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The Best High-Yield Online Savings Accounts in September 2020

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There are no excuses for sticking with a low-rate savings account these days. High-yield savings accounts provide consumers with interest rates that are way above those offered by conventional banks. The best high-yield online savings accounts can easily earn you an APY of 0.60% or greater, while the average rate offered by a traditional brick-and-mortar bank remains at a paltry 0.06%.

If you’re still skeptical about switching to an online bank, consider the facts. Your funds are just as safe stashed with an FDIC-insured online bank as they would be with the bank branch on Main Street, and you’re likely to get better technical support with an online-only bank website and app. Many offer round-the-clock customer support and online chat features that make it easy to resolve issues without needing to visit a branch in person. Along with higher rates, you may end up saving on the cost of the account. With lower overhead costs, online banks typically charge lower fees.

Every month we review and compile the best high-yield savings account offers from online banks. Our ranking factors in features such as a higher-than-average interest rate, no minimum balance requirement, and superior ATM access.

Market update: Banks have dropped their savings rates considerably due to recent uncertainty caused by the COVID-19 outbreak. Despite interest rates declining overall, we are still seeing many of the pre-crisis top performers continuing to lead the pack in the overall best rates category.

Do you have a savings goal in mind? Tell us about it!

1. Favorite Online Package: Ally Bank – 0.80% APY

Online Savings Account from Ally Bank

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on Ally Bank’s secure website

Member FDIC

  • APY: 0.80%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Ally is a bank without branches that had been consistently paying high interest rates on savings accounts. While Ally is still offering rates way above what brick-and-mortar banks are offering, it seems this online bank no longer wants to be seen as the online bank with the most competitive rates. The current APY on Ally’s savings account is 1.00%. Although Ally has dropped its rate significantly, we still favor this online bank. It doesn’t require a minimum balance to earn the APY and, even better, you can open a free checking account (also with no minimum balance requirement). This makes access to your savings account incredibly easy – because you can transfer funds online (or via the app) and have immediate access via checks, debit cards and ATMs. With an Ally account, you will have access to their full suite of expanding (and market-leading) products such as CDs, money market account, checking account, and IRA accounts.

2. High Rate: Synchrony Bank – 0.75% APY

  • Annual Percentage Yield (APY): 0.75%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: Yes
  • App Available: Yes
Overview: Synchrony Bank pays a healthy 0.75% APY. There is no minimum balance requirement and no monthly fee. In addition to the great rate, you can get an ATM card. Most internet-only banks require you to transfer funds electronically, which can take a few days. If you ever need quick access to your funds, the ATM card makes access easy. You might not recognize the Synchrony brand in the banking space, but it is a large, well-capitalized business. Synchrony used to be a part of General Electric (GE), and was spun out as a separate company. Unfortunately, the digital experience is not the best, but they now have a mobile banking app.

3. High Rate: Capital One – 0.65% APY

  • APY: 0.65%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: A consistent rate leader for its deposit accounts, Capital One now offers its 360 Performance Savings. With a 0.65% APY on all balances and no monthly fee, you get a chance to boost your savings uninterrupted. There are no minimum balances required to open or maintain the account, either.

Capital One is able to offer higher rates and lower (to no!) fees on this online savings account compared to traditional in-branch offerings. Still, you can head to a Capital One branch or Capital One Café to open a new 360 Performance Savings account, if you prefer. You cannot use an ATM to withdraw or deposit funds, but you can visit a branch, call the bank or make your own online transfer. You can access all accounts on your mobile device through the Capital One app, as well.

4. High Rate: American Express National Bank – 0.60% APY

High Yield Savings Account from American Express National Bank

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on American Express National Bank’s secure website

Partner Offer

Member FDIC

  • APY: 0.60%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: No
Overview: Our sponsored advertiser, American Express National Bank, offers a Personal Savings account, which earns a 0.60% variable Annual Percentage Yield (APY) as of 9/21/2020. The account charges no monthly fees and requires no minimum deposit, making it an affordable account to open. You must fund your account within 60 days of applying for the account, and the FDIC insures your deposits up to $250,000. Overall, the account is a great option for anyone who wants the flexibility of earning a high interest rate on a sum of money you’ve stashed away, minus the withdrawal restrictions of a certificate deposit.

5. High Rate: Marcus by Goldman Sachs – 0.60% APY

High-yield Online Savings Account from Marcus by Goldman Sachs

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on Marcus By Goldman Sachs’s secure website

Member FDIC

  • Annual Percentage Yield: 0.60%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Our advertiser Marcus by Goldman Sachs, the consumer bank of Wall Street giant Goldman Sachs, offers a 0.60% Annual Percentage Yield on deposits. There isn’t a minimum balance requirement to earn the APY and there are no transaction fees. Upon opening the account, you can deposit funds via electronic transfer, wire transfer, or deposit by check. You can get access to your funds via electronic transfer or wire transfer.Goldman has been investing heavily in Marcus, its online consumer bank. Marcus is already offering some of the best savings accounts and personal loans in the market, and further expansion is expected. The savings account has consistently been paying one of the highest rates in the market. With a 0.60% APY, you can get one of the highest rates in the market from a well-known brand. The maximum deposit is $1,000,000 and deposits are FDIC insured up to the $250,000 limit.

Marcus is accessible both online and via the Marcus mobile app, available only in the Apple App Store.

6. High Rate: Barclays Bank – 0.60% APY

Online Savings Account from Barclays

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on Barclays’s secure website

Member FDIC

  • APY: 0.60%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Barclays is a large, old British bank, based in London and with more than 325 years of history. Although Barclays is huge in the United Kingdom, it is a challenger brand in the US. Barclays offers savings products with highly competitive rates. These deposits are used to fund their rapidly growing American credit card business. The online savings account has a 0.80% APY with no minimum balance to open and no monthly fees. Your deposits are FDIC insured up to the legal limit. The Barclays website has a good look and feel. And you can have the confidence of keeping your money with one of the world’s largest and oldest universal banks.

7. High Rate: Axos Bank – 0.90% APY

High Yield Savings from Axos Bank

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on Axos Bank’s secure website

Member FDIC

  • APY: 0.90%
  • Minimum balance requirement: $250
  • Monthly Fees: None
  • ATM Access: ATM card available upon request
  • App Available: Yes
Overview: Axos Bank was founded in 2000, known then as Bank of Internet USA. Through a couple name changes, Axos Bank has remained one of the top online banks. It offers a full suite of deposit products, from various checking accounts to certificates of deposit.

This High Yield Savings account earns its industry-leading APY on all balances, although you need $250 to open the account. Interest is compounded daily. There is no monthly fee and you can receive a free ATM card upon request.

As a digital bank, Axos Bank is accessible online and on mobile. Its mobile app includes mobile deposit. Axos Bank also offers a step-by-step Switch Kit to help you switch from your current bank to Axos.

8. High Rate: Vio Bank – 0.83% APY

High Yield Online Savings Account from Vio Bank

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on Vio Bank’s secure website

Member FDIC

  • APY: 0.83%
  • Minimum balance requirement: $100
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Vio Bank is the online division of MidFirst Bank, a national private financial institution with over $16 billion in assets. Vio Bank was recently created and is not yet as established as Marcus, Barclays, American Express, Synchrony, and Ally Bank. However, this online bank launched its High Yield Online Savings account with a strong APY (at the time of its launch) and has been consistently competitive since it launched. It’s currently offering an outstanding 0.83% APY on all balances. You only need $100 to open the account. You can fund the account via ACH.

There are a few limitations to keep in mind: incoming ACHs take anywhere between two to five business days to post and the online bank may place a hold your ACH for two or three business days. When you’re ready to transfer funds out of the account, you’ll be limited to $5,000 per outgoing ACH. You’ll also be limited to transferring an aggregate monthly total of $20,000 via outgoing ACHs. As is with every other savings account, you’ll also be limited to making six withdrawals per monthly statement cycle. The good news (aside from the high APY) is that Vio Bank doesn’t charge a monthly maintenance fee. Vio Bank also has a mobile banking app where you can conveniently manage your accounts on-the-go. Also, its website is mobile friendly so it should be fairly easy to do your online banking from a smart phone, as well. We think this online bank is very promising and hope it continues to offer one of the best savings account rates in the nation.

9. High Rate: Citizens Access – 0.80% APY

Online Savings Account from Citizens Access

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on Citizens Access’s secure website

Member FDIC

  • APY: 0.80%
  • Minimum balance requirement: $5,000
  • Monthly Fees: None
  • ATM Access: No
  • App Available: No
Overview: Citizens Access is the online division of Citizens Bank. This division was recently created to provide the best savings rates to consumers. While the online division is brand new, the bank its backed by isn’t. Citizens Bank has been around for a while and has grown to have over $122 billion in assets. While you need to deposit and maintain a minimum balance of $5,000 to earn the 0.80% APY, you’ll be funding an account that comes with no fees. If your balance happens to fall below $5,000, the APY will drop to 0.25%. One downside to this online-only bank is that they don’t currently have a mobile banking app. This means that you’ll have to do all of your banking through their website. Luckily, their website is mobile-friendly.

10. High Rate: Live Oak Bank – 0.70% APY

High Yield Online Savings from Live Oak Bank

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on Live Oak Bank’s secure website

Member FDIC

  • APY: 0.70%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Founded in 2008, Live Oak Bank offers a great spread of financial products, including its high-yield Online Savings account. The Online Savings account earns 0.70% APY on all balances. Plus, interest is compounded daily for faster savings. There’ s no minimum deposit requirement to open, either, nor a monthly fee to worry about.

In addition to online access, Live Oak Bank offers a mobile app.

11. High Rate: BrioDirect – 0.65% APY

High-Yield Savings from BrioDirect

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on BrioDirect’s secure website

FDIC Insured

  • APY: 0.65%
  • Minimum balance requirement: $25
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: BrioDirect is powered by Sterling National Bank, which is a large bank in New York with over $29 billion in assets. This online brand recently launched with a high 0.65% APY. You only need $25 to open the account and you’ll need to maintain at least this amount on a daily basis to earn the APY. This account doesn’t have a monthly service fee and can be funded via ACH, wire transfer, or check.

There are limitations to the amount of money you can transfer in and out via ACH. BrioDirect limits incoming ACH transfers to $500,000. The bank limits outgoing ACH transfers to $25,000 per transaction and a total of $125,000 per month. You are able to link as many external bank accounts as you’d like to this account. You can also initiate ACH deposits and withdrawals from other banks.

You can manage this account online or from Sterling National Bank’s mobile app.

12. High Rate: Discover – 0.60% APY

  • APY: 0.60%
  • Minimum balance requirement: None
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Although usually known for its credit cards, Discover has carved a space for itself in the deposits world with its competitive online accounts. The Online Savings Account earns its 0.60% APY on all balances. There is no minimum to open the account either. Interest is compounded daily and paid monthly.

The account is free to own. Plus, there are no fees for checks, returned deposited items, excessive withdrawal fees, stop payment orders or insufficient funds.

In addition to online access, Discover offers a mobile app for further convenience, which includes mobile deposit capabilities.

13. High Rate: Nationwide by Axos Bank – 1.05% APY

My Savings from Nationwide by Axos Bank

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on Nationwide By Axos Bank’s secure website

FDIC Insured

  • APY: 1.05%, contingent on having a My Checking account with a deposit of at least $1,000
  • Minimum balance requirement: $100
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Through this partnership, Nationwide by Axos Bank is able to offer a full suite of financial accounts and services. Axos Bank, a digital bank founded in 2000, provides these services and the FDIC insurance on deposit accounts. Mobile access is available through the Axos Bank for Nationwide mobile app on both iPhone and Android devices.

My Savings is just one of Nationwide by Axos Bank’s savings accounts and requires at least $100 to open. Its competitive 1.05% APY applies to all balances, although you’ll need to have a My Checking account with a monthly direct deposit totaling at least $1,000 to that checking account to snag the competitive savings rate. If you don’t want the My Checking account, you can still earn a solid rate of 1.00% APY. The My Savings account does not charge a monthly service fee.

14. Unique Bank + Highest Overall Rate: Fitness Bank – 1.05% APY

Fitness Savings (12,500+ Steps) from FitnessBank

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on FitnessBank’s secure website

Member FDIC

  • APY: 1.05%, contingent on taking 12,500 steps
  • Minimum balance requirement: $100
  • Monthly Fees: $10
  • ATM Access: No
  • App Available: Yes
Overview: Fitness Bank is unique and new online bank. It’s a division of Affinity Bank, which has been around since 2002 and has acquired over $318 million in assets. Affinity Bank decided to launch a concept like no other to reward actively fit individuals with the highest APY currently available. While most institutions choose to offer tiered rates based on balance amounts, Fitness Bank offers tiered rates based on the average number of steps you take on a daily basis. To earn the high 1.05% APY, you’ll need to take an average of 12,500 steps or more per day. If you only take an average of 10,000 to 12,499 steps per day, you’ll earn an APY of 0.95% (which is still a great APY). You’ll earn 0.85% APY if you take an average of 7,500 to 9,999 steps per day. Taking an average of 5,000 to 7,499 steps per day will qualify you for an APY of 0.75%. Finally, if you take anywhere between 0 to 4,999 steps on average per day, you’ll only earn 0.50%.

Fitness Bank will track your steps by requiring you to download its Step Tracker app. The bank will then calculate your average steps from the previous month to determine which tier you qualify for. Once the bank determines which rate your activity qualifies you for, you will continue earning that rate for an entire month until the bank recalculates your activity. The activity requirement will be waived for the first month so that you can get your app all set up and start logging in some steps. For this first month, you’ll automatically earn the 1.05% APY.

In terms of actual money, you will need at least $100 to open the account and you’ll need to maintain this balance to waive the $10 monthly maintenance fee. The bank does impose a limit on the amount of money you’re able to transfer in and out of the account via ACH. You cannot transfer more than $15,000 per day in or out of the account. You also cannot exceed more than six certain withdrawals or you’ll incur an excessive withdrawal fee of $10 for each additional withdrawal. In addition to the Step Tracker app, Fitness Bank has a mobile banking app to manage your account.

15. High Rate: First Foundation Bank – 1.00% APY

Online Savings Account - New Money Only from First Foundation Bank

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on First Foundation Bank’s secure website

Member FDIC

  • APY: 1.00%
  • Minimum balance requirement: $1,000
  • Monthly Fees: None
  • ATM Access: ATM card available upon request
  • App Available: Yes
Overview: First Foundation Bank officially launched in 2008, but its leadership has been in the financial services industry since 1990. This bank was established by the same group that leads the Keller Group, a wealth management firm. The bank has grown to acquire over $6 billion in assets. In October, this bank launched an Online Savings Account with a high APY of 1.00%. You’ll need to have a balance of at least $1,000 in order to open that account and you’ll need to maintain that amount in order to earn the high APY. If your balance falls below $1,000, the APY will drop. This account doesn’t have a monthly service fee.

While Regulation D applies to this account, First Foundation Bank will provide an ATM card if you request one from the bank. The bank will reimburse ATM fees from other banks and ATM operators up to $20. There is a limit to the amount of money that you can withdraw. If you’re withdrawing from an ATM, the bank sets a daily limit of $500. The daily point-of-sale limit is $1,500. If you’re transferring money online or via ACH, the daily limit is $20,000 and the monthly limit is $100,000. If you need to transfer more than the preset limits, you’re able to call the bank and request that they increase the limit. The bank allows you to maintain the account online and through their mobile banking app.

16. High Rate: TAB Bank — 0.90% APY

High Yield Savings from TAB Bank

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on TAB Bank’s secure website

Member FDIC

  • APY: 0.90%
  • Minimum balance requirement: $1
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: TAB Bank was established in 1998 to offer businesses financial assistance. Since the bank opened its doors, it’s acquired over $715 million in assets. In September 2018, TAB Bank decided to launch a High Yield Savings account, which offers a 0.90% APY. The bank doesn’t require a minimum amount to open the account, but you must maintain a daily balance of $1 to earn the APY.

You can fund the account via ACH, wire transfer, or check. You’re able to manage the account online or via TAB Bank’s mobile app.

17. High Rate: ConnectOne Bank – 0.90% APY

OneConnection Savings - Online from ConnectOne Bank

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on ConnectOne Bank’s secure website

Member FDIC

  • APY: 0.90%
  • Minimum balance requirement: $2,500 min to earn
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: With locations in New Jersey and New York, ConnectOne Bank’s best savings offering lives online. The free OneConnection Savings account requires at least $2,500 to open. It earns its competitive 0.90% APY on balances from $2,500 to $250,000.99. Balances above that earn a 0.30% APY instead.

Deposits into this online account can be made through the Remote Check Deposit feature on the bank’s mobile app, online funds transfers, direct deposit and checks or cash at a location. Withdrawals can be made by online funds transfers or by requesting a check to be sent to you.

18. High Rate: SFGI Direct – 0.81% APY

  • APY: 0.81%
  • Minimum balance requirement: $1
  • Monthly Fees: None
  • ATM Access: No
  • App Available: No
Overview: SFGI Direct is Summit Community Bank’s online division. They currently have more than $2 billion of assets and is privately owned by Summit Financial Group, Inc. SFGI is FDIC insured through Summit Community Bank, so deposits are protected up to the legal limit. They are currently offering a good rate of 0.81% on balances of $1 or greater. You’ll have to deposit a minimum of $500 in order to open the account, but you can’t make an initial deposit greater than $25,000. After you make your initial deposit, you’re able to add as much money as you’d like to the account.

While they do offer a good rate on an online savings account, their online experience is lacking. Their website feels dated and they don’t appear to have a mobile banking app.

19. High Rate: Amboy Direct – 0.70% APY

Personal eSavings Account from Amboy Direct

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on Amboy Direct’s secure website

Member FDIC

  • APY: 0.70%
  • Minimum balance requirement: $3,000
  • Monthly Fees: None
  • ATM Access: No
  • App Available: No
Overview: Established in 1990, Amboy Direct is the online banking arm of New Jersey-based bank Amboy Bank, itself founded back in 1888.

The eSavings account’s top 0.70% rate is reserved for balances from $3,000 to the maximum balance allowed on the account, $100,000. Balances of $300 to just below $3,000 will still earn a 0.30% APY, while any balances below that do not earn interest. You’ll need at least $100 to open an account, but there’s no monthly fee to worry about.

Amboy Direct accounts are accessible only online; there is no mobile app.

20. For Small Balance Savers: Digital Federal Credit Union – 6.17% APY

  • APY: 6.17%
  • Minimum balance requirement: Deposits up to $1,000 earn APY
  • Monthly Fees: None
  • ATM Access: No
  • App Available: Yes
Overview: Digital Federal Credit Union (DCU) currently offers a nice account for people who are just starting to save. You can earn an APY of 6.17% with their Primary Savings Account. You will only earn that rate on deposits up to $1,000. Once you have more than $1k, you should consider other accounts on this list. It is a credit union – and your deposits are insured by the NCUA up to the legal limit.

Anyone can join the credit union by donating to one of their participating organizations such as Reach Out for Schools, which has a membership fee of $10. You’ll be able to join one their participating organizations when you go to open your account with DCU. DCU is also part of a nationwide CO-OP network that allows their members to have access to shared branches and surcharge-free ATMs throughout the U.S.

MagnifyMoney’s best savings accounts for September 2020

To recap, here are our top picks of the Best Savings Accounts for September 2020.

To find the best savings accounts overall, this list is updated weekly to stay on top of the best savings account choices that have consistently offered top savings account rates over the past two years.

The Best Savings Accounts in September 2020 Overall

Institution

APY

Bank Review

Ally Bank Online Savings Account

0.80% APY

Ally Bank Review

Synchrony Bank High-Yield Savings Account

0.75% APY

Synchrony Bank Review

Capital One 360 Performance Savings

0.65% APY

Capital One 360 Review

American Express National Bank Personal Savings


0.60% APY

American Express Review

Marcus by Goldman Sachs High Yield Online Savings

0.60% APY

Marcus by Goldman Sachs Review

Barclays Bank Online Savings Account

0.60% APY

Barclays Bank Review

Nowadays, the best savings accounts are often found online. New online savings accounts from online banks or even established banks looking to get in on the high-yield action blow traditional savings account rates out of the water. This list is updated weekly to reflect the latest and greatest online savings accounts with consistency over the past two years.

The Best Online Savings Accounts in September 2020

Institution

APY

Bank Review

Axos Bank High Yield Savings Account

0.90% APY

Axos Bank Review

Vio Bank High Yield Online Savings Account

0.83% APY




Vio Bank Review

Citizens Access Online Savings Account

0.80% APY

Citizens Access Review

Live Oak Bank Savings Account

0.70% APY

Live Oak Bank Review

BrioDirect High-Yield Savings Account

0.65% APY

BrioDirect Review

Discover Online Savings Account

0.60% APY

Discover Review

In today’s fluctuating-rate climate, the best high-yield savings accounts can change from day to day. We stay on top of them for you and list the highest earning savings accounts from this month below.

The Best High-Yield Savings Accounts and Rates in September 2020

Institution

APY

Bank Review

Nationwide by Axos Bank My Savings

1.05% APY

Nationwide by Axos Bank Review

Fitness Bank Savings

1.05% APY

Fitness Bank Review

First Foundation Bank Online Savings Account

1.00% APY

First Foundation Bank Review

TAB Bank High Yield Savings

0.90% APY

TAB Bank Review

ConnectOne Bank OneConnection Savings

0.90% APY

ConnectOne Bank Review

SFGI Direct Savings Account

0.81% APY

SFGI Direct Review

Amboy Direct eSavings

0.70% APY

Amboy Direct Review

Why trust us?

At MagnifyMoney, it is our mission to inform our readers about the best financial opportunities out there. Our insights have been cited by top financial publications including Marketwatch, CNBC and the Wall Street Journal.

Our dedicated team of financial experts spends dozens of hours grading online savings accounts according to their interest rates, fee schedules, extra features, minimum balance requirements and accessibility, adjusting our rankings as banks and their offerings change on a weekly basis.

We distilled our picks from a list that included hundreds of banks, credit unions and online institutions nationwide.

Our methodology for picking the best high-yield savings accounts

To find the best high-yield online savings accounts, MagnifyMoney looks at over 6,000 financial institutions each week, from small community banks and credit unions to traditional brick-and-mortar banks to new online banks.

  1. Savings account rates: We heavily weighted the APYs offered by each bank in terms of both magnitude and consistency. Higher savings rates were prioritized over lower rates. Due to the variable rates on savings accounts, we also gave additional consideration to banks that were known to maintain competitive rates over longer periods of time.
  2. Minimum deposit and balance requirements: To ensure accessibility to all customers, we focused on banks that welcome deposits of all sizes, where the ideal banks in this category have minimum balance and deposit requirements of $0.
  3. Bank account fees: Unnecessary fees can eat into your long-term savings in a major way. Banks that offered low or no fees were given priority in this category over banks that are known to charge account maintenance fees, service charges and other surcharges.
  4. Customer service: We considered overall customer satisfaction and bank reputation when weighing each bank performance in this category. While each customer’s experience varies, we looked at relative feedback each bank received at the national level based on data sourced from consumer advocates like the Consumer Financial Protection Bureau (CFPB) and the Better Business Bureau. Banks that failed to meet minimum standards of performance were excluded.

What should I know about high-yield savings accounts?

It’s easy to take your savings account for granted, setting up automatic deposits and forgetting about it. But there’s a lot more to high-yield savings accounts that you should know.

For one, you can find consistently more competitive rates at online banks than with your typical big bank. Online banks are also more fee-friendly — although there are still some legal limitations you should be aware of to avoid extra fees.

What is a high-yield savings account?

A high-yield savings account, also known as a high-interest savings account, is a savings account that earns interest at a higher rate than a traditional savings account. The average savings account interest rate tends to hover around 0.20% APY, but big brick-and-mortar banks often offer interest rates more like 0.01% APY.

High-yield savings accounts raise the bar and offer upwards of 1% to 2% APY — sometimes even 3% APY in good rate conditions. High-interest savings accounts are also more likely to come with added benefits like little to no fees, especially when offered by an online bank.

How much interest will I earn with a high-yield savings account?

When you open a high-yield savings account, you’re almost guaranteed to earn more in interest than with a traditional savings account.

For example, let’s say you have $5,000 to deposit into a savings account. If you choose a high-interest savings account with a 2.30% APY, for example, you’ll earn $116 and some change in a year, provided you don’t make any additional contributions to the account in that time (which would boost your savings even more).

If you deposit your $5,000 into an average savings account at 0.20% APY for a year, you’ll earn just $10 in interest. It’s a pretty big difference in earnings, and all it takes is a simple account switch.

Even in a low-rate environment, where a high-yield savings account might be earning 1.30%, for example, you’ll still make about $65 in interest, which is still well over the $10 average earnings from a traditional savings account.

Does the APY for high-yield savings accounts change?

Savings accounts are variable-rate accounts, so their rates are subject to change — and they will over the course of an account’s lifetime. This is in contrast to fixed-rate savings vehicles, like CDs, which have set rates for predetermined periods of time.

There is no universal answer for how often interest rates change on high-yield savings accounts, since each institution has its own policies and decisions. However, you can often expect an institution to change its savings account rates about once a month at least. This change typically happens at the beginning of the month.

High-interest savings accounts are also more likely to see changes in their APYs than traditional low-rate savings accounts, because high-interest accounts have more room to change. Traditional savings account rates can only go so low, especially since many of them are already bottomed out at 0.01% APY.

How to choose the best high-yield savings account

  • Start by finding the highest APY
  • Check whether the institution is consistent with its high rates
  • Look for a no-fee account
  • Confirm any account balance minimums

When you’re looking for the best high-yield savings account, it’s tempting to go straight for the highest APY you can find. That account will certainly offer the highest yield at the moment, but there’s also more to it than that. Unless you’re okay with the possibility of switching accounts periodically to chase the highest rates, it may help to find an account offered by an institution that consistently offers some of the most competitive savings account rates. We’ve started our roundup above with those accounts, offered by consistent industry-leaders over the past two years.

But high yields may mean nothing if you lose your earnings to fees, so the best high-interest savings accounts out there are also the ones with little to no fees. Look for accounts with no monthly service fees, no overdraft fees and/or no excessive transaction fees. This will help you keep your savings intact.

You’ll also want to choose a high-yield savings account that works within your existing finances. Some accounts may impose minimum deposit or balance requirements to open and keep the account. We think the best high-interest accounts are the ones that require low or $0 minimums, which makes the account much more accessible to savers. But, if you have a high balance and find a savings account that offers a higher rate for high balances, then you can go for that account if it better fits your needs.

How do I open a high-yield savings account?

In most cases, opening a high yield savings account is as easy as clicking a button on the institution’s website and completing a short application form. You will likely be approved for the account right away.

A savings account application will likely require your name, home address, email address and Social Security Number. If the account requires a minimum deposit at opening, you’ll also likely have to link an external account at this time. Otherwise, you may make your initial deposit after opening, often within a 30- or 60-day window.

If you have a rocky banking history, like previous negative balances or circumstances where the institution closed your account, your application for a high-interest account may be denied. You can check out your recorded banking history with ChexSystems, a reporting system that many banks use. If there are any errors or points of contention, you may be able to dispute an item in your ChexSystems report.

What should I use a high-yield savings account for?

You can use a high-yield savings account for a variety of reasons and savings goals. You can use it as your emergency fund, where you stash your cash for a rainy day, for example. Perhaps you want to use a high-interest savings account to boost your savings toward your next vacation or your kid’s college education.

Luckily, many institutions allow you to have several savings accounts at a time, meaning you can save toward separate goals simultaneously without ever getting your wires crossed.

Should I get an online savings account?

An online savings account is your best bet for obtaining the highest interest rate available. Online banks lack the costs associated with maintaining brick-and-mortar branches, and they generally pass the savings onto you in the form of better interest payouts. And like we’ve said, if your money is going to sit in an account, you might as well make it worth your while by growing it at a competitive rate.

Online savings accounts generally feature superior accessibility. Online banks are laser-focused on offering the best possible and most user-friendly app experiences. There’s often 24/7 customer service, and they tend to provide very good ATM access. When shopping for the best savings account to suit your needs, make sure you include a good mix of online banks offering high yields, brick-and-mortar banks and credit unions in your search.

What impacts savings rates?

Institutions typically alter their rates in response to changes in market interest rates, which are in turn driven by the federal funds rate set by the Federal Reserve. The federal funds rate influences the rates banks lend money to each other. When the Fed increases the federal funds rate, financial institutions respond by increasing the interest rates they offer on deposit accounts. When the federal funds rate falls, interest rates decrease.

If you’re not keen on tracking the federal funds rate, changes to the APY on your savings account may come as a surprise. Luckily, chances are that if you keep your deposits with an online bank, you’ll still get the most competitive rates regardless of a Fed pause or rate decrease. Online savings accounts outperform most brick-and-mortar rates any day.

What are the best banks for high-yield online savings accounts?

Here’s a summary of our top picks:

  • 0.60% APY – Marcus by Goldman Sachs
  • 0.75% APY – Synchrony Bank
  • 0.60% APY – American Express National Bank
  • 0.65% APY – Capital One
  • 0.80% APY – Ally Bank
  • 0.60% APY – Barclays Bank
  • 0.83% APY – Vio Bank
  • 0.90% APY – Axos Bank
  • 0.70% APY – Live Oak Bank
  • 0.80% APY – Citizens Access
  • 0.60% APY – Discover
  • 0.65% APY – BrioDirect
  • 1.00% APY – First Foundation Bank
  • 1.05% APY – Nationwide by Axos Bank
  • 1.05% APY – Fitness Bank
  • 0.81% APY – SFGI Direct
  • 0.75% APY – Prime Alliance Bank
  • 0.60% APY – Comenity Direct
  • 0.90% APY – ConnectOne Bank
  • 6.17% APY – Digital Federal Credit Union

Savings Account FAQs

There is nothing inherently unsafe about a high-yield savings account. As long as you make sure you’re depositing your money into an FDIC-insured bank or NCUA-insured credit union, your money will be insured up to legal amounts in case your institution fails.

You may also want to double check an institution’s security measures before signing up for an account. Check whether their website and information is protected by encryption and firewalls. Reputable institutions will also include anti-virus and anti-fraud measures. Other protections include biometric logins (fingerprints or face match), two-factor verification and security questions.

There is often not much difference between high-interest savings accounts and money market accounts. A money market account is a type of savings account that also tends to have higher rates than traditional savings accounts.

Some money market accounts set themselves apart by offering a debit or ATM card and/or check-writing capabilities. These accounts offer further accessibility to your money. However, money market accounts still fall under the six-limit “convenient” transaction requirement, like regular savings accounts.

High-yield savings accounts are taxed like regular savings accounts. However, your earnings from a high-interest savings account are more likely to be taxed, as you are more likely to be earning more in that account than a traditional low-rate account.

Savings account earnings are taxed if you make $10 or more. Regardless of your earnings, your institution should send you and the IRS a copy of Form 1099-INT, which details the interest you’ve earned in a year. Even if you don’t receive that form, the IRS will, and they will expect you to report your interest income on your tax return.

If you earn $1,500 or more in interest income in a year, you will also need to detail those sources of income on Schedule B of Form 1040.

Thanks to the Federal Reserve’s Regulation D, you can withdraw up to six times per statement cycle from a high-yield savings account, like any other savings account. This includes pre-authorized and automatic withdrawals and transfers, and transfers made by debit card, check or other similar ways.You can get around this limit by performing “less convenient” withdrawals, like those made in person at the bank or ATM. Exceptions to the rule also include withdrawals and transfers requested by mail and those initiated over the phone if you receive the withdrawal as a mailed check.

Online banks don’t incur the costs of maintaining brick-and-mortar branches. These costs include rent, building maintenance, staff salaries and the cost of keeping physical cash safe. Without these expenses weighing them down, online banks reap big savings — savings they then pass on to their customers in the form of high interest rates.

74% of Americans don’t know online-only banks generally offer better savings rates

A new survey by MagnifyMoney has found that Americans largely misunderstand online savings accounts and the financial opportunities they offer.

Key findings

  • 74% of Americans don’t know online-only banks typically offer higher interest rates than traditional brick-and-mortar banks.

    • Additionally, 16% believe online-only banks charge more fees than traditional brick-and-mortar banks, which is generally false. To see our picks for the best high-yield online savings accounts, scroll up.
    • Another 11% believe money deposited in an online bank isn’t insured, which is most often untrue. All the online banks listed above — and more — are FDIC insured. Even many fintechs and neobanks offer FDIC insurance on their cash management accounts, via partner banks.
  • Just over 143.3 million consumers are likely missing out on higher interest rates for their savings by not banking with online-only financial institutions. Of those without an account, complacency is the primary reason, as 55% are satisfied with their brick-and-mortar bank.
    • Less than half of Americans (44%) have an account with an online-only bank. Their main reasons for the switch are better interest rates (30%), fewer fees (28%) and recommendation by a financial advisor (27%).
  • Who’s most likely to have an online-only savings account? Generation Xers (61%), those earning $75,000 or more a year (58%), college graduates (57%) and men (57%).
  • More than 44% of respondents fear online banking puts them at risk for data breaches, while 40% are concerned hackers will have an easier time accessing their data. Still, of those without an online bank, just 19% said it was because they don’t trust the bank with their money.

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,029 Americans, with the sample base proportioned to represent the overall population. The survey was fielded on Aug. 25, 2020.

For the purposes of our survey, generations are defined as the following ages in 2020:

  • Generation Z: 18 to 23
  • Millennial: 24 to 39
  • Generation X: 40 to 54
  • Baby boomer: 55 to 74
  • Silent generation: 75 and older

While Gen Z and the silent generation were surveyed — and their answers were factored into the overall percentage totals among all respondents — they were omitted from generational comparisons, due to the low sample size among both groups.

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You can learn more about how our site is financed here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Earning Interest

The Best CD Rates – September 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you’re looking for a better yield on your savings and have time to burn, a high-rate CD at an online bank would be a great option. With a CD, you agree to lock up your funds in an account for a specific period of time, and in return the bank offers a higher yield than you’d find on a standard savings account. If you’re not keen on the idea of completely locking your money away for a set amount of time, you may want to consider a no-penalty CD. These accounts give you the benefit of locking down a rate for a set amount of time without requiring you to lock in your money for the length of the term.

CDs are often seen as the next level up after savings for that reason. If you’ve maxed out your savings account with enough funds to see you through the next year or so, it can be wise to start shoveling savings into a CD to maximize your returns.

For the best CD rates in the industry, check out online banks. They tend to offer much better interest rates than traditional banks, thanks to the lack of typical brick-and-mortar costs.

For example, let’s say you find a 12-month CD at a big brick-and-mortar bank that requires a $1,000 minimum deposit and pays 0.05% APY. If you were to open that account with just the minimum, you’d earn 50 cents after a year. Even a bigger deposit of $10,000 would only yield $5 at maturity.

At an online bank, on the other hand, you could earn 2.80% often with a minimum deposit of $1,000. Opening the account with $1,000 would yield $28, while a $10,000 deposit would earn $280 in a year, a much better return on your money no matter how you look at it. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).

Check out MagnifyMoney’s top picks for the best CD rates below.

Do you have a savings goal in mind? Tell us about it!

The best CD rates for September 2020

To find the best CD rates, we look for the banks that consistently offer competitive CD rates month over month. This list is updated weekly and the rates are organized by 1-year rates from highest to lowest. Here are the accounts from top banks with consistently competitive CD rates:

6 months – 6 years: Marcus by Goldman Sachs – 0.45% APY – 0.90% APY; $500 minimum deposit to open

High-yield 12 Month CD from Marcus by Goldman Sachs

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on Marcus By Goldman Sachs’s secure website

Member FDIC

Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive annual percentage yields (accurate as of 7/9/20). Even better: there is only a $500 minimum deposit. So, if you don’t have enough money to meet the minimum deposit of the other banks on this list, or you are looking for another bank for your savings, GS is a good option. It also doesn’t hurt that they also offer some of the best CD rates in the market today. Here are their rates:

Term

APY

Minimum Deposit Amount

6 months

0.45%

$500

9 months

0.55%

$500

12 months

0.85%

$500

18 months

0.85%

$500

24 months

0.85%

$500

3 years

0.85%

$500

4 years

0.85%

$500

5 years

0.90%

$500

6 years

0.90%

$500

3 months – 5 years: Ally Bank – 0.20% APY – 1.00% APY; $0 minimum deposit to open (higher APY with higher deposit)

12 Month High Yield CD from Ally Bank

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on Ally Bank’s secure website

Member FDIC

Ally is one of the largest internet-only banks in the country. Ally’s former advertising campaign made it very clear: no branches = higher rates. And Ally has consistently paid some of the highest rates in the country across savings accounts, money market accounts and CDs. For savers with fewer funds, Ally is unique. There is no minimum deposit to open a CD. However, if you have more money, you’ll earn more in interest and in some cases, earn a higher APY. And one of our favorite features of Ally: they often (although not always) offer preferential rates on renewal. Far too often banks give the biggest bonuses to new customers, but Ally has done a good job of rewarding its existing customers. All deposits at Ally are FDIC insured up to the legal limit.

3-months:
  • 0.20% APY (less than $5k)
  • 0.20% APY ($5k minimum deposit)
  • 0.20% APY ($25k minimum deposit)
18-months:
  • 0.75% APY (less than $5k)
  • 0.75% APY ($5k minimum deposit)
  • 0.75% APY ($25k minimum deposit)
6-months:
  • 0.40% APY (less than $5k)
  • 0.40% APY ($5k minimum deposit)
  • 0.40% APY ($25k minimum deposit)
3-year:
  • 0.75% APY (less than $5k)
  • 0.75% APY ($5k minimum deposit)
  • 0.75% APY ($25k minimum deposit)
9-months:
  • 0.50% APY (less than $5k)
  • 0.50% APY ($5k minimum deposit)
  • 0.50% APY ($25k minimum deposit)
5-year:
  • 1.00% APY (less than $5k)
  • 1.00% APY ($5k minimum deposit)
  • 1.00% APY ($25k minimum deposit)
12-months:
  • 0.75% APY (less than $5k)
  • 0.75% APY ($5k minimum deposit)
  • 0.75% APY ($25k minimum deposit)
1 year – 5 years: Citizens Access – 0.65% APY – 0.80% APY; $5000 minimum deposit to open

Online 1 Year CD from Citizens Access

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Member FDIC

Citizens Access is the online division of Citizens Bank, N.A., aimed at providing more convenient access to better banking products. Both divisions are headquartered in Providence, R.I. Citizens Bank was founded in 1828 and as of September 2019, had $150 billion in assets.Citizens Access’ online CD accounts require a pretty high opening deposit of $5,000. However, all its terms earn at premium rates, making your savings more worthwhile. Citizens Access also offers an easy opening process to build a CD ladder with them. You’ll need to deposit at least $5,000 in each new CD, though.

When you fund any new Citizens Access CD within 10 days after opening, the bank’s CD Rate Pledge will apply, snagging you the highest interest rate offered by the bank for that CD term within those 10 days. Here are their rates:

CD TermAPY
12 months0.65%
2 years0.65%
3 years0.70%
4 years0.75%
5 years0.80%
3 months – 10 years: Discover Bank – 0.25% APY – 0.80% APY, $2,500 minimum deposit to open

12 Month CD from Discover Bank

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Discover Bank's website is secure

Discover is best known for cash back credit cards. However, Discover has also quietly built a leading internet bank that offers checking accounts, savings accounts and CDs. Discover has invested in a mobile banking app and strong on-shore customer service.Although Discover does not always have the highest rate, it is very close (within basis points) across all durations. If customer service and digital tools (like apps) are important to you, Discover is an excellent consideration. Note: you can even get a CD rate with a duration as short as 3 months. However, you would be better off opening a high yield savings account if you plan on saving the money for less than a year.Keep in mind that all CD terms come with an early withdrawal penalty if you choose to withdraw money before your maturity date. If your Discover CD is less than one year, the penalty is worth three months of simple interest. If the term is between one to three years, the penalty is worth six months of simple interest. Four-year CDs have a penalty that is worth nine months of simple interest. Five year CDs have a penalty that is worth 18 months of simple interest and seven to 10-year CDs have a penalty that is worth 24 months of simple interest.

CD TermAPY
3-months0.25%
6-months0.45%
9-months0.55%
12-months0.60%
18-months0.60%
2-year0.65%
30-months0.70%
3-year0.70%
4-year0.70%
5-year0.80%
7-year0.80%
10-year0.80%
1 year – 5 years: Barclays Bank – 0.40%0.40% APY, no minimum deposit to open
Barclays is one of the oldest banks in the world. Although they’re based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they’re offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don’t require a minimum balance to earn the APY or open an account. Deposit as little or as much as you’d like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.

CD TermAPY
1-year0.40%
2-year0.40%
3-year0.40%
4-year0.40%
5-year0.40%
1 Years – 5 years: Quontic Bank – 1.02% APY – 1.28% APY; $500 minimum deposit to open

12 Month CD from Quontic Bank

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Online bank Quontic Bank offers a wide range of CDs, with term lengths from one year to five years. Currently, its 1-year CD doles out an APY of 1.02%, although its crown jewel is its 5-year CD, which has a high APY of 1.28%. There is a minimum deposit of $500 required for this product.

CD TermAPY
1-year1.02%
3-year1.17%
5-year1.28%
6 months – 5 years: Pen Air Federal Credit Union – 0.60% APY – 1.35% APY; $500 minimum deposit to open

3 Month CD from Pen Air Federal Credit Union

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NCUA Insured

Pen Air Federal Credit Union offers a slew of certificates of deposit, with term lengths ranging from just three months to 60 months. Its 12-month CD is certainly worth highlighting, with its 1.00% APY. There is a minimum deposit of just $500 required for this account.

Membership to Pen Air Federal Credit Union is open to anyone who also joins the Friends of Navy-Marine Corps Relief Society. Although Pen Air only has physical locations in Florida and Alabama, it offers its products online, nationwide

Term

APY

6 months0.60%
1 year0.90%
3 years1.15%
5 year1.35%
6 months – 5 years: Commuintywide FCU – 1.00% APY – 1.20% APY; $1,000 minimum balance

12 Month Share Certificate from Communitywide Federal Credit Union

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on Communitywide Federal Credit Union’s secure website

NCUA Insured

In exchange for a $1,000 minimum deposit, Communitywide’s 12-month share certificate earns a 1.00% APY. One great feature is flexibility regarding your dividends, which may be compounded in the certificate, deposited to another share certificate, or transferred to another account. Another feature to understand is that there is no automatic renewal of Communitywide’s share certificates, which could be a good thing for savers who like to be reminded to survey the best rates available before rolling over their investments.

For over 50 years, Communitywide Federal Credit Union has provided banking services to the citizens of northern Indiana, and now a completely revamped online and mobile portal brings its great rates to you, wherever you are. Membership in Communitywide FCU is open to members of the Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley, as well as employees of over 40 companies in the central Midwest region.

Term

APY

6 Months

1.00%

12 Months

1.00%

60 Months

1.20%

6 months – 5 years: Primary Bank – 0.45% APY – 1.30% APY; no minimum balance required

6 Month CD from Primary Bank

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on Primary Bank’s secure website

Member FDIC

Primary Bank was established in 2015 and is headquartered in New Hampshire. The bank has acquired over $255 million in assets. If you’re interested in opening a 1-year CD with this bank, you won’t need a specific deposit amount. The bank also doesn’t have a balance requirement to earn the 0.95% APY. The bank may impose an early withdrawal penalty if you choose to withdraw from the principal early, but you’ll have to contact the bank to learn about the penalty.

Term

APY

3 Years

1.10%

4 Years

1.20%

The best no-penalty CD rates

No-penalty CDs are unique because these accounts allow customers to withdraw from their CD without incurring an early withdrawal penalty. These CDs are an attractive offer to customers as it provides no risk if they choose to withdraw their money early. Here are some of the best no-penalty CD rates that are available nationwide:

7 months – 13 months: Marcus by Goldman Sachs – 0.75% APY – 0.55% APY; $500 minimum deposit to open

7 Month No-Penalty CD from Marcus by Goldman Sachs

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Member FDIC

Similar to its regular CDs, you only need a minimum of $500 to deposit into Marcus Goldman Sachs’ no-penalty CDs. This makes these CDs highly attractive to customers with smaller deposits. If you choose to open one of these CDs, you’ll only be locked in for seven days after you fund the account. After the seventh day, you’re free to withdraw your funds, but keep in mind that you’ll need to withdraw the full amount.

These CDs are an excellent option if you want your money to remain liquid or if you want to invest your money into an interest-earning account for a short amount of time. One thing to note is that the 7-month no-penalty CD has a much higher rate than the regular 6-month CD (0.75% APY vs 0.45% APY). The high APY makes Goldman’s 7-month no-penalty CD a fantastic option if you want to earn interest in a short amount of time. Here is Goldman’s full list of no-penalty CD rates:

TermAPYMinimum balance to earn the APY
7-month0.75%
$500
11-month0.65%
$500
13-month0.55%
$500
11 months: Ally Bank – 0.75% APY – 0.75% APY; $0 – $25,000 minimum deposit to earn APY

No Penalty 11 Month CD from Ally Bank

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Unlike the other two banks that offer multiple terms, Ally Bank only offers one term on its no-penalty CD. While Ally doesn’t require a minimum deposit to open, it does reward higher balances with higher APYs. This no-penalty CD is great for low-balance individuals who want to keep their money liquid. However, if you’re okay with locking your money into a CD for 12 months, you’re better off going with Ally’s regular 12-month CD as it has a higher APY (0.75% APY vs 0.75% APY) and doesn’t have a certain balance requirement to earn that high rate.

If you still choose to open Ally’s 11-month no-penalty CD and you need to withdraw money before the terms ends, you’ll need to withdraw your funds in full and won’t be able to do so until seven days after funding the account. Here are the tiered rates for Ally’s no-penalty CD:

TermAPYMinimum balance to earn the APY
11 months0.75%None
11 months – 14 months: PurePoint Financial – 0.40% APY – 0.35% APY; $10,000 minimum deposit to open

13 Month Online No-Penalty CD from PurePoint Financial

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Member FDIC

PurePoint Financial is the online division of Union Bank. Both the parent bank and this online division are backed by financial giant, Mitsubishi UFJ Financial Group (MUFG). Under the MUFG Union Bank umbrella, this institution has acquired over $130 billion in assets. As its online division, PurePoint Financial has been able to offer its customers highly competitive rates not only in CDs, but in an online savings account.

Currently, PurePoint Financial is offering an extremely competitive rate of 0.35% on its 13-month no-penalty CD. It also offers an 11-month and a 14-month no-penalty CD, but those two accounts have lower rates than its 13-month no-penalty CD. Keep in mind that you’ll need at least $10,000 to deposit into any of these CDs. If you do choose to withdraw money from this CD before the term is up, you’ll need to withdraw the full amount. You’ll also have to wait seven days after you fund the account to withdraw any of the money. Here’s a full list of PurePoint Financial’s no-penalty CDs.

TermAPYMinimum balance to earn the APY
11-month0.40%$10,000
13-month0.35%$10,000
14-month0.30%$10,000
6 months: Investors eAccess – 0.40% APY; $500 minimum deposit to open

6 Month No Penalty CD from Investors eAccess

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Member FDIC

Investors eAccess is the online division of Investors Bank, a large bank headquartered in New Jersey that was established in 1926. The parent bank currently has over $26 billion in assets. The online division was launched earlier this year and decided to introduce itself by offering a strong rate on its inaugural product, the eAccess Money Market account. It seems this online bank is slowly offering different deposit accounts, but one thing that sticks out is that it’s offering these new products with high rates.

Currently, Investors eAccess is offering two types of CDs: a 6-month No-Penalty CD and a 10-month regular CD. The 6-month No-Penalty CD is comes with a strong 0.40% APY. You need at least $500 to open the account and you’re free to withdraw from the principal amount after the first seven calendar days from opening the account without incurring any penalties. If you choose to withdraw the full amount (including any interest earned) before the maturity date, you won’t incur any penalties, but the full withdrawal will close the account. Regardless of how much you choose to withdraw from the account, the bank will send you the funds via an official Bank Check. The check will be made out to the account owner and mailed First Class to the address on file.

TermAPYMinimum balance to earn the APY
6-month0.40%$500

The highest CD rates from banks and credit unions by term

The following banks and credit unions are currently offering the highest CD rates for each term.

Best 1-year CD rates

Best 1-year CD rate from a Credit Union: Veridian Credit Union – 1.00% APY, $1,000 minimum balance

12 Month CD Special from Veridian Credit UnionThe Veridian Credit Union is currently offering a special, 12-month CD with an attractive APY of 1.00% and a minimum balance of $1,000. If you have more cash you’re looking to stash, Veridian is also offering a special 12-month jumbo CD with a minimum balance of $100,000 and an APY of 1.05%.

The Veridian Credit Union is open to anyone who lives or works within its field of membership, which consists of all 99 Iowa counties and a select number of counties in Nebraska. Additionally, membership is open to registered users of the business payment app Dwolla.


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on Veridian Credit Union’s secure website

NCUA Insured

Best 1-year CD rate from a National Bank: Primary Bank – 0.95% APY, no minimum deposit

12 Month CD from Primary Bank Primary Bank was established in 2015 and is headquartered in New Hampshire. The bank has acquired over $255 million in assets. If you’re interested in opening a 1-year CD with this bank, you won’t need a specific deposit amount. The bank also doesn’t have a balance requirement to earn the 0.95% APY. The bank may impose an early withdrawal penalty if you choose to withdraw from the principal early, but you’ll have to contact the bank to learn about the penalty.


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on Primary Bank’s secure website

Member FDIC

Best 2-year CD rates

Best 2-year CD rate from a Credit Union: Evansville Teachers FCU – 1.04% APY, $1,000 minimum deposit

2 Year CD from Evansville Teachers Federal Credit UnionTo join this credit union, you may make a $5 donation to the Mater Dei Friends & Alumni Association. You may want to strongly consider doing so, as the 2-year CD rate offered by Evansville FCU is the best on the market in terms of APY, at 1.04%. Plus, it only requires a minimum balance of $1,000.


Best 2-year CD rate from a National Bank: BankDirect– 1.00% APY, $10,000 minimum deposit

24 Month CD from BankDirect Online bank BankDirect offers a wide range of CDs, varying in term length from 90 days to five years. Currently, its 2-year CD boasts a competitive APY of . However, there is a hefty minimum deposit of $10,000 required for this product.

BankDirect is the online division of Texas Capital Bank. It offers an array of banking products to consumers online, nationwide.


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on Signature Federal Credit Union’s secure website

NCUA Insured

Best 3-year CD rates

Best 3-year CD rate from a Credit Union: State Department FCU – 1.10% APY, $500 minimum deposit

36 Month Certificate from State Department Federal Credit UnionState Department FCU offers an array of CDs, ranging in term length of six months to 60 months. Its 3-year CD has a particularly competitive rate, with a 1.10% APY. This product requires a low minimum deposit of $500, and dividends are compounded daily.

Membership to State Department FCU is open to anyone who also joins the American Consumer Council and opens a savings account at the credit union with just $1.


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on State Department Federal Credit Union’s secure website

NCUA Insured

Best 3-year CD rate from a National Bank: United Texas Bank – 1.05% APY, $500 minimum deposit

36 Month CD from United Texas BankUnited Texas Bank offers an array of CDs ranging in term length from one month to 48 months. Its 3-year CD offers a particularly generous APY of 1.05%. There is a minimum deposit of $1,000 required for this product. Penalties may apply for early withdrawal.

While United Texas Bank only has two locations in Dallas, its products are available online, nationwide.


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on United Texas Bank’s secure website

Member FDIC

Best 4-year CD rates

Best 4-year CD rate from a Credit Union: Hiway Federal Credit Union – 1.30% APY, $25,000 minimum deposit

48 – 59 Month CD from Hiway Federal Credit Union You’ll need a $25,000 minimum deposit to snag this top rate from Hiway Federal Credit Union. Smaller deposits as low as $500 will still earn interest, just at lower interest rates. The early withdrawal penalty for this range of CDs equals 365 days’ dividends.

Hiway Federal Credit Union was founded in 1931 to serve the financial needs of Minnesota Department of Transportation employees. Today, membership is extended to members of select communities, employees of select employer groups, relatives and roommates of eligible individuals and members of the Minnesota Recreation and Park Foundation or Association of the U.S. Army.


SEE DETAILS Secured

on Hiway Federal Credit Union’s secure website

NCUA Insured

Best 4-year CD rate from a National Bank: First Internet Bank– 1.20% APY, $500 minimum deposit

48 Month CD from Hyperion BankHyperion Bank offers a large selection of CDs, with terms ranging from 30 days up to 60 months. Currently, its 4-year CD stands out for its 1.20% APY and low minimum deposit of just $500, making it one of the most attractive 4-year CDs currently available.

Based in Philadelphia, Hyperion Bank offers its products and services to consumers online, nationwide.


SEE DETAILS Secured

on Hyperion Bank’s secure website

Member FDIC

Best 5-year CD rates

Best 5-year CD rate from a Credit Union: Generations Credit Union – 1.65% APY, $500 minimum deposit

60 Month CD from Generations Credit Union Generations Credit Union offers an array of certificates of deposit, but its 5-year CD is currently one of the best of its kind, with an APY of1.65%. For this CD, there is a required minimum deposit of $500. While balances up to $49,999 will garner the 1.65% APY, balances of over $50,000 will reap an even higher APY of 2.12%.

Established in 1939, Generations Credit Union is based in Washington. Membership to Generations is open to anyone who also joins the Northwest Energy Coalition and the Northwest Credit Union Foundation, regardless of where they live.


SEE DETAILS Secured

on Generations Credit Union’s secure website

NCUA Insured

Best 5-year CD rate from a National Bank: Federal Savings Bank – 1.35% APY, $500 minimum deposit

5 Year Promotional CD - New Money from The Federal Savings Bank The Federal Savings Bank is currently featuring a 1.35% APY for its 5-year CD. There is a low minimum deposit of $500 for this product.

The Federal Savings Bank is a veteran-owned, federally-chartered bank. While the bank only has locations in Illinois, it offers its products nationwide, online.


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on The Federal Savings Bank’s secure website

Member FDIC

The cities that are most likely to use CDs for their savings

We recently looked at the 100 largest U.S. metros to find the cities with the highest percentage of households that own certificates of deposit.

Among the 100 largest U.S. metros, San Francisco came out on top, with 25.4% of households owning certificates of deposit. That’s more a little more than twice as many households, on a percentage basis, than Greensboro, N.C., our bottom-ranked city, where only 12.5% of households own CDs.

Typically, households in large cities are more likely to sock money away in CDs. Chicago, Los Angeles, New York and Washington, D.C. — among the 10 largest metros in the U.S. — all make our list of top 10 cities where people own CDs. There are some exceptions: Odgen, Utah ranks No. 4 in the nation for CD saving: 21.9% of Ogden households have CDs.

Variability in local CD rates may explain some of the differences, as the highest rates available by state can vary by as much as one percentage point. In fact, in Jan. 2019, Utah had the highest average local 1-year CD yield in the country.

Questions to ask before you open a CD

1. How are CDs different from savings accounts?

With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the rate – and the higher the penalty for closing the CD early. With a savings account, you’re limited to six withdrawals or transfers per month. Otherwise, you can empty the account at any time without paying a penalty. You can’t lock in the interest rate on a savings account, though, since the bank can change the interest rate at any time.

2. Am I better off keeping my cash in savings?

CDs work best if you’re confident you won’t need to access a certain amount of money for a specified period of time. Let’s say you have $10,000 laying around that you can safely say you won’t need to use for two years. In a high-yield savings account earning 2.45%, you would earn $496.00 over two years with annual interest compounding — and potentially even more, if your bank compounds interest more frequently. If you put that money into a 2.90% 2-year CD, you would earn $588.41 (compounding yearly) once the account matures. The extra interest income is easy money, considering the ease of opening an account online. However, if you think you might need to use the money in the next couple of months, especially if your finances are already a little rocky, a savings account is a much better idea for its better flexibility.

It’s important to note that deposit rates are a bit in flux right now, due to the uncertainty surrounding the federal funds rate (more on that below). But we’re currently seeing some high, favorable interest rates on 1-year CDs, rates that outstrip savings account rates.

If you can afford to part with the funds, “choosing a 1-year CD now does make sense rather than keeping the money in a savings account,” says Ken Tumin, founder of LendingTree-owned DepositAccounts.com. “However, it is possible that 1-year rates could go below some savings account rates.”

That’s why it’s important to compare rates before you sign up for a certain account.

Tumin also notes that there is an added tax benefit to opening a 1-year CD now over a savings account. With a 1-year CD, you can choose to have interest paid at maturity, or in 2020 on accounts opened now. Taxes would be owed on that interest for 2020, but not paid until 2021. Savings accounts, on the other hand, pay out interest each month. So a savings account opened today will generate interest income for the 2019 tax year.

3. What CD term length should I select?

The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days’ worth of interest is a typical penalty, although it can reach as high as 180 days. On 2- and 3-year CDs, a 6-month penalty is about average. The impact of the penalty on your return can be significant: if you opened a one-year CD with a 2.65% APY and closed it after six months, you would forfeit half of the interest and earn only 1.32%. You would have been better off with a savings account paying 2.25%.

The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.

Given the risk of early withdrawal penalties, it’s important that you’re completely confident that you will not need to withdraw the money early. Check that you already have enough savings in a flexible emergency fund to cover you for the next few years in the event of an accident or surprise trip to urgent care. Ask yourself whether your deposit would be put to better use paying off any debts. If you’re not completely convinced you can sock away that much money for such a commitment, go for a shorter CD term or a savings account.

As of right now, if you’re trying to jump on the best rates and have cash to stash away for years, your best bet is to lock in a 5-year CD to get the best rates possible.

“It doesn’t look like we’ll see another Fed rate hike in the first half of the year,” says Ken Tumin. “In the last month or two, we’re seeing some drops in CD rates.”

However, this downward movement looks like more of a correction being made by banks who may have boosted their CD rates too far too fast, instead of signaling the start of an industry-wide drop in rates.

“We won’t see a big drop until we see signs that the Fed will start cutting rates,” Tumin notes.

Tumin suggests finding long-term CDs with small or mild withdrawal penalties, like Ally. That way, in the event you do need to break into your funds (whether for an emergency or to move to a new, higher rate), you won’t lose the majority of your savings. So while there are still 5-year CDs out there with 3% APY and higher, you’re going to want to lock those in for the long term.

4. Should I consider my local bank or credit union?

The interest rates shown in this article are all from credit unions and online banks that offer products nationally. However, our product database includes traditional banks, community banks and credit unions.

If traditional banks offered better rates, they would have been featured in this article. Internet-only banks have dramatically better interest rates. That should not be surprising — because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates and lower fees.

If you’re worried about early withdrawal penalties, credit union CDs might be your best bet; on average, they tend to have lower penalties than banks. Pair that with high credit union CD rates, and you’ve got a winning savings combo. (Interestingly, while internet banks tend to offer the best CD rates, they also tend to assess bigger early withdrawal penalties than brick-and-mortar banks.)

How to find the best CD for you

If you don’t find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.

Even though CDs are traditionally pretty structured, you still have hundreds of options available to you. If your savings goal is years in the future, look closer at longer terms like 5- and even 10-year accounts. If you don’t quite have thousands of dollars to stash away, you can find a bank that requires a lower minimum deposit, if at all. You can also find select no-penalty CDs, which tend to be around one year long or less.

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Best Money Market Rates & Accounts – September 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

 

Reviewed By

Updated May 1, 2020

If you’re looking to save more money beyond your regular savings account, consider adding a money market account to the mix. A money market account can earn at a higher rate than a savings account, especially if you have a larger balance to deposit. Many MMAs tier their rates as well, rewarding higher balances with higher rates.

Like most deposit accounts, the rate on money market accounts has grown over the past few years, up from 0.188% APY in 2016 to 0.372% APY in January 2020. Savings account rates have also increased, but still averaged only 0.272% APY in January 2020.

You can do much better than a 0.372% APY on a money market if you’re willing to break with traditional brick and mortar banks. Opening an MMA at the bank around the corner, for example, may not yield more than 1.00% APY, while an internet-only bank might offer a rate of 2.00% APY or higher. With a rate like that, you can boost your savings by a wide margin.

If you were to put $50,000 into an MMA earning 0.04%, you would earn only $20 in interest over a year. Put that same starting amount into an online bank account at 2.00%, and you’d earn $1,000 in interest over a year.

With so many options out there, it can seem daunting to search for a new bank account with a potentially new bank. We’ve made it it easier for you by rounding up the best money market accounts out there. We searched through over 12,000 banks and credit unions to find the money market accounts paying the highest interest rates. We also looked at an account’s minimum requirements and fund accessibility.

Overall, we found that internet banks consistently beat the competition. You might not recognize all their names — new online banks are continuing to crop up — but if it’s high interest rates you’re looking for, it might be good to branch out since online banks are the way to go.

MagnifyMoney’s Best Money Market Accounts for May 2020

Here are our favorite accounts for May 2020:

The Best Money Market Rates & Accounts in May 2020

Institution

APY

Minimum Deposit Amount

Discover Bank

0.45% APY

$2,500

Ally Bank

0.50% APY

$0

Sun East Federal Credit Union

1.25% APY

$5,000

Affinity Plus Federal Credit Union

2.02% APY

$0

Prime Alliance Bank

0.75% APY

$10,000

Pacific National Bank

1.00% APY

$5,000

CFG Bank

0.90% APY

$25,000

Northpointe Bank

1.85% APY

$25,000

UFB Direct

0.40% APY

$25,000

CIT Bank

0.60% APY

$100

Virtual Bank

0.70% APY

$100

Premier Members Credit Union

2.00% APY

Up to $2,000

Do you have a savings goal in mind? Tell us about it!

1. Discover Bank – 0.45% APY, $2,500 minimum deposit to open

Money Market from Discover BankDiscover Bank has become a household name for many financial products, and its money market account is no exception. Currently, Discover is offering a 0.45% APY on its Money Market account for balances under $100,000. Balances above $100,000, though, will earn an APY of 0.50%. There is a minimum opening deposit of $2,500 for Discover’s Money Market account, but after that, there are no minimum balance fees.

2. Favorite Online Package: Ally – 0.50% APY, no minimum deposit and link to free checking

Online Savings Account from Ally BankAlly Bank is a very popular internet-only bank. If you’re able to keep a minimum daily balance of $5,000, you’ll be rewarded with a 0.50% APY. Although the interest rate on the money market account is not the highest, Ally does offer a very competitive overall package – particularly if you link the account to an Ally checking account. The checking account has no minimum balance and no monthly fee. You can link your money market account to your checking account to provide overdraft protection. Money would be transferred to your checking account with no transaction fee if you ever made a mistake. You would be able to access your money market account with your Ally ATM card, which has free AllPoint access and up to $10 of non-Ally ATM fees reimbursed every month. This money market account is a nice way to provide yourself with overdraft protection while earning interest. If you don’t need check-writing capabilities on your savings, you would still be better off with Ally’s savings account.

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on Ally Bank’s secure website

Member FDIC

The rest of these are the best money market accounts listed by APY regardless of minimum balance:

3. High Rate: Sun East Federal Credit Union, 1.25% APY, $5,000 minimum balance to earn APY

MAX-Yield Money Market Account Special - New Money (13 Month Intro Rate) from Sun East Federal Credit Union

Sun East Federal Credit Union was established in 1949 by employees of the Sun Oil Company. These employees wanted to help each other out financially and decided to do so by establishing their own credit union. Since its establishment, the credit union has grown to acquire over $634 million in assets. Anyone can become a member of this credit union by donating $10 to the Sun East Charitable Foundation. You can also qualify by your location, family members, or through employers.

Once you become a member of this credit union, you’ll be able to open the Max-Yield Money Market Account. This account is currently offering a 1.25% APY that is guaranteed for 13 months. You’ll need to maintain a balance of at least $5,000, but the balance can’t exceed $250,000. Keep in mind that after the 13-month promotional period ends, the account will turn into the Classic MMA. The Classic MMA earns a much lower APY. If you aren’t able to maintain the minimum balance of $5,000, you’ll incur a monthly fee of $10. This account does come with check-writing capabilities. You’re able to manage this account online as well as through the credit union’s mobile app.

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on Sun East Federal Credit Union’s secure website

NCUA Insured

4. High Rate: Affinity Plus Federal Credit Union, 2.02% APY, $0 minimum balance to earn APY

Superior Money Market from Affinity Plus Federal Credit Union
Affinity Plus Credit Union is a Minnesota-based credit union, but even if you do not live in the North Star state, you can take advantage of the attractive financial products they offer. Membership to the credit union is open to anyone who makes a one-time dues payment of $25 to the Affinity Plus Foundation.

Affinity Plus Credit Union offers a slew of money market accounts, but its Superior Money Market Account stands out, with a 2.02%  APY on balances up to $25,000. Additionally, there is no minimum deposit required and no monthly maintenance fees. Balances over $25,000 earn a 1.00% APY.

To earn the higher 2.02% APY, you must have a minimum direct deposit of $500 per month (which could come from payroll, Social Security or unemployment) to any Affinity Plus checking, savings or money market account, and also be enrolled in digital statements. If you don’t meet those requirements, you’ll earn 0.10% APY.

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on Affinity Plus Federal Credit Union’s secure website

NCUA Insured

5. High Rate: Prime Alliance Bank – 0.75% APY, $10,000 minimum balance to earn APY

Personal Money Market from Prime Alliance BankPrime Alliance Bank was established in 2004 and has grown to acquire over $455 million in assets. The bank is currently offering a Personal Money Market account with an APY of 0.75%. You’ll need to deposit and maintain a balance of at least $10,000 in order to earn this APY. If your balance drops below $10,000, the APY will drop to 0.75%. There aren’t any monthly fees with this account. Prime Alliance Bank will provide an ATM card if you request one. This account can be managed online or via the bank’s mobile app.

SEE DETAILS Secured

on Prime Alliance Bank’s secure website

Member FDIC

6. High Rate: Pacific National Bank – 1.00% APY, $5,000 minimum balance to earn APY

MMDA Online Special - New Money from Pacific National BankPacific National Bank has quite an interesting history. In 1982, Banco Del Pacifico Ecuador (BPE) decided to establish Banco Del Pacifico International in Miami, FL as an Edge Act bank. The Edge Act allowed national banks to do international banking through divisions chartered by the Federal Reserve Bank. By 1985, Banco Del Pacifico International decided to become a national bank charter and changed its name to Pacific National Bank. Since this change, the bank has acquired over $499 million in assets. The bank initially offered its services to South Florida residents, but decided to expand to all U.S. residents with a valid Social Security Number in 2016. Today, Pacific National Bank is offering an online special on its money market account. With a minimum deposit of $5,000, you could earn an APY of 1.00%. You’ll need to maintain that amount in the account on a daily basis to waive the monthly maintenance fee of $25 and to continue earning the high rate. Check writing is available with this account, but keep in mind that you can only make six certain transaction within a month due to federal law. If you exceed six certain transactions within a month, Pacific National Bank will charge a fee of $20 per additional transaction. You may also make ACH transfers, free of charge, without any limits after the initial funding. In addition to banking online, the bank offers a mobile banking app for your convenience.

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on Pacific National Bank’s secure website

Member FDIC

7. High Rate: CFG Bank 0.90% APY, $25,000 minimum balance to earn APY

CFG High Yield Money Market - New Money from CFG Bank
CFG Bank is a privately owned and operated bank headquartered in Baltimore. While the bank only has a handful of locations scattered throughout Maryland, it offers many of its products online, nationwide.

Currently, CFG Bank is featuring a 0.90% APY on its High Yield Money Market account. However, this rate is only available for new funds, there is a minimum deposit of $1,000 required to open and a minimum daily balance of $25,000 required to obtain the APY. A minimum daily balance of $1,000, though, will still earn you an APY of 0.80%.

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on CFG Bank’s secure website

FDIC Insured

8.High Rate: Northpointe Bank – 1.85% APY, $25,000 minimum balance, checks and debit card available

Liquid Money Market from Northpointe BankNorthpointe Bank is a fairly large bank located in Grand Rapids, MI. They have over $1 billion in assets and have only been around since 1999. Currently, they’re offering a 1.85% APY on their money market account. While you’ll only need $1,000 to open the account, you’ll have to have a minimum balance amount of $25,000 to earn the high APY. If you have a balance between $1,000 and $2,500, you won’t earn an APY. If your balance is between $2,500 and $25,000, you’ll earn a 1.05% APY. Once your balance exceeds $1 million, the APY will drop to .50%. This account comes with a debit card and checks. Northpointe Bank does not charge a monthly maintenance fee, but will charge a $15 Excess Transaction Fee each time you exceed six certain transactions a month. They offer online banking and have a mobile banking app.

9. High Rate: UFB Direct – 0.40% APY, $25,000 minimum balance to earn APY

High Yield Money Market Account from UFB Direct

UFB Direct is a division of Axos Bank, a federally chartered, publicly traded and FDIC-insured bank based in San Diego. In recent months, UFB Direct has become increasingly aggressive with high rates targeting big balances. The APY of 0.40% is an outstanding rate, but you need to have a balance of at least $25,000. If your balance drops below that, you’ll earn an APY of 0.10%. You’ll also need to keep an average daily balance of at least $5,000 in the account in order to avoid a monthly maintenance fee of $10.00. You will get a Visa debit card and have access to limited check writing. We think this is the best option for people with big balances that they want to keep in a money market account.

SEE DETAILS Secured

on UFB Direct’s secure website

Member FDIC

10. High Rate: CIT Bank – 0.60% APY, $100 minimum balance

Money Market Account from CIT Bank CIT Bank is a well-established internet bank offering an array of financial products at competitive rates. Currently, its Money Market account features an attractive APY of 1.80% with no monthly service fee. There is a minimum required deposit of $100 for this account, and an overdraft fee of $25. Interest is earned on your entire daily balance, and is compounded daily and paid out monthly.

SEE DETAILS Secured

on CIT Bank’s secure website

Member FDIC

11. High Rate: Virtual Bank – 0.70% APY, $100 minimum balance

eMoney Market Special from Virtual Bank

As its name suggests, Virtual Bank is an internet-only bank that offers money market accounts and CDs. Currently, its eMoney Market account is worth exploring, with a 1.80% APY and a low minimum opening deposit of $100. This APY, though, only applies to new money not currently held at Virtual Bank. There is a minimum amount of just $0.01 required in order to earn interest, however you must maintain a daily minimum balance of $100 in order to avoid the $5 monthly service charge. Virtual Bank’s eMoney Market account comes with free mobile deposits.

SEE DETAILS Secured

on Virtual Bank’s secure website

Member FDIC

12. Premier Members Credit Union – 2.00% APY up to $2k

Money Market Account from Premier Members Credit Union

Premier Members Credit Union is open to anyone willing to make a $5 donation Impact on Education, a charity for the Boulder Valley School District. This credit union is currently offering an incredible rate of 2.00% with only $5 to open the account. You can earn this APY on balances up to $2,000. Amazingly, even if you grow the balance up to $5,000, you’ll earn 0.50% APY. As the balance increases, the APY decreases to the following:

  • $5,000.01-$10,000: 0.35%
  • $10,000.01-$50,000: 0.25%
  • $50,000.01-$100,000: 0.25%
  • $100,000.01-$250,000: 0.15%
  • $250,000.01+: 0.15%

Premier Members Credit Union rewards low balance savers by placing the highest rate with the lowest deposit, but if the balance grows they start using a reverse tier system where they blend the APY as the balance grows. Checks are available with this account, but you can only make six withdrawals per month. Each additional withdrawal will be assessed a $10 fee.

SEE DETAILS Secured

on Premier Members Credit Union’s secure website

NCUA Insured

What is a money market account?

A money market account is a special type of savings account: Cash you put in the account remains deposited with the financial institution, where it earns a variable annual percentage yield. Because the name of this deposit product has the word market in it, you may assume a money market account is some kind of investment product, but it’s not.

One of the features that differentiates a money market account from a savings account is that institutions generally make it easier to access deposited funds by offering checks and ATM cards. Note that some institutions are starting to provide them for savings accounts, too. Keep in mind that much like a savings account, money market accounts are governed by Regulation D, the Federal Reserve rule stating you can only make a maximum of six withdrawals via check or debit card. Additional withdrawals may incur a fee from your bank or credit union.

It’s also important to understand that money market accounts are different from money market funds. In the 1980s, shoulder pads and hair weren’t the only things that were big: Yields on money market funds were both low-risk and offered a good rate of return. To help out the banking sector, Congress passed the Garn-St Germain Depository Institutions Act of 1982, which allowed banks to offer a new type of savings account — money market accounts — with an interest rate based on those offered in money markets.

What to consider before opening a money market account

Before you get bogged down in the details, let’s take a look at some quick pros and cons of a money market account.

Pros:Cons:
  • Typically carry higher interest rates than savings accounts
  • Convenient access to your funds with check-writing abilities and a debit/ATM card (not offered on all accounts)

  • May carry monthly maintenance fees or a high balance to waive one
  • Still limited to six transfers and withdrawals per month like a savings account (or you’ll face a fee)
  • You’re better off using a higher yield product like CDs for money you won’t need in the immediate future

Who money market accounts are best for

Now that you know the basics of a money market account, should you get one? They’re a good choice if you have a big deposit you’d like to keep safe and growing at a high interest rate. Then when you need to access that money, perhaps for an upcoming purchase or in an emergency, you can often easily do so with an ATM/debit card or by writing a check.

Savings accounts vs. money market accounts

Money market accounts often earn a higher rate than standard savings accounts. The caveat is that MMAs often require higher opening deposits or higher balances than a standard savings account. Even so, you may also find that one bank’s top money market rate earns at the same rate (or lower) as a savings account at another bank.

For example, one of the best savings accounts, Ally’s Online Savings account, offers a 0.80% APY while its money market account earns at a mere 0.50% APY (on most balances). So if it’s high interest rates you’re after, be sure to compare accounts across the board rather than turning immediately to a money market account. Just be sure to keep your balance limits in mind when shopping around.

What often separates money market accounts from savings accounts is their check-writing abilities or issued ATM/debit cards. This provides easier access to your money especially if you have larger balances you’re saving for a bigger purchase. Not all money market accounts offer these features, though. Furthermore, money market accounts are still savings vehicles, so they’re also limited to six outgoing transactions per month, like transfers and withdrawals.

Read more about the differences between money market and savings accounts here.

CDs can offer higher rates than money market accounts

Savings accounts and money market accounts often pay much lower interest rates than CDs. Right now you can get a 1-year CD paying 0.85% APY (with only a $500 minimum). You can find the best CD rates here. If you build a CD ladder, you can take advantage of 5-year rates that are currently as high as 0.91%. Creating a CD ladder also allows you to protect your investments over the years by locking in today’s high rates in a long-term account while also staying flexible for any potential rate increases with your shorter-term accounts. The interest rate on a money market account can change right away, at the bank’s discretion.

If you need some savings more immediately, money market accounts are great places to keep that money— it’ll keep growing, while still remaining accessible. In contrast, should you need to access your CD funds before it matures, you’ll likely face a pretty heavy penalty, typically forfeiting three to six months of interest.

A money market account isn’t the same thing as a money market fund

Money market accounts, like deposit accounts, provide FDIC insurance on your deposits up to $250,000. Money market funds, on the other hand, are investment accounts, most likely sold by your broker, and are regulated by the Securities and Exchange Commission instead. Money market funds invest in highly liquid cash and cash equivalent securities that typically mature within 13 months.

As an example, Vanguard offers the Prime Money Market Fund. Like other money market funds, this one “invests in short-term, high-quality securities.” Its objective is to keep the fund trading at $1 and generate a decent return. Still, money market funds can end up with a lower return than those you see from the money market accounts listed in this article. Since money market fund returns are dependent on the market and the Federal Reserve Rate, it’s important to keep an eye on the current interest rate climate to see whether investing in these funds are worth your time and money.

Money market funds charge expense ratios, or management fees, that are charged as a percentage of your fund (Vanguard’s is currently 0.16% as of Dec. 2018). You can also end up paying some transaction fees. It’s important to watch out for an account’s fees which can often lessen your total investment in the end. Like money market accounts, money market funds can also require a high minimum balance to open an account.

Most people compare the return of a money market fund (sold by their broker) to the interest rate paid by a traditional bank (sold by their local bank teller). As a result, they are willing to take the risk of a money market fund. However, as you can see from the best money market accounts in this article, you can get FDIC insurance and beat the return of most funds without taking on the risk of market investments.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.