $0
Northfield Bank
1.90% 10.38x $0
FNBO Direct
1.90% 10.38x $1
Bank5 Connect
1.90% 10.38x $10
Comenity Direct
1.90% 10.38x $100
Rising Bank, a division of Midwest BankCentre
1.90% 10.38x $1,000
UFB Direct, a division of Bofi Federal Bank
1.90% 10.38x $2,500
Rate available for new accounts only.
New account holders only.
BAC Florida
1.90% 10.38x $100,000
New money only.
1.86% 10.16x $1,000
1.85% 10.11x $0
Live Oak Banking Company
1.85% 10.11x $0
Western State Bank
1.85% 10.11x $0
ableBanking, a division of Northeast Bank
1.85% 10.11x $1,000
Citizens Access
1.85% 10.11x $5,000, a division of Silvergate Bank
1.85% 10.11x $10,000
TIAA Bank / Everbank
1.85% 10.11x $100,000
Cross River Bank
1.82% 9.95x $0
BankPurely, a division of Flushing Bank
1.80% 9.84x $0
Dollar Savings Direct, a division of Emigrant Bank
1.80% 9.84x $0
Discover Bank
1.80% 9.84x $0
My Savings Direct, a division of Emigrant Bank
1.80% 9.84x $1
EBSB Direct
1.80% 9.84x $2,500
Purepoint MUFG Union
1.80% 9.84x $10,000
Amboy Direct
1.76% 9.62x $30,000
Susquehanna Community Bank
1.76% 9.62x $100,000
Heritage Bank National Association
1.76% 9.62x $230,000
Sallie Mae Bank
1.75% 9.56x $0
ETrade Bank
1.75% 9.56x $0
Not available to residents of states with PNC branch locations.
Promotional rate for new account holders only.
Incredible Bank, a division of River Valley Bank
1.75% 9.56x $300,000
Banesco USA
1.71% 9.34x $100
Capital One 360
1.70% 9.29x $0
Barclays Bank Delaware
1.70% 9.29x $0
Marcus: By Goldman Sachs
1.70% 9.29x $1
Synchrony Bank
1.70% 9.29x $1
1.70% 9.29x $5
1.70% 9.29x $5
Heritage Bank National Association
1.66% 9.07x $100,000
Radius Bank
1.65% 9.02x $25,000
Ally Bank
1.60% 8.74x $0
Norwood Bank
1.50% 8.20x $25
My Banking Direct, a division of New York Community Bank
1.50% 8.20x $25,000
Clear Sky Accounts
1.49% 8.14x $1
Commercial Bank & Trust Company
1.25% 6.83x $25,000
Axos Bank, a division of Bofi Federal Bank
1.05% 5.74x $0
Zions Bank
1.00% 5.46x $1,000
New Dominion Direct
0.65% 3.55x $100,000
OneWest Bank, a division of CIT Bank
0.40% 2.19x $100,000
CNB Bank Direct
0.26% 1.42x $100
MainStreet Bank
0.25% 1.37x $1,000
Charles Schwab Bank
0.23% 1.26x $0
Kirkpatrick Bank
0.15% 0.82x $1
Dime Community Bank
0.05% 0.27x $0
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, January 2020

Online Savings - 1.70% 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.

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. Marcus does not yet have a mobile app.

Online Savings – 1.85% 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: It is also ahead of the curve in decreasing its savings rate in anticipation of each possible 2019 Federal funds rate decrease. All Citizens Access savings and CD products require a $5,000 minimum balance.

Online Savings Account – 1.60% APY, no minimum

Great For: Consistently Competitive savings 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 recently, 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, great customer support, and the ease of getting into and out of No Penalty CD products. Ally also recently offered new and existing users a 1% cash promotion for bringing new deposits.

What to watch for: Ally's savings rate is no longer competitive with its peers. Some users have expressed disappointment with long wait times in reaching customer service by phone during peak hours. Others have commented about being disappointed by Ally's aggressive cross-selling of auto loan, personal loan, credit card and online trading products.

High Yield Savings – 1.70% APY, no minimum

Great For: Stronger CD rates than most 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 very competitive on the savings side. Even though Synchrony is an entirely independent entity now and should not have exposure to GE's troubles, there may still be hidden exposure.

Highlights: User reviews on BestCashCow have in the past cited strong and consistently available customer service, although recent reviews are uniformly negative about customer service.

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 - 1.70% 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 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 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 over the last several years, and has aggressively cut its savings rate in 2019. 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

Putin, North Korea, David Faber, Jim Stewart and Your Savings and Brokerage Accounts

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

There are very few things or people that get my attention on CNBC.   I usually find myself switching over to Bloomberg when Joe Kernen or Jim Cramer start rambling.    I guess neither were around on Christmas Eve morning because I ended up leaving the channel where it was to catch the tail end of a discussion between David Faber and Jim Stewart where Faber seemed to suggest that a lot of people on Wall Street were concerned about a debilitating cyber attack on our financial institutions.

This has been bothering me more than a little over Christmas.   David Faber and Jim Stewart are serious journalists and they speak to a lot of people.   They were suggesting the type of a cyber attack where you wake up and check your bank account and it is gone --the bank’s records and its back-ups have all been destroyed.   They were not speaking about an attack where accounts cannot easily be recreated, where you log back in after a few minutes and everything is fine.

We all know that the banks – big and small – have multiple back ups, redundancies and active and passive protections.   But, we also know that Kim Jong-un needs a win.  Vladimir Putin does nothing but win and may feel newly emboldened by Moscow Mitch McConnell and the Republicans support to probe further and deeper into our society than he already has.  In either case, these guys have teams of very talented people working to disrupt our lives and our financial systems.    Either one would celebrate taking down Ally or Goldman Sachs in the same way that they celebrate Trump.

If nothing else, it seems to me that this is an awfully good time to download your latest bank and brokerage statements and to take screenshots daily of all your savings and CD account balances if you can.   If we find ourselves in a situation where everything needs to be retraced, you will be way ahead of the game.  

Financial Advice from a 50-Year Old Who Last Saw a Market Like This in 1999

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

As I turn 50, I feel it is appropriate to look back and give some advice to a 30-year old me who was encountering a crazy bullish stock market like the current one in 1999.

Twenty years ago, I had just turned 30.  I was a newly-minted MBA working in a dead-end job with GE in Connecticut.   As the Century was drawing to a close, the internet bubble was raging (in spite of Bill Clinton’s impeachment).  Having already moved most of my assets into high-flying technology and internet companies like Qualcomm and Akamai, I left my job to join a technology and telecom venture capital firm in Europe.

Everyone knows that the internet bubble popped in March of 2000 before finally hitting bottom in mid-2002.   Those years hurt many.   Fortunes were wiped clean.

But, technology is resilient and today some twenty years later it has lead the US stock market to new levels (and valuations that, in many cases, would be absurd even by 1999-levels).   And, life refreshes such that our economy is now run by 30 year-olds who sit in positions like the one I held 20 years ago.   For me, it is sometimes startling to speak with these 30-year olds who have no knowledge or understanding of what I and those like me went through some 20 years ago (they also have no knowledge of the 2008 – 2009 financial crisis).

So here, I write my advice to a younger me in the hope that maybe it will help other folks.

First, do not be afraid to take serious risks.   Quit your cushy job with some stodgy old company to work for an innovative start up or to create your own company.   You only live once.

Second, quantify the risk you are taking.   Working in a job that can deliver tens of millions of dollars in options or stock appreciation and is exciting is a bet worth taking.  But, if you are going to do that, then do what you can to pay down your mortgages, any outstanding loans you might have, and keep some cash on hand in case things go bad, because they inevitably do.   Many smart young people went from wealthy to broke in the 2000 to 2002 timeframe.   Committing to keeping 40% or more of your assets in cash will protect your lifestyle and save you years of anguish.

See the best online savings rates today.

Third, if you feel the need to stay heavily in the market all the time, then diversify, diversify and then diversify some more.   If you just made a fortune on your company’s public listing, you may not want to sell but don’t become so wedded to the story that you start buying more at crazy prices and tons of shares in other companies in the same industry.   Semiconductor investments really worked well in 2019, but if you work in the industry and have all of your exposure there, you might want to put new money to work in a biotech fund or even an oil and gas fund in 2020 (even though a market crash will sink all boats).

Fourth, stocks do not all go to infinity no matter what Jim Cramer and the other talking heads on CNBC may say.   They are all pushing their own books and they are not experts.   In fact, one fellow on CNBC’s Fast Money has spent 2019 shorting Tesla and buying cannabis.   A monkey can throw darts better than most of these people.   Do you own research, find your own experts, and never invest in what some talking head says – even if they promise that next year JDSU or AOL is a “lock to go up 30%”.

Fifth, no matter how rosy things get, financial markets can change on a dime.   Commit to a portfolio and an asset allocation that reflects your risk tolerance levels and that you won’t need to adjust dramatically if things go seriously badly.  Ultimately, you want to be able to sit on your hands for long periods when things go south without jeopardizing your happiness and your lifestyle.

Full disclosure: The author is ending 2019 with 50% of his assets in savings and short-term CDs and 50% in equities.  He is long Qualcomm, Akamai and Tesla.

Fed Leaves Fed Funds Target Rate Unchanged at 1.50% to 1.75%, Plans to Take 2020 Off

The Federal Reserve voted unanimously today to leave the Fed Funds rate unchanged at 1.50% to 1.75%.   This move was widely expected after Chairman Jerome Powell and other Fed governors signaled that they were comfortable with where borrowing costs were after three Fed funds rate cuts this year.

In its statement, the Federal Reserve removed its earlier guidance indicating that it would increase rates once in 2020, and noted that it now does not anticipate needing to raise rates again until 2021.

Thus, loan products that are tied to interest rates, e.g., credit cards, auto loans, personal loans, and home equity lines of credit (HELOC), are now much lower than they were at the beginning of 2019 when the Fed funds rate peaked at 2.25% to 2.50%.   While, those seeking new mortgages and home equity loans could act now to take advantage of lower rates, the Fed also indicated that there is no hurry as current rates will most likely remain unchanged for much or all of next year.

You can check mortgage and home equity loan rates here.

Likewise, savings rates aren’t likely to go up anytime soon, but they also aren’t likely to fall much further either.   Those with excess cash reserves can still take advantage of short-term CD rates that offer a nice, but not necessarily great, premium over savings rates in consideration of their loss of liquidity.

Check local savings and CD rates here.     


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.)

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. 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, 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 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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