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Banking

The Best Prepaid Debit Cards

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

Prepaid debit cards are flexible tools that can help you manage your financial life. If you don’t have a bank account but need to pay with a card, a prepaid debit card does the trick. Tend to overdraft your checking accounts? A prepaid debit card can help you avoid nasty overdraft fees.

The best part of prepaid debit cards is that you can use them anywhere the card issuer is accepted, whether that’s Visa, Discover, Mastercard or American Express. But which to choose? There are hundreds of options, many of which charge fees — there can be several — and have balance limits.

To help you avoid fees and select the best prepaid debit card for your needs, we weighed a range of key factors and found the top options for a range of different users. We identified the best prepaid cards for low fees, which can be especially helpful if you’re already tight on money. We also found prepaid debit cards with the lowest ATM withdrawal fees to ensure you can access your cash. It’s also important to be able to fund your prepaid card without it costing an arm and a leg, so we list the best prepaid cards for cash reloads and direct deposits. Finally, we looked at the best rewards prepaid debit cards.

The best low-fee prepaid debit cards

Prepaid debit cards are great options if you don’t qualify for traditional banking products, whether because of traditional banking fees or bad credit. Either way, we’ve found the best prepaid cards without monthly fees so that you can take advantage of their benefits. We ranked the following cards by looking for the lowest monthly and activation fees.

Bluebird by American Express — $0 monthly fee, $0 activation fee

Bluebird by American ExpressBluebird by American Express is our top low-fee pick thanks to its lack of monthly, annual and activation fees. The card is free to purchase online, but it costs $5 if you buy a Bluebird Account Set Up Kit at a Walmart store.

The Bluebird card is also a low-fee favorite for its free reloading options through direct deposit, debit cards and cash deposits at Walmart. If you want to deposit cash at another participating retail location, it can cost up to $3.95 per deposit. You can withdraw money for free from any MoneyPass ATM. All out-of-network ATM withdrawals will incur an American Express fee of $2.50, in addition to a possible surcharge from the ATM owner. It doesn’t charge fees for replacement cards, foreign exchange withdrawals or account inactivity.

You can use the Bluebird by American Express card anywhere American Express is accepted. Just keep in mind that American Express isn’t accepted by merchants everywhere. Bluebird Checks are also available ($19.95 per checkbook, plus taxes and shipping) to make purchases. You must have each check pre-authorized to prevent you from writing a check for more than you have in your Bluebird account.

Your Bluebird funds are Federal Deposit Insurance Corp.-insured through American Express National Bank.

Navy Federal Credit Union GO Prepaid Card — $0 monthly fee, $0 activation fee

Navy Federal Credit Union GO Prepaid Card With a promise of no hidden fees, the Navy Federal Credit Union GO Prepaid Card doesn’t charge you for opening and activating the card, or for making purchases. When you open a card, you must fund it with at least $20 initially with a Navy Federal debit card or credit card. Other payment forms are not accepted when first funding the account. You can use Navy Federal ATMs without facing a fee, but using out-of-network ATMs both domestically and internationally will incur a $1 charge from Navy Federal. Transactions made in foreign countries in U.S. dollars or foreign currency, both for purchases and at ATMs, will trigger a Visa International Service Assessment Fee of 1.0% of the transaction amount.

Navy Federal membership includes active-duty military members, veterans, retirees, select Department of Defense employees and immediate family members of eligible service members. You must be a member of the credit union who is 18 or older and listed as primary owner on a Navy Federal savings account to open a GO Prepaid Card.

MyVanilla Prepaid Card — $0 monthly fee, up to $3.95 activation fee

MyVanilla Prepaid Card You don’t have to worry about a monthly fee with a MyVanilla Prepaid Card. The card allows free direct deposit, bank transfers and MyVanilla card-to-card online transfers to fund your account. Adding funds through a Vanilla Reload network retailer can cost up to $3.95, depending on the merchant.

Using a MyVanilla Prepaid Card to withdraw cash isn’t always fee-free. Although the card’s website indicates surcharge-free MoneyPass ATM access, using any domestic ATM, including MoneyPass machines, will cost $1.95, according to customer service. International ATM withdrawals cost $4.95. To avoid setting your savings back, you’ll want to stick to using a MyVanilla card simply to make purchases.

MyVanilla Prepaid reloadable cards can be opened either as a Visa or Mastercard. There are only slight differences in retailers that accept one versus the other, so you can choose based on preference. You can open a MyVanilla Card online or at participating retailers, such as Family Dollar, Walmart and Walgreens. After purchasing the card at a store, you need to register it online to start using it.

Whether Visa or Mastercard, all MyVanilla Prepaid Cards are FDIC-insured through The Bancorp Bank.

The best prepaid debit cards for ATM withdrawals

While prepaid debit cards come with the convenience of debit and credit cards, it can still help to have cash on hand sometimes. To find the best prepaid debit cards for ATM withdrawals, we looked for those with the lowest fees for both in-network and out-of-network ATMs, while taking widespread ATM access into consideration.

Affinity Plus Federal Credit Union Visa® Reloadable Prepaid Card — $0 in-network and out-of-network ATM fees

Affinity Plus Federal Credit Union Visa® Reloadable Prepaid Card As you might expect, banks don’t often allow you to make ATM withdrawals at other banks for free. Affinity Plus Federal Credit Union does things a little differently with its Visa® Reloadable Prepaid Card: There are no fees for using both in-network and out-of-network ATMs. Also, there are no fees for account maintenance, purchases, cash deposits or inactivity.

The card costs $4.95, whether at an Affinity Plus branch or online. You can load any amount between $20 and $5,000.

Headquartered in St. Paul. Minn., Affinity Plus FCU serves the Minnesota community, with branches throughout the state. To become an Affinity Plus FCU member, you must work or volunteer at select organizations, attend or have graduated from select schools or live, work or worship in select Minnesota cities. You may also be eligible through relatives or roommates with which you live. You can also join by making a one-time $25 dues payment to the Affinity Plus Foundation.

Navy Federal Credit Union GO Prepaid Card — $0 in-network ATM fee, $1 out-of-network ATM fee

Navy Federal Credit Union GO Prepaid Card Already one of our best low-fee prepaid debit cards, the Navy Federal Credit Union GO Prepaid Card also offers one of the best out-of-network ATM fee deals — $1. Just keep in mind that the ATM owner may charge additional fees. The card also has no fees for monthly maintenance, card activation, ownership and purchases.

You’ll have to be a member of Navy Federal Credit Union who is at least 18 years old with a Social Security number and primary ownership of a Navy Federal savings account to be able to open a GO Prepaid Card. Membership is open — but not limited — to active-duty members of the military, veterans, select Department of Defense employees and immediate family members of eligible service members.

UFCU ABILITY Card — $0 in-network ATM fee, $1 out-of-network ATM fee

UFCU ABILITY CardUniversity Federal Credit Union offers ABILITY Card holders access to over 300 UFCU Alliance ATMs. But if you find yourself using an out-of-network ATM, UFCU will charge only a $1 fee for each transaction. Still, while that’s the lowest fee you’ll find, try to stick to using in-network ATMs, especially since non-UFCU ATM owners may also charge fees. Avoiding an out-of-network ATM fee pileup can be helpful since there is already a $5 monthly fee to keep the card.

To open an ABILITY Card, you’ll need at least $25, although there’s no opening fee for UFCU members. There are no fees for reloading, but you’re limited to $1,000 in withdrawals and $2,000 in purchases per day.

You’ll need to be a member of the credit union to open an ABILITY Card. You can join UFCU if you’re employed by a company, enrolled in a school or belong to an association in the credit union’s field of membership. You can also join if an immediate family member is a member or if you join the University of Texas Longhorn Foundation.

UFCU has locations and ATMs across central Texas and Galveston County, and offers members access to hundreds of National Shared Branch Network locations as well.

The best prepaid debit cards for cash deposits

You shouldn’t have to pay to keep your cash safe in an account, but many prepaid cards charge a fee when you reload the card with cash. The best prepaid cards for cash deposits are those that not only offer the service for free, but also offer the ease and convenience of being able to reload at thousands of locations.

American Express Serve® Free Reloads Card — $0 cash deposits at select locations

American Express Serve® Free Reloads Card The American Express Serve® Free Reloads Card provides access to the largest network of locations to make free cash reloads on your card. It has over 45,000 locations, including retailers like CVS, Family Dollar, Rite Aid and Walmart. Direct deposits and bank transfers are also fee-free. The card also includes Early Direct Deposit, which allows you to get your paychecks deposited on the card up to two days early.

The card costs $0 to open online, but up to $3.95 at retail locations. There is a $6.95 monthly fee unless you are a Texas, New York or Vermont customer. Also be mindful when using ATMs, as you can get charged $0.75 each time you enter an invalid PIN, exceed your ATM withdrawal limits or you have insufficient funds.

Bluebird by American Express — $0 cash deposits at Walmart

Bluebird by American Express In addition to being our top low-fee prepaid debit card, the Bluebird by American Express card is also great for cash deposits. You can add cash to your Bluebird by American Express card for free at virtually any Walmart checkout register. Having a personalized card allows you to add between $1 and $1,999. You can also add cash at other participating locations, including CVS, Walgreens and 7-Eleven, although these merchants will charge a fee up to $3.95. Other free reload options are direct deposit and from a debit card. Master Account holders can also deposit money for free with 10-day Mobile Check Capture by Ingo Money.

You can open a Bluebird account for $5 at a Walmart store, online or on the Bluebird Mobile App through the App Store or Google Play. There is no Bluebird monthly, annual or activation fee. You can use your card to make purchases anywhere American Express is accepted. To withdraw cash from the card, you can do so for free at any MoneyPass ATM or for a fee at out-of-network ATMs or through Cash Pickup Powered by Ria.

The best prepaid debit cards for direct deposits

Debit card issuers often hold paycheck funds for a few days after an employer notifies them of a direct deposit. These best prepaid debit cards for direct deposits can bypass that waiting period and get you your paycheck up to two days earlier, without charging an extra fee for this handy service.

RushCard Prepaid Visa — $0 early direct deposits

RushCard Prepaid Visa Our first pick is the RushCard Prepaid Visa, which allows free and early direct deposits. RushCard puts direct deposit funds — including employer paychecks, government benefits and tax refunds — in your account as soon as they are notified of the deposit.

You can deposit cash without a RushCard fee at thousands of retail locations, including CVS, or through services like MoneyPak. While RushCard won’t charge you for these cash deposits, there may still be a third-party fee. There may also be fees for check deposits and cashing checks.

You can open a RushCard Prepaid Visa on one of two different plans. The Unlimited Plan allows for unlimited purchases and costs either $5.95 a month with direct deposit or $7.95 a month without direct deposit. But if you feel like you won’t use the card all that much, the Pay As You Go Plan might be a better option. There is no monthly fee; instead, you pay $1 per purchase. While it advertises no activation fee, there is a $3.95 or $9.95 fee when you first fund your card or change the design (the exact fee depends on the card design you choose).

The RushCard Prepaid Visa is issued by MetaBank, which is insured by the FDIC.

Green Dot Prepaid Card — $0 early direct deposits

Green Dot Prepaid Card Making direct deposits on your Green Dot Prepaid Card is the best way to load this card. Not only are they free, but you can get access to your paychecks up to two days earlier than usual, like with the RushCard. Cash reloads, on the other hand, can cost up to $5.95 in third-party fees.

The Green Dot Prepaid Card does charge a $7.95 monthly service fee. However, loading at least $1,000 on the card in a month will waive the service fee for the following month. Setting up direct deposits can be extra beneficial here since direct deposits, unlike cash reloads, are free.

You can buy and open a Green Dot Prepaid Card for up to $1.95 only at participating stores, either as a Mastercard or Visa.

Netspend Prepaid Card — $0 early direct deposits

Netspend Prepaid Card The Netspend Prepaid Card is another great option if you’re looking to get your paychecks direct deposited early. You can get paid up to two days faster when you set up free card reloads through direct deposit. Cash deposits cost $3.95 for each reload.

The Netspend Prepaid Card is available in three different plans. The Pay-As-You-Go-Plan charges a fee per transaction instead of a monthly fee, making this choice best for occasional use only. If you’ll need the card more often, consider the Monthly Plan, which charges a flat monthly fee, which can vary depending on the issuer. You can also upgrade to Netspend Premier, which cuts your monthly fee in half by enrolling in direct deposit and having at least $500 direct deposited into your account each month.

The card is issued by either Axos Bank, The Bancorp Bank, MetaBank or Republic Bank & Trust Co.; you can check the issuing bank on the back of your card.

The best rewards prepaid debit cards

Having a prepaid debit card doesn’t mean you don’t deserve rewards. The following cards offer the best rewards programs you’ll find among prepaid debit cards.

American Express Serve Cash Back — 1% cash back on purchases

American Express Serve Cash Back — 1% cash back on purchases The American Express Serve Cash Back prepaid card earns unlimited 1% cash back on all purchases rounded to the nearest dollar. Plus, the cashback rewards are added directly to your account after each purchase, so you don’t have to wait for the end of the month for rewards.

Your rewards can help offset the card’s $7.95 monthly fee (unless you live in Texas, New York or Vermont, where there is no fee). There is also an opening fee of up to $3.95 if you don’t open the card online and a cash reload fee of up to $3.95. There are no fees for direct deposit, bank account transfers, MoneyPass ATM withdrawals or sending/receiving money.

Netspend Prepaid Card — cashback rewards

Netspend Prepaid Card Already a great option for direct deposits, the Netspend Prepaid Card is also a solid rewards prepaid card. Through Netspend Payback Rewards, you can earn cash back on your purchases, with rewards customized according to your spending habits. You activate reward offers online in your Netspend account, then use your card at selected retailers to redeem the rewards.

In addition to direct deposit, you can fund the NetSpend Prepaid Card for free via account transfers between other Netspend accounts. Reloading with cash or Mobile Check Load on the app, however, will result in a fee. Accessing cash through an ATM will also cost $2.50.

The Netspend Prepaid Card charges a monthly fee on its Monthly Plan and Netspend Premier cards. The Pay-As-You-Go Plan allows you to do just that: pay per transaction, which should be occasional so as not to lose money to fees. Regardless of your plan, be careful of the $5.95 inactivity fee that is charged per month after 90 days without transactions. The card is issued by either Axos Bank, The Bancorp Bank, MetaBank or Republic Bank & Trust Co., which you can check on the back of your card.

Walmart MoneyCard by Green Dot — 3% cash back

Walmart MoneyCard by Green Dot The Walmart MoneyCard by Green Dot works best for loyal Walmart customers. You can earn 3% cash back at Walmart.com, 2% cash back at Murphy USA and Walmart fuel stations, and 1% cash back at Walmart stores. In total, you can earn up to $75 cash back each year. While you’re spending at Walmart, you can also get cash for free at participating Walmart MoneyCenters and customer service desks.

It costs $1 to open a Walmart MoneyCard at a participating Walmart store. There is also a $5 monthly fee unless you load $1,000 or more on the card each month. You can reload your card for free with direct deposit, Walmart check cashing and online bank transfers. You can even receive your direct deposits up to two days earlier, too, with ASAP Direct Deposit™. Reloading the card with cash, however, can cost up to $5.95, depending on the retailer.

What is a prepaid debit card?

If you’re not familiar at this point, a prepaid debit card works much like it sounds. You load money on the card, whether with cash, a check or direct deposit. Unlike a regular debit card, prepaid debit cards aren’t linked to a checking account. And although prepaid debit cards are offered by the main issuers of credit cards, prepaid debit cards aren’t like credit cards at all, where you borrow money and pay it back later. With a prepaid card, you’re spending the money in real time. Plus, you cannot spend more than you have on the card, preventing messy overdrafts and fees.

Why should you use a prepaid debit card?

  • You don’t have access to a bank account: According to the FDIC, about 8.4 million U.S. households were unbanked in 2017, meaning they did not have an account at an insured financial institution. Although many banks offer prepaid debit cards, you don’t have to have a checking or savings account to have a prepaid debit card. Prepaid debit cards allow you to deposit the cash or checks you do have and use the card to make purchases or pay your bills. This comes in handy for online payments or when stores have gone cashless.
  • Prepaid debit cards don’t require good credit: If you have bad marks on your credit history, it can be difficult qualifying for a credit card or opening a bank account. Prepaid debit cards come with little risk to the issuer, so they typically won’t check your credit report. That makes it a payment option even for folks who have bad credit. If that applies to you, use the prepaid debit card as a tool to improve your spending habits. The card may not boost your credit score, but you should still be responsible when using the card.
  • Prepaid debit cards can be cheaper than alternative money services: Without a debit or credit card or checks, there aren’t many ways to send money securely. Money orders are one option, although they come with their own set of fees that can pile up. Sending and receiving remittances, and even check cashing come with their own sets of fees charged per transaction. Prepaid cards serve the middle ground, offering convenient payment and low fees. You can find the best prepaid cards for low fees and ATM withdrawals above.
  • You want to lessen the risk of online payments: While technology has made our lives a lot easier to send and spend money, it has also made money easier to steal. One wrong click, and fraudsters could have your bank account numbers in no time. Using your prepaid debit card limits exposure to your bank account. Even if the prepaid card number is stolen, the thief can use only what’s on the card at that time rather than all your savings.

Are prepaid debit cards safe?

Generally, if you obtain a prepaid debit card, your money will be FDIC-insured through the issuing or partner bank. Additionally, thanks to a new rule from the Consumer Finance Protection Bureau (CFPB), there are more protections in place for prepaid debit cardholders. Through this rule, you can monitor your accounts online more easily and protect your money if a card is lost, stolen or incorrectly charged. The CFPB will also ensure you’re provided with honest and upfront information about card policies and fees so you can really find the best fit.

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.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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Banking

Best Savings Accounts

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

Interest rates on savings accounts vary greatly, which means you need to shop around to find your best rate available. It’s possible to find rates reaching well past 2%, while the average savings account rate stands at around 0.28% (as of November 2019). This is why we check rates daily at more than 5,000 U.S. banks and credit unions, to make it easy for you to gain the best possible return on your savings.

The savings account table below allows you to compare savings account rates offered by financial institutions such as online banks, credit unions, community banks and the big nationwide banks. The best savings account rates are published at the top of the table, and APYs decrease as you scroll down the list. Feel free to filter the results by location and investment amount for more customized results.

A savings account is a key component of everyone’s financial life. Whether you’re shopping around for a new savings account or you need to open one for the first time, this comprehensive guide should help you get started. Below, you’ll find the best savings accounts to choose from, and a full brief on every aspect of selecting the right account for your needs.

Everybody needs something a little different from their savings account. That might mean you want to maximize your interest earnings, while others might need easy branch access. For that reason, we’ve outlined the best savings accounts in several different categories to better help you find the right one for your preferences.

Best Savings Account Rates from Top Online Banks

Some people really put an emphasis on banking with a well-known, dependable bank that offers high rates and great features. For this reason, we’ve compiled a list of the big online banks that have had competitive rates for two consecutive years and either don’t require a minimum deposit amount or have a low minimum deposit amount requirement.

1. Goldman Sachs Bank USA – 1.90% APY, no minimum deposit to open account

Goldman Sachs Bank USA

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Marcus by Goldman Sachs® is a brand of Goldman Sachs Bank USA that powers the bank’s online savings accounts, as well as its personal loans. Marcus launched its online savings account in 2016 with a competitive rate (at the time). While savings rates have fluctuated, continue to do so, this online brand has continued to offer a consistently competitive rate on its savings account. Today, the bank is offering a 1.90% APY. There isn’t a minimum deposit amount or balance requirement to earn the APY — plus, this account doesn’t come with any monthly fees either.

You can easily fund the account by either transferring your funds directly from a linked external bank account, setting up direct deposit, sending a check or sending a domestic wire transfer. While you can deposit as much as $1 million per account, you’ll only be able to transfer a maximum of $125,000 per outgoing transfer when initiated online. Marcus does give you the option to call its customer service number if you need to withdraw more than that amount. Keep in mind that you’ll be limited to making six certain withdrawals or transfers per statement period.

One downside to this online-only bank is that it doesn’t currently have a mobile app that allows you to conduct transfers, so you’ll have to conduct transfers on Marcus’ website. However, the online bank did join forces with Clarity Money, a personal finance app from Goldman Sachs Bank USA. Through Clarity Money, you’ll be able to monitor your account and manage your finances in a simple way.

2. Barclays – 1.90% APY, no minimum deposit to open account

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Barclays originated in London over 300 years ago. In 1965, Barclays incorporated Barclays Bank in California, and in 1971, incorporated Barclays Bank of New York, where its Wealth unit is now based. While the bank has a presence in several U.S. cities, it settled its headquarters in Wilmington, Del. in 2001, where the online business currently resides.

While Barclays had been predominantly making a name for itself in the credit card space, the bank launched its online savings account in 2012 with a fairly competitive rate. Since its launch, the bank has remained consistent with its rate and even decided to up its game in March 2019 to compete with the other online banks. Today, Barclays holds on to a 1.90% APY, and doesn’t require a minimum amount to open the account or a balance to earn that APY.

You can fund the account by transferring funds via ACH, setting up direct deposit, mailing a check or uploading a picture of a check via the bank’s Deposit Checks feature. Be aware that Barclays may hold your deposited funds for up to five business days if deposited by check or electronically. If you fund the account via ACH or transfer from another bank, the funds will be available immediately. The maximum amount that you can withdraw or deposit is $250,000 per transaction.

If having the ability to bank at the palm of your hand is important to you, you’ll be happy to know that Barclays has a mobile app.

3. American Express National Bank – 1.75% APY, $1 minimum balance amount

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While this institution was established in 1989, American Express National Bank can trace its roots back to 1850 when its parent company, American Express, was originally founded. Not unlike Barclays, American Express is widely known for its credit card products.

With our sponsored advertiser, American Express National Bank, you can also open deposit accounts like its Personal Savings Account. Luckily for banking customers, the account historically offers good rates that consistently land it in top rankings. Today, you can take advantage of its 1.75% variable Annual Percentage Yield (APY), as of 11/7/2019, with any deposit amount. The account doesn’t charge a monthly fee, nor any fees for wires or to deposit checks.

This high yield savings account does not come with an ATM/debit card or checks. You can deposit money by mailing a check and make online transfers to and from your account. When pulling funds from your external bank, it will take five business days to appear in your account when you initiate the transfer from your Personal Savings account, and one to three when you initiate through your external account. Sending funds from your Personal Savings Account will take one to three business days no matter which side you initiate from. American Express Personal Savings is accessible online only; it does not have a mobile app.

4. Synchrony Bank – 1.90% APY, no minimum deposit to open accounts

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Synchrony Bank, a subsidiary of Synchrony Financial, has been around since 1932. The bank’s history has been deeply rooted in the credit card industry, but it’s done a great job establishing itself as a top online bank over the years.

Back in 2014, having a savings account that offered a 1.00% APY was rare, but Synchrony Bank established itself by offering this rate. Since then, it has consistently offered one of the top savings account rates in the market; currently, it’s offering a 1.90% APY. There isn’t a minimum deposit requirement to open the account or earn the APY. There are also no monthly fees.

You can fund this savings account a number of ways: ACH, mobile check deposit, direct deposit, wire transfer, or a mailed check. Incoming transfers will typically take three business days to post unless you initiated the transfer after 10pm EST.

One really big perk of this account is that it comes with an ATM card — Synchrony is partnered with the Accel network for ATM access. You will be limited to withdrawing a maximum of $1,000 per day, and if you use an out-of-network ATM domestically, Synchrony will refund you up to $5 per statement cycle. Synchrony Bank has a mobile app for your convenience.

5. Ally Bank – 1.80% APY, no minimum deposit to open account

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Ally Bank traces its history back to 1919, when it was GMAC, a division of GM designed to help auto dealers finance and maintain their inventory. It became Ally Bank 90 years later in 2009 and now offers a range of financial products well beyond auto loans.

Today’s Online Savings Account rate may not be the highest we’ve seen from Ally Bank, but it has remained a top competitor nonetheless. Its 1.80% APY will still yield solid savings and requires no minimum deposit to get started. There’s no monthly fee here, either, which allows your savings to grow effortlessly. Ally Bank is relatively low on fees and maintains transparency around the fees it does charge — these include outgoing domestic wires, paid overdraft items and excessive transactions.

As an online bank, Ally Bank doesn’t allow for cash deposits to be made into its Online Savings Account, though you can still deposit checks remotely with Ally eCheck Deposit and make online, wire and mail transfers in and out of the account. You can also make transfers out of your account over the phone and by requesting a check. Online transfers between Ally Bank accounts are immediate, while transfers between Ally Bank and non-Ally accounts take three business days. Free next-day transfers are available to select customers depending on account tenure, account activity and transfer activity.

Ally Bank offers an extensive and helpful mobile app that allows you to make deposits, pay your bills, transfer money, find in-network ATMs and view your balances and transactions. You can download the app on various platforms including Android, iOS and Windows.

Best Rates from New Online Savings Accounts

Over the last year or so, there have been a ton of new online banks being created by bigger banks or big banks introducing new online savings options. This list includes those banks that have either launched within the last two years or introduced a brand-new savings account with consistently high rates within the last two years.

1. Vio Bank – 2.07% APY, $100 minimum deposit to open account

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Vio Bank is an online division of MidFirst Bank which was founded in 1911.

Vio Bank has certainly been a recent stand-out candidate for its competitively high rates on its CDs as well as its High Yield Online Savings Account. It currently earns 2.07% APY and compounds interest daily for better savings. Plus, there’s no monthly fee. You will need at least $100 to open the account. It’s better to stick to electronic statements here, because paper statements cost $7 each.

Vio Bank doesn’t provide debit cards or check writing capabilities on its High Yield Online Savings Account or any other accounts. Instead, you’ll have to make online ACH transfers. Deposits into the account may take five or more business days. You’re limited to $25,000 daily and $100,000 monthly on transfers to and from external accounts initiated by Vio Bank. There aren’t any limits on transfers initiated outside, though. You can fund your High Yield Online Savings Account by mailing a check, depositing a check on mobile or sending an incoming wire.
In addition to its online presence, Vio Bank extends itself to a mobile app, as well, which allows you to manage your accounts and make transfers on the go. It is available in the Apple App Store and Google Play Store.

2. HSBC Direct – 2.05% APY, $1 minimum deposit to open account

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HSBC Direct is the online-only offering from HSBC Bank USA, which traces its history back to the Hongkong and Shanghai Banking Corporation Limited in 1865. As part of HSBC Bank USA, the HSBC Direct Savings account earns a competitive 2.05% APY on all balances. You must open an account with at least $1 in new money, meaning money not already on deposit with HSBC. There is no monthly fee to worry about here.

HSBC Direct provides Money Management Tools that are designed to help you manage your money, set goals and stick to a budget. This includes email alerts for bills, low balances and fees, customizable goals and comparable income and spending.

When you have an HSBC US account, you can pay bills and make transfers and other payments in the Move Money section. Transfers in and out of the account typically take three to five business days to clear. Deposits into the account are limited to $3,000 daily and $5,000 monthly. An ATM or debit card is not included with this account.

Take advantage of the HSBC Mobile Banking App for further accessibility, like mobile check deposit. You can find it in the App Store and Google Play.

3. CIBC USA – 2.05% APY, $1,000 minimum deposit to open account

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CIBC, or Canadian Imperial Bank of Commerce, began as two Toronto-based banks: The Canadian Bank of Commerce (founded in 1867) and the Imperial Bank of Canada (founded in 1875) — the two banks merged in 1961. CIBC expanded into the U.S. in 1991 with CIBC U.S., and established its headquarters in Chicago. You can find CIBC USA locations in Illinois, Michigan, Missouri and Wisconsin.

The online-only CIBC Agility™ Online Savings Account offers a competitive 2.05%APY on all balances, although you’ll need at least $1,000 to open an account and get started. It does not charge a monthly fee, so your savings can keep growing uninterrupted.

To withdraw funds from your account, you can make transfers between accounts (both internal and external) or submit a request in writing for a check to be issued in your name. To deposit money, you can also make ACH transfers or send a cashier’s or personal check to CIBC USA in either the bank’s name or your name. Check deposits are placed on a 10-day hold.

In addition to online account access with CIBC NetBanking, you’ll also have further on-the-go access with the CIBC US Mobile Banking App.

4. CIT Bank – 1.85% APY, $100 minimum deposit to open account

CIT Bank

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CIT was founded in 1908 in St. Louis, Mo., and is now headquartered in Pasadena, Ca. CIT’s personal banking sector also includes OneWest Bank in Southern California.

The 1.85% APY on the Savings Builder account isn’t earned outright. When you open the account, it will start earning at a 2.176% interest rate from the day you open it through what’s known as the first “Evaluation Day,” which falls a couple months after opening. On each Evaluation Day, CIT will determine whether you qualify for the 1.85% APY for the next month. You can qualify by either maintaining a balance of $25,000 or more or making at least one monthly deposit of $100 or more. Failure to meet these requirements will bump your APY down to 1.24%. Interest is compounded daily.

You’ll need at least $100 to open a Savings Builder account. It does not charge a monthly maintenance fee. You can fund your Savings Builder account through electronic fund transfers, mailed checks or wires. You can use these same methods to transfer money out of your account; just note, though, that an outgoing wire will cost $10 for accounts with a balance of less than $25,000.

The CIT Bank mobile app provides another outlet to manage your accounts, deposit checks and make transfers.

5. Citizens Access – 1.85% APY, $5,000 minimum deposit to open account

Citizens Access

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Citizens Access is the online-only branch of Citizens Bank, a Providence, R.I.-based bank founded in 1871.

Unlike its other competitors, Citizens Access has a bit of a higher minimum deposit to open its Online Savings Account, requiring $5,000. If you can meet that threshold, you can start earning at its 1.85% APY, but balances under $5,000 will drop to 0.25% APY. Citizens Access boasts zero fees, including for monthly maintenance.

To make a deposit into the Online Savings Account, you can make an online funds transfer or deposit a check through the mail or mobile check deposit; withdrawals are made in the same ways. When moving money from your Online Savings Account, it can take two to three business days for the funds to post in the external account.

Citizens Access doesn’t have a mobile app, but the website is designed to be easily accessible on mobile, including mobile check deposit capabilities.

Best High-Yield Savings Accounts

If the feature you care about the most is the rate a bank offers on a savings account, this list is for you. These banks are currently offering the highest savings account rates.

1. First Foundation Bank — 2.40% APY, $1,000 minimum

First Foundation Bank

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Founded in 1990, First Foundation Bank is headquartered in Irvine, Ca. and has 20 locations in California, Hawaii and Nevada.

First Foundation Bank’s Online Savings account sets itself apart from the bank’s other offerings with its competitive 2.40% APY on balances $1,000 and over. Balances under that earn 1.00% APY. You’ll need to open a new account with at least $1,000 in new money, or money not already held on deposit with the bank.

You can access your Online Savings account online and on mobile to pay bills, deposit checks, transfer money and more.

2. BrioDirect – 2.30% APY, $25 minimum deposit to open account

BrioDirect

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For the next best high-yield savings rate, head to BrioDirect which doesn’t require any physical commitment from you. BrioDirect is an online brand of Sterling National Bank, founded in 1888, which manages and holds your accounts.

Open a BrioDirect High-Yield Savings account with just $25 to start. You’ll also need to maintain at least $25 in the account to earn the 2.30% APY. There is no monthly fee and the only other posted fees are a $10 excessive transaction charge and a $35 overdraft/insufficient funds fee.

You can transfer money between your BrioDirect savings account and other accounts using the bank’s External Transfers feature online or by calling the bank. You can also fund the account by wiring the money or sending a check. There isn’t a BrioDirect-branded mobile app, but you can use Sterling’s Personal Mobile Banking app to manage your accounts.

3. SFGI Direct — 2.27% APY, $1 minimum balance

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SFGI Direct is an online division of Summit Community Bank, which provides FDIC insurance on any SFGI Direct deposits. Summit Community Bank is headquartered in headquartered in Moorefield, W.V.

Open an SFGI Direct Savings account with just $500 and start earning interest at 2.27% APY with just $1. There is no monthly fee on the account.

SFGI Direct can be accessed online. You can set up online transfers in and out of the Savings account directly within your account.

4. Vio Bank — 2.07% APY, $100 minimum deposit

Vio Bank

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Vio Bank is a division of MidFirst Bank, which is based in Oklahoma City. Vio Bank deposits are considered MidFirst Bank deposits for purposes of FDIC coverage.

A new leader in the savings account space, Vio Bank offers 2.07% APY on all High Yield Online Savings balances. You just need at least $100 to open the account. There is no monthly fee, although paper statements cost $7 each.

To access a Vio Bank account, you can make online ACH transfers. Vio Bank limits transfers to and from external accounts to $25,000 daily and $100,000 monthly when initiated through Vio Bank. Transfers initiated through external accounts are not limited. You can fund your High Yield Online Savings Account by mailing a check, depositing a check on mobile or sending an incoming wire. Deposits may take up to five days to post.

Vio Bank is accessible online and through its mobile app, available in the Apple App Store and Google Play Store.

5. FitnessBank – 1.75% APY, $100 minimum deposit to open account

FitnessBank

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Personal goals often revolve around health and money and Fitness Bank seeks to seamlessly bring those together. Fitness Bank is a division of Affinity Bank, which was founded in 2002.

The Fitness Savings Account earns interest on balances over $100. The exact APY you earn on your Fitness Savings Account depends on your average daily step count which is calculated each month. The top rate of 1.75% APY is reserved for customers who log 12,500 steps or more. The rate drops to 1.25% APY for an average daily step count between 10,000 to 12,499; to 2.60% APY for 7,500 to 9,999 steps; and to 2.34% APY for 5,000 to 7,499 steps. Finally, the rate plummets to 0.50% APY if you’re logging 4,999 or fewer steps. When you open a new account and have at least $100, the account will have an initial APY of 1.75% until the rate adjustment date after the first full month.

You need at least $100 to open a new Fitness Savings Account. You must also maintain a $100 minimum average daily balance in order to waive the $10 maintenance fee. There is no fee for incoming wires. You can deposit money into your account through online transfers, which typically take three to five days to post.

To track your steps, you will need to download the FitnessBank Step Tracker app. Then you can link it with your Garmin, FitBit, Apple Health or Google Play.

 

Best Savings Account Bonus Offers

Some banks offer cash bonuses to bring in new customers. There are often requirements that need to be met in order to qualify for these bonuses, so you’ll want to pay attention to those prior to applying. This list includes banks offer bonuses for opening a savings account.

1. Discover – $200 bonus with $25,000 minimum deposit + 1.80% APY on all balances

Discover Bank

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Largely known for its credit cards, Discover also offers an array of high-yield deposit accounts. With roots as the Greenwood Trust Company, founded in 1911, Discover Bank came into being by name in 2000.

You have until Dec. 2, 2019 to open a new Discover Online Savings Account and redeem this bonus offer. If you deposit at least $15,000 into the new account by Dec. 16, you’ll earn a $150 bonus. Deposit at least $25,000 by the same date, and you’ll earn a $200 bonus. If you qualify, the bonus will be deposited by Dec. 30. You can apply online or by phone using the code MM1119.

The account itself earns at a solid 1.80% APY, and interest is compounded daily. There are no minimum deposit or balance requirements or a monthly fee.

2. Citibank – $400 bonus with $15,000 minimum deposit

Citi

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Based in Sioux Falls, S.D., Citi traces its history back to New York City in 1811.

Snag a $400 from Citibank by being a new customer an opening a Citibank Account Package by Dec. 31. Deposit at least $15,000 in either the checking or savings account within the package within 30 days of opening the account. The money must be new to Citibank and kept across both accounts for 60 days.

The Citibank Account package includes both the checking and savings account. There is a $25 monthly fee which you can waive with a $10,000 minimum balance across both accounts. The checking account earns a 0.01% APY, and the savings account will earn between 0.04% and 0.13%, depending on your balance. Citibank offers a mobile app to access your accounts.

3. Associated Bank — $400 bonus with $25,100 minimum deposit

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Associated Bank was founded in 1970 when three Northeast Wisconsin banks merged. It is headquartered in Green Bay, Wisc.

Earn a $400 bonus when you open both an Associated Choice Checking account and an Associated Relationship Savings account by June 30, 2020. Open the Choice Checking account with at least $100. You must also make three payments through Associated Bank Online Bill Pay or at least one direct deposit of $300 or more within 45 days of account opening. Open the savings account with at least $25,000. You must maintain a $25,000 minimum combined balance between the two accounts for 90 days to receive the reward 120 days after account opening.

Email yourself a coupon code from the offer page to bring into a branch to redeem. Your new accounts must be funded with new money not already held with Associated Bank. Associated Bank employees and customers who already have or have had a checking account or Associated Relationship Savings account at Associated Bank within the last six months are not eligible for the offer.

The Associated Choice Checking account earns between 0.01% and 0.05% APY, where higher balances earn higher rates. There is a $25 monthly fee, which you can waive with at least $10,000 in combined deposit accounts or either an HSA or investment account. The Associated Relationship Savings account earns according to balance tiers, between 0.10% and 1.35% APY.

4. Chase – Up to $350 bonus with $10,000 minimum deposit and direct deposit in a qualifying checking account

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Established way back in 1824, Chase is headquartered in Columbus, Ohio. It has a presence in 33 states and Washington D.C.

Another checking and savings mix-and-match bonus, you have until Jan. 21, 2020 to open a new Chase Total Checking account. Once it’s open, setting up direct deposit will snag you a $200 bonus. Earn another $150 when you open a Chase Savings account and deposit at least $10,000 in new money within 20 business days. You must also maintain that balance for at least 90 days.

The accounts themselves aren’t too remarkable. The Chase Total Checking account charges a $12 monthly fee unless you have direct deposits totaling $500 or more, a minimum $1,500 balance at the beginning of each day or a $5,000 average beginning day balance in combined account balances. The Chase Savings account also charges a fee, $5 per month, that you can waive with a minimum $300 balance at the beginning of each day, at least one repeating automatic transfer of at least $25 or more from your personal Chase checking account or Chase Liquid® Card, a linked Chase College Checking account for Overdraft Protection, an account owner younger than 18 or a qualifying linked account. Chase provides users with a mobile app to manage accounts.

5. Wells Fargo – $250 bonus with $15,000 minimum deposit

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Wells Fargo was founded in 1852 and is headquartered in San Francisco.

Earn a $250 bonus by opening a new Wells Fargo savings account with a $25 minimum deposit by Dec. 31, 2019 and depositing at least $15,000 in new money within 10 days of opening. New money means that it must not already be held in a Wells Fargo account. You must also maintain a $15,000 minimum daily balance for 90 days after account opening.

Wells Fargo requires you to open the new savings account in a branch with a valid bonus offer code which you can find online. The offer’s scope is very limited, serving only customers in Dallas, Texas and Washington, D.C.

Wells Fargo has two savings accounts. Way2Save Savings earns a mere 0.01%APY, while the Platinum Savings account earns either 0.05% APY or 0.90% APY, depending on your balance. Wells Fargo provides a mobile app for its customers to deposit checks and manage accounts on the go.

Best Savings Account Rates from Credit Unions

Some people prefer to do their banking with credit unions because of the member benefits that extend beyond the deposit accounts. This list includes credit unions that currently offer the best savings account rates for low and high depositors.

1. Digital Federal Credit Union – 6.17% APY, up to $1,000 account balance

Digital Federal Credit Union (DCU)

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Chartered in 1979, Digital Federal Credit Union is based in Marlborough, Mass. and is the largest credit union headquartered in New England by asset size. Eligibility for DCU membership is based on your family relationship to a current member, the company you work for or retired from, an organization you belong to or a community you’re a member of (where you live, worship, attend school, etc).

DCU offers its members a whopping 6.17% APY on its Primary Savings account. However, this high APY applies to the first $1,000 in your account. Everything over that will earn 0.25% APY. The account requires a $5 opening deposit and balance to maintain membership. There is no monthly service fee.

Transfers through DCU’s Payment Center impose a minimum amount of $0.01 and maximum amount of $2,500.

DCU offers account access through branches (both DCU and CO-OP), online, at ATMS and over the phone. There is no mobile app.

2. USALLIANCE Financial – 1.90% APY, $500 minimum balance amount

USALLIANCE Financial

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USALLIANCE Financial was founded in 1966 by a handful of IBM employees. Today, it opens up membership to various neighborhoods in the New York City metro area, select schools, houses of worship and members of certain community-oriented organizations.

The High Dividend Savings account earns 1.90% APY and compounds interest daily. You’ll need to open an account with at least $500 and maintain a $500 minimum balance to keep earning dividends.

While there is no monthly fee, there is a $5 withdrawal fee that applies to any movement of money out of the account, including transfers. To transfer funds between accounts, you can initiate either through USALLIANCE or from your external account. Transfers will take a few days to post.

USALLIANCE offers its mobile app in both the Apple Store and Google Play. It allows you to view all your activity, pay bills, deposit checks and more.

3. CommunityWide Federal Credit Union – 2.00% APY, $1 minimum deposit to open account

Communitywide Federal Credit Union

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CommunityWide Federal Credit Union was founded in 1967, originally known as West Washington Association Federal Credit Union, settling into its current name in 1985. Based in South Bend, Ind., CommunityWide opens membership up to employees/retirees/donors of select employer groups, relatives of qualified members and members of select charity groups.

The Funds account from CW is a unique approach to savings. You’re allowed to make a withdrawal from the account between the 1st and 5th of each month; any withdrawals outside of that period are subject to a penalty of seven days’ dividends. Complying with this account’s requirements allows you to earn at 2.00% APY, a higher rate than the credit union’s standard savings account. You need only $1 to open an account and there is no monthly fee to maintain the account.

In addition to online access, CW provides mobile access either through your browser or its mobile app available for iOS and Android, which allows for check deposit.

4. American Heritage Federal Credit Union — 1.80% APY, $10,000 minimum deposit

American Heritage Federal Credit Union

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Founded in 1948, American Heritage Federal Credit Union is based in Philadelphia and serves members of the surrounding community. American Heritage membership is also open to those who are employed by a Workplace Partner or an immediate family or household member of a current or eligible member. You may also join by making a donation to the Kids-N-Hope Foundation.

The High Yield Savings Account earns 1.80% APY on balances $10,000 and over. You’ll need to open the account with at least $10,000 in the first place, and keep that minimum balance to avoid the $10 monthly fee.

In addition to its Philadelphia-area branches, American Heritage offers online, phone and mobile banking access.

4. Alliant Credit Union – 1.70% APY, $100 minimum balance amount

Alliant Credit Union

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Chartered in 1935, Alliant Credit Union is based in Chicago, Il. You can become an Alliant Credit Union member if you are a current or retired employee or member at a select organization, are an immediate family member of a current member, live or work in a select Chicago-area community or join Foster Care to Success (FC2S).

The High-Rate Savings requires at least $5 to open, but Alliant will fund it for you. You’ll need to increase your average daily balance to at least $100 to earn 1.70% APY. There’s no monthly fee with eStatements, but paper statements will incur only a $1 fee.

You can easily make online transfers between your Alliant accounts and either external or other Alliant accounts. Alliant allows you to set immediate one-time, future, or recurring transfers. Deposits into an Alliant account typically credit within 24 hours of Alliant receiving the funds. You can make an unlimited number of transfers between accounts, but the limit for same-day ACH transfers is $25,000 per day. Benefit from further convenience with Alliant’s mobile app, available for Android and iOS.

Savings Account FAQs

What is a savings account?

A savings account is a type of deposit account where you can stash money for any length of time, long or short. Banks and credit unions reward you with an attractive return on your savings balance — thanks to the magic of compound interest, your savings can grow steadily over time. Keep in mind that unlike checking accounts, savings accounts aren’t designed to handle frequent transactions. Due to the Federal Reserve’s Regulation D which mandates certain types of telephone and electronic withdrawals, including transfers from savings accounts up to 6 per statement cycle.

While they give customers a safe place to stash their money, savings accounts serve a different purpose for financial institutions. Banks and credit unions use their customers’ deposits to fund loans and other products. Banks charge borrowers interest on loans, which funds in part the interest you earn on your savings deposits. So when you open and fund a savings account, you’re helping your bank fund its business.

Is my money protected in a savings account?

The money you place into a savings account at a bank is generally protected by FDIC insurance, up to the legal limit. This limit applies per person, per bank, per ownership category.

For example, you would receive full FDIC coverage of a $250,000 deposit made to a savings account at ABC Bank, and you would get full FDIC insurance on $250,000 deposited in a savings account with XYZ bank.

If ABC Bank went under, you wouldn’t lose a dime of your deposit. The FDIC would either set you up with a new account at another FDIC-insured bank for the same amount as the closed account, or send you a check for the balance. However, if you had a $50,000 checking balance and a $250,000 savings account balance with ABC Bank, you would only receive $250,000 in total FDIC insurance for your accounts — with a potential loss of $50,000.

Credit unions rely on National Credit Union Administration (NCUA) insurance. The NCUA is an independent agency that maintains the National Credit Union Share Insurance Fund (NCUSIF), which funds deposit insurance payouts. All federal credit unions are insured by the NCUA. State-chartered credit unions are regulated by the state supervisory authority where the credit union’s main office is located, but they may also have NCUA insurance.

How should I use funds in my savings account ?

Money kept in a savings account is best left alone unless you absolutely need it. To maximize the return on your savings, stash most of your liquid cash flow in a savings account, and only keep the funds you need for day-to-day spending in your checking account. That allows your money to grow more efficiently — more money in a savings account means more interest earned and compounded.

Is it easy to move money in and out of a savings account?

How easy it is to move money in and out of your savings account depends on your financial institution. Typically, a transfer between deposit accounts goes through Automated Clearing House (ACH). ACH transfers should only take one to two business days to clear, often clearing immediately or within one business day. Some institutions, however, may take the full two days depending on their own rules and regulations.

Keep in mind that savings accounts have a limit of up to six certain transfers or withdrawals per month, thanks to the Federal Reserve’s Regulation D, or Reg D. This limit only applies to “convenient” transfers and withdrawals made by “preauthorized, automatic, telephonic agreement, order or instruction, or by check, debit card or similar order made by the depositor and payable to third parties.” Less convenient transactions are exempt from this regulation, including withdrawals or transfers made in person at the bank or ATM, by mail or over the phone.

Making more than six transactions per cycle will often result in an excessive transaction fee depending on the financial institution. Exceeding the limit several times can lead to the bank closing your account for good.

Do I need a savings account?

It’s safe to say that everyone should have a savings account. If your money is going to sit in a bank account, it might as well earn interest while it’s there. And if you’re going to earn interest, it’s surely best to find an account that earns the most interest possible — namely a high-yield savings account.

Even if you’re not interested in chasing the highest possible interest rate, you should still have a savings account to keep your money safe. Some people don’t trust banks and stash cash under their mattresses. But what happens if your house burns down or there’s a break-in? Stolen or lost funds are gone for good. Meanwhile, money in a savings account is kept safe by the FDIC, which even offers bank skeptics peace of mind. FDIC insurance means you’ll get your money back no matter what.

What should I consider when applying for a savings account?

If you’re not sure which account to choose, consider your savings priorities first. If you’re trying to reach a savings goal, a high-yield savings account will help you reach your goal faster than a lower-rate account.

Perhaps you want an account where you don’t have to worry about fees. There are several free savings accounts and accounts that don’t charge for excessive withdrawals that would be perfect for your needs.

Generally, though, these two features should be your top priorities when applying for a savings account. A high-yield savings account grows your money more efficiently, and not having fees taking out a chunk of those savings helps you keep it.

Is it better to have a savings account with a bank or a credit union?

If you’re looking at interest rates, there’s not much difference between the average savings accounts offered by banks and credit unions. In June 2019, the average savings account rate from brick-and-mortar banks earned just 0.28% APY, while credit unions had an average APY of 0.25%. But that doesn’t mean you won’t find competitive rates at banks or credit unions — it simply means you’ll need to shop around.

The same goes with fees. A 2018 MagnifyMoney survey of 57 rewards checking accounts from banks and credit unions indicated that credit unions tend to charge slightly higher fees than their traditional bank counterparts. However, credit unions are nonprofits, and tend to charge fairer fees than big banks do.

For many people, the choice of bank or credit union is a matter of personal preference. When you join a credit union, it means that you own a piece of the institution along with the other members. With a credit union there’s more transparency about how your deposits are being used — many people prefer to know that they are funding loans and helping other members, as opposed to paying big executive paychecks.

When it comes to physical access, banks usually have credit unions beat. Big banks have the money to spread their branches throughout the country, while credit unions tend to serve specific communities and locations. Still, credit unions very often partner with other credit unions and ATM networks to provide their members with widespread ATM access. Note that the CO-OP Financial Services credit union service organization has the second largest branch network in the United States.

Why should I open a high-yield savings account?

A high-yield savings account is an easy way to boost your savings without any extra effort on your part. Let’s say you have $5,000 in a 0.01% APY savings account, which is a typical rate from traditional, big banks. Assuming you don’t make any additional contributions, in a year, you’d earn a whopping 50 cents in interest. That’s a pretty poor rate.

Switching that $5,000 deposit over to a high-yield savings account that earns 2.00% APY would yield $100 and change in interest annually — that’s definitely a sight better than 50 cents. Additional recurring deposits, perhaps monthly, would increase your savings even more. Setting up automatic recurring deposits an easy way to turbocharge your savings.

What fees are typically associated with a savings account?

Many deposit accounts charge a monthly maintenance fee. The exact fee amount depends on the bank and specific account, but they can range anywhere between $5 to $15 a month. The good news is that there’s almost always a way to waive the fee. Typically this means maintaining a minimum monthly balance or making a certain number of transactions per month. You seldom have to worry about any monthly fees with online savings accounts.

Banks often charge for returned deposits, overdrafts, excessive transactions, expedited delivery or transfers, incoming and outgoing wire transfers, and paper statements. Avoid these things and skip the fees. If you’re worried about overdrafting your account, monitor your balance closely. There’s no need to pay $35 for overdrafting your account.

Are online savings accounts safe?

Many of the best savings accounts are available online. By operating only over the internet, banks are able to save on the cost of owning and maintaining physical branches. Banks pass those savings onto their customers in the form of the high rates you see above.

But just because they’re online doesn’t mean they’re any less secure than a well-known bricks-and-mortar bank. Reputable online banks offer FDIC insurance on your balances up to the legal limit. If you’re unsure, you can use the FDIC’s BankFind tool to double check a bank’s insurance status.

As for online security, most banks employ the same security features as the big banks, if not more. This includes network and browser encryption, firewalls, anti-virus scanning and anti-malware protection. Banks may also offer additional safety features like two-step authentication, automatic logout, fingerprint identification and proactive account monitoring. You can always check a bank’s exact safety features on its website, which applies to both online-only and brick-and-mortar banks.

Can I open more than one savings account?

You sure can. If you have a lot of cash on hand, opening multiple savings accounts can allow you to maximize your FDIC insurance. Think of the scenario mentioned above: Keep $250,000 in an ABC Bank savings account and $250,000 in an XYZ savings account. Dropping the total $500,000 in a single ABC Bank savings account would leave $250,000 uninsured.

Opening more than one savings account may also help you keep track of separate savings goals. For example, you can use one savings account to house your emergency fund which you never touch except for dire circumstances. Keeping it separate from your other accounts may make it easier for you to avoid dipping into your emergency backstop.

If you do have more than one savings account, just make sure they all earn at competitive rates.

How often do savings account rates change?

Unlike certificates of deposit, savings accounts have variable rates. This means that the bank can decrease or increase their rate at any point, often without notice. However, you can typically expect rate changes to happen on or right after the start of a month.

Deposit account rates often track the federal funds rate, which is set by the Federal Reserve. The federal funds rate establishes the rate banks and other financial institutions charge each other for lending. So when the federal funds rate is cut, banks tend to cut their own rates in response. This includes not only deposit rates, but loan rates as well. Conversely, banks boost their interest rates when the Fed raises the federal funds rate. Keep an eye on the Federal Reserve’s regular meetings to get a better sense of where the federal funds rate — and therefore your deposit rates — are headed.

Do I pay taxes on savings account interest?

If you earn $10 or more in interest in a year, then yes, your savings interest is taxable. Your bank or financial institution will send you a 1099-INT form documenting the interest you’ve earned. Using that form, you include your interest earnings with your annual tax filing. The bank will also send a copy of your 1099-INT form to the IRS.

Even if you don’t receive a 1099 from your bank, you’ll still need to report interest earned on your tax return. Plus, if you earned more than $1,500 in interest in a year, you’ll need to list out the sources of all that interest income on Schedule B of the 1040 Form.

Your earned interest is taxed according to your marginal tax bracket. If you earned $50 in interest and you’re in the 22% tax bracket, you’ll pay $12 in taxes on that interest earned.

What are the alternatives to a savings account?

Having a savings account is a crucial part of your financial life, but there are other types of deposit accounts that you can (and perhaps should) fit in.

Certificates of deposit

A certificate of deposit (CD) is a time deposit. Unlike savings accounts, which have no expiration date, CDs operate according to defined terms. Typically, CD terms range between three and 60 months, although some institutions offer terms beyond these parameters. Once you make your initial deposit, you have to wait for the term to expire — or mature — to access your funds and interest earnings.

CDs are a solid savings alternative for folks who have already maxed out their other savings accounts. They’re also good for longer-term savings goals. Opening a longer CD lets you lock in a high rate for the length of the term and not have to deal with the rate fluctuations that come with regular savings accounts.

CDs often require a minimum deposit to open, often ranging between $500 and $10,000. Any deposits larger than that are often considered “jumbo” CDs. However, there typically aren’t monthly fees to worry about with a CD.

Withdrawing money from a CD before maturity will result in an early withdrawal penalty. Remember how banks use savings accounts to fund their loans? The same is true here, except with CDs, you’re essentially making a promise to the bank that they can use those funds for a set amount of time.

For example, if you open a five-year CD, the bank expects to be able to use the funds for loans over a period of five years. If you withdraw that money after three years, the bank loses access to those assets and charge you a penalty. The penalty is often expressed as a portion of the interest earned. In this example, you might be charged 365 days’ worth of interest for making that early withdrawal. Some banks may offer “no-penalty” CDs, which tend to have shorter terms, that allow you to avoid the penalty.

Money market account

A money market account resembles a savings account more closely. It earns interest without an expiration date and limits your outgoing transactions to six per cycle. However, money market accounts can also include some checking account features like a debit card and the ability to write checks. This makes them a good alternative if you plan to dip into the account a bit more regularly, rather than using it only for emergencies.

Money market accounts tend to earn at higher interest rates than regular savings accounts. However, they also tend to require higher balances to open and then earn interest. Money markets often charge monthly fees, as well, even when they’re online.

Checking account

Checking and savings accounts are the bread and butter of your financial life. While savings accounts are meant for stashing your money away, checking accounts are designed to help you move through the world, making payments, sending transfers, getting cash and more.

That doesn’t mean that your checking account can’t earn interest, too, however. Maximize your savings by opening a high-yield checking account to match your high-yield savings account. Checking accounts don’t earn at rates as high as savings accounts, but that way, all your money in all your accounts can be growing. For more efficiency, consider keeping the majority of your funds in your savings account for better growth — then you can transfer funds over to your checking account as needed.

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.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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Banking

1 in 5 Regret Combining Finances With Spouse or Partner

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

First comes love. Then comes marriage. Then comes a joint bank account?

Many couples choose to merge their finances, so MagnifyMoney commissioned a survey of over 1,000 Americans regarding their feelings about doing so with a spouse or partner. About half of those surveyed are married or living with a partner.

The survey revealed that some feel regret or tension over combining their finances. Before you run along and open a joint bank account, keep reading for more findings. These are helpful discoveries when you consider that MagnifyMoney in 2017 found that 21% cited money as the cause of their divorce.

Key findings

  • 1 in 5 regret combining finances with their spouse or partner, and those who earn more than their partner are more likely to regret it. Breaking that down, 29% of higher earners feel regret, compared with 16% who earn less and 11% who make about the same amount as their partner.
    • Members of Generation X (ages 39 to 54) are more likely to wish they had not combined financial accounts. 27% of that age group reported regretting doing so, versus 22% of millennials (ages 23 to 38) and 12% of baby boomers (ages 55 to 73).
  • Women are almost twice as likely to say they’re not satisfied with the way finances are managed in their relationship. Across both genders, less than two-thirds are completely satisfied with the handling of money in their relationship.
  • Nearly 4 in 10 are concerned their spouse or partner spends too much. The higher earner in the relationship is typically more concerned about their partner’s spending levels than those who either earn less or earn about the same.
  • 58% percent of men said they outearn their spouse or partner, while just 23% of women said the same.
  • Unmarried couples living together are more likely to have argued about money within the past month than married couples, despite being less likely to have shared financial accounts. This could have something to do with the fact that 44% of unmarried individuals living with their partner are concerned that the partner spends too much, compared with 34% of married couples who said the same.
  • Millennials argue about money more often than other generations. About 40% said they had a money-related argument with their spouse or partner within the past month, versus 31% of Gen Xers and 22% of baby boomers.
  • 78% of Americans check with their partner or spouse before making a purchase over $500. 60% would be angry if their partner or spouse spent that amount without telling them first. Women are more likely than men to be angry about this occurrence.

Who is merging their finances?

Joint bank accounts are not reserved solely for married couples. Those living with a partner can join their finances as well.

In fact, 43% of unmarried couples who live together have entirely joint bank accounts or at least have some of their money in a joint bank account with their partner. There is no guarantee married couples will merge their bank accounts either, as 16% keep separate bank accounts.

Even married couples who share bank accounts don’t necessarily combine all their finances. While 65% of married couples merged their financial accounts, 19% reported keeping some of their finances separate.

Couples are more likely to merge their finances on their own timeline. In fact, 69% of married couples opened their joint account after the wedding, while 16% did so after getting engaged. Even without marriage plans on the horizon, 13% chose to merge their finances after moving in together.

But not everyone is ready to jump on the shared finances bandwagon. Of those with separate accounts, 73% said they never plan on joining their finances. Meanwhile, 21% plan to combine their finances after marriage, with just 4% waiting for an engagement and 3% waiting until they have a child to do so.

Why couples merge their finances

As with other areas of life, couples can have varying opinions regarding how they should best manage their finances.

Whether couples are joining their finances, many still plan together financially. In fact, 30% of couples reported sharing responsibility for managing the household finances.

Spending causes problems

You might want to check with your beloved before you make a pricey purchase. Of those surveyed, 60% reported they would be angry if their partner or spouse spent $500 without telling them first. Women were even more likely to express anger if they weren’t informed of such a purchase.

Not being on the same page about what constitutes as overspending could lead to anger and resentment, which are feelings most couples would like to avoid. The amount that members of a couple are content with spending can vary.

Considering the fact that 36% of people feel their spouse or partner spends too much money, it’s wise to get on the same page and determine an appropriate budget.

How couples feel about merging their finances

For many couples, combining finances feels like a no-brainer. It’s just the next step after the honeymoon. But some couples may find that this seemingly obvious financial step doesn’t work for them.

In fact, 20% of couples reported regretting merging their finances with a spouse or partner. Those who earn more than their romantic partner feel more regret after merging finances. Almost 29% of respondents who earn more than their partner regret doing so. The higher-earning partners were also about twice as likely to report arguing with their partner about money at least once a week.

This is a reminder why it’s important to speak with your partner about important financial issues before you merge your lives together. Planning how you’ll work together to pay off debt, create an emergency fund, buy a home and manage your living expenses is an important part of keeping your relationship financially and emotionally healthy.

Methodology

MagnifyMoney by LendingTree commissioned Qualtrics to conduct an online survey of 1,070 Americans, 573 of whom are either married or living with their partner. The survey was fielded July 26-30, with the sample base proportioned to represent the general population.

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.

Jacqueline DeMarco
Jacqueline DeMarco |

Jacqueline DeMarco is a writer at MagnifyMoney. You can email Jacqueline here