Think of a savings account like a loan to a bank. Banks borrow the money from you to loan it to someone else. Your goal should be to maximize the rate you charge banks to borrow your money. Fortunately, the top choices are simple: online banks and credit unions offer the best returns. We've looked looked at hundreds of offers to find the best for you.
5 things to know
Make sure your deposit is FDIC insured.
All US bank deposits are insured up to $250,000; if you deposit more, then open accounts at multiple banks.
Don’t withdraw more than six times per month.
Regulation D limits the number of times you can take money out of a savings account to six.
Make sure the interest compounds daily.
Earn interest every day, so the next day you earn interest on a higher balance, which includes the interest already earned.
You don’t need a traditional branch bank for a savings account.
If you have big cash deposits or write lots of cashiers checks, then okay. But the rate difference between online banks and traditional banks is huge!
If you open a Certificate of Deposit (CD), understand how much interest you forfeit for early breakage.
The amount can be up to 6 months, by law.
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