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Updated on Wednesday, September 16, 2020
Interest rates on savings accounts vary greatly, which means you need to shop around to find your best rate available. As of September 2020, you won’t find a rate higher than 2%, although rate leaders still beat out the month’s average savings account rate, which is around 0.24%. To make it easier for you to get the best possible return on your savings no matter the times, we check rates daily at more than 5,000 U.S. banks and credit unions.
A savings account is a key component of everyone’s financial life, but 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.
So 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.
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Best savings account rates
1. FitnessBank – 1.05% APY, $100 minimum deposit to open account
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 1.05% APY is reserved for customers who log 12,500 steps or more. The rate drops to 0.95% APY for an average daily step count between 10,000 to 12,499; to 0.85% APY for 7,500 to 9,999 steps; and to 0.75% 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 1.05% 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.
2. Nationwide by Axos Bank — 0.80% APY, $1,000 minimum direct deposit to earn
Through Axos Bank, Nationwide is offering competitive deposit accounts, among other banking services like loans and business finances. Axos Bank is entirely digital, and was founded in 2000. Axos Bank provides the FDIC insurance for Nationwide by Axos Bank accounts; insurance deposits with either name are considered insured under Axos Bank.
The My Savings account works best when you pair it with a My Checking account. Receiving a monthly $1,000 direct deposit into the checking account will earn you the high 0.80% APY on your My Savings balance, no matter the amount. You can still earn a 0.60% APY on all balances if you choose to forgo the checking account.
You’ll need at least $100 to open a My Savings account. There is no monthly fee.
3. Affirm — 1.00% APY, $0 minimum deposit to open account
Affirm’s main business is creating payment plans for your online purchases, but it also offers a mobile savings account with FDIC insurance provided by Cross River Bank. Affirm Savings earns 1.00% APY. There are no minimum balance requirements, nor a monthly fee.
Affirm Savings was designed specifically for a mobile experience, so you will need to download the Affirm mobile app, available in the Apple App Store and the Google Play Store. Online transfers are the way to go with this account; there is no debit card or checks.
4. First Foundation Bank — 1.00% APY, $1,000 minimum
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 1.00% APY on balances from $1,000 to $5 million. Balances over that earn 0.35% APY. You’ll need to open a new account with at least $1,000 in new money — 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.
5. Axos Bank – 0.81% APY, $250 minimum deposit to open account
Axos Bank is a digital bank that offers a full range of financial services and products for both individuals and businesses. Its High Yield Savings earns 0.81% APY on all balances. You’ll need at least $250 to open the account, but after that, there’s no minimum balance requirement. There’s also no monthly fee on the account.
Axos Bank is accessible online and through its mobile app, but High Yield Savings account holders can also request a free ATM card for further access. You can use any MoneyPass and Allpoint ATM nationwide without incurring a fee.
6. TAB Bank – 0.90% APY, $0 minimum deposit to open account
TAB Bank has been around since 1998 and is based in Ogden, Utah. Its High Yield Savings account offers a 0.90% APY with daily compounding. There’s no minimum deposit needed to open an account, but you do need a daily balance of at least $1. On the opposite end, there is no balance cap. There is also no monthly fee, although you could face fees for other things like outgoing wires, cashier’s checks, overdrafts and paper statements.
Within the first six months after account opening, TAB Bank does not allow you to request transfers from external accounts while in your TAB account. Instead, TAB suggests that you initiate those transfers from the external account itself. The limit on incoming transfers during this time is $1,000, and then increases to $3,000 after this introductory period. Transfers out of your TAB Bank account are limited to $3,000 and typically take two to three days to post in the external account.
7. ConnectOne Bank — 0.90% APY, $2,500 minimum deposit
ConnectOne Bank was founded in 2005 in Englewood Cliffs, N.J., where it is still headquartered. Now, it has branches throughout New Jersey and New York.
ConnectOne Bank has also expanded its product offerings online, with its high-yield OneConnection Savings account, found exclusively online. This account requires at least $2,500 to open. There is no monthly maintenance fee, and interest compounds daily.
The account doesn’t include a debit or ATM card, so you’ll need to transfer funds to another account or request a check from the bank to make a withdrawal. However, you can visit a ConnectOne Bank location to deposit checks or cash into the account. You can also deposit checks through the Remote Check Deposit feature in the ConnectOne Bank mobile app.
8. Vio Bank – 0.83% APY, $100 minimum deposit to open account
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 0.83% 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.
9. Live Oak Bank — 0.70% APY, $0 minimum deposit
Founded in 2008, Live Oak Bank has a single location in Wilmington, N.C. Otherwise, it’s accessible online, over the phone and on mobile either on your browser or through the Live Oak Bank mobile app.
Live Oak Bank offers a better way to save with its high yield online savings account. Anyone can save with this account as there is no minimum deposit or balance requirement, and there is no monthly fee either. Interest compounds daily on this account.
You can deposit money via online transfers, wire transfers, mailing a check or remotely depositing a check with the Live Oak Bank mobile app.
10. AmboyDirect — 0.70% APY, $100 minimum deposit
Founded in 1990, Amboy Direct is the online banking arm of Amboy Bank, which was founded in 1888. Amboy Bank is based in New Jersey.
The Amboy Direct eSavings account offers its top 0.70% APY on balances from $3,000 to $100,000. Balances from $300 to just below $3,000 earn a 0.30% APY instead, while balances below $300 don’t earn any interest. The eSavings account requires at least $100 to open and its balance cap maxes out at $100,000. There is no monthly fee on the account.
Your AmboyDirect accounts can be managed and accessed online and over the phone.
To find the best 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.
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.
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.
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.
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 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 savings accounts that you should know.
Read on to find out more about how savings accounts work, how many savings accounts you should have and more.
What is a savings account
The definition of a savings account is a deposit account that earns interest and allows six “convenient” withdrawals per statement cycle. This limit applies to telephonic transfers, preauthorized and automatic transfers and withdrawals and transfers made by check, debit card or another similar method. Savings accounts are offered by traditional brick-and-mortar banks, online banks, credit unions and other financial institutions.
Deposits held in savings accounts at banks are typically insured by the Federal Deposit Insurance Corporation (FDIC), while credit union deposits are insured by the National Credit Union Administration (NCUA). When looking for the best savings account, always choose an institution insured by either the FDIC or the NCUA. This protects your savings account with the backing of the U.S. Federal Government in the event that your bank fails.
How do savings accounts work
Savings accounts are interest-bearing deposit accounts that hold your money safely and securely with a financial institution. They are liquid, meaning you can withdraw your money at any time you choose. However, due to the limitations of the Federal Reserve’s Regulation D, savings accounts only allow six convenient transfers and withdrawals per statement cycle. Exceeding this limit will typically result in a fee for each additional transaction.
While almost all savings accounts earn interest, the earnings may vary depending on what type of bank you choose.
When should I use a savings account
You can use a savings account to house your emergency fund as well as any cash you don’t need to cover your monthly spending habits. Savings accounts are highly liquid and easy to access when you need them — certificates of deposit (CDs) and investment accounts are much less liquid — but still earns more interest than regular checking accounts.
Savings accounts are most often used for general savings, and they’re a much better choice than keeping all of your money in a checking account. A savings account with a competitive rate lets your money grow by earning a strong interest rate. Still, it’s always best to keep a financial cushion in your checking account, to cover expenses and avoid overdrafts.
Separate savings accounts are a great way to meet multiple financial goals. For example, you could save funds for future college tuition costs in one savings account, and money for your next vacation in a separate savings account.
How to choose the right savings account for you
When shopping for the best savings account, your first consideration should be an account’s interest rate. If you’re going to let your money sit somewhere, you want to make it a worthwhile investment. Second, check for fees — there’s no use earning a lot in savings if that’s just going to be taken away by pesky fees. Finally, consider broadening your horizons so you can weigh all your options.
Compare offers to get the best savings rate. Use our savings account comparison tool to calculate how much you could earn with different accounts. You can filter by ZIP code and size, which can help large-balance savers find better options than no-minimum options.
Don’t forget about fees. Snagging the highest interest rate isn’t always your best bet. You also want to ensure the whole account helps you earn consistent returns. For example, a high-rate savings account might reset to a lower APY after an introductory period. Perhaps the best rate requires a balance that’s too high or too low for your needs. And watch out for monthly fees that could eat into your savings.
Compare options beyond banks. It’s easy to keep a savings account with the bank your family has banked with for generations. But you could be missing out on incredible savings by ignoring new banks and even credit unions.
Think beyond your savings rate. Don’t let yourself get stuck focusing solely on rates. Most banks complement their savings accounts with a contingent of other account types, like checking or CD products. Do you work with cash a lot or require specialized services like obtaining cashiers checks or want access to a checkbook? The online banks who typically offer the highest APYs may fall short in these categories.
What are the different types of savings accounts
Financial institutions offer a few different varieties of savings accounts. For instance, a money market account is technically a type of savings account under Regulation D, but it’s often marketed under its own name.
Certain labels are applied to savings accounts to differentiate features or ownership types. For example, an online savings account is just a standard savings account that’s available online. Likewise, a high-yield savings account is simply a standard savings account that earns a high interest rate.
Differences in account ownership do not change the way savings accounts function — withdrawal limits and interest rates remain the same. That said, there are a few details worth highlighting when it comes to savings account ownership types:
Individual savings account: This is a savings account for one person. No one else can access funds saved in the account unless the savings account holder authorizes it. You may see savings accounts marketed with other labels like “high yield” or “online” savings accounts, but they all fall underneath the same umbrella of “individual savings accounts”.
High yield savings account: These savings accounts focus on offering the highest savings rates. They are offered by a number of online, local, and national banking institutions. The higher rates on these accounts may be offset by a limited selection of banking services. You can read more about these in our review of the best high yield savings accounts.
Online savings account: These savings accounts focus on ease of access with 24/7 access to online banking and they often overlap with high yield savings accounts. It may be difficult to deposit/withdraw cash and checks with online savings accounts, due to their limited ATM networks and lack of physical branches.
Joint savings account: With a joint savings account, two or more people share equal access to funds saved in the account. These are distinct from individual savings accounts.
Custodial account: These accounts let a designated custodian manage funds for the benefit of a minor, who then assumes ownership of the account when they turn 18 or 21 years old, depending on the state. Common custodial accounts are associated with UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) agreements. These are functionally distinct from individual savings accounts.
Payable on Death (POD) account: This type lets the account owner choose beneficiaries who inherit the funds saved in the account after the owner passes away. These are functionally distinct from individual savings accounts.
Determining which is the best savings account for you can be a difficult decision and will depend on your individual needs. However, there’s no real limit to the number of savings accounts that you can open; take some time to shop around to find a savings account that combines the highest rates, greatest convenience and still fits your unique needs.
What are the typical fees associated with savings accounts?
The main fee you should look out for when shopping for any bank account is the pesky monthly service fee. These fees are charged for simply owning an account, and can range from as little as $5 to as much as $25, depending on the institution and the account.
Another common fee associated with savings accounts is the excessive transaction fee. This fee is charged each time you go over the legal limit of six transfers per statement cycle, and usually runs around $10. Some institutions, like Synchrony, do not charge an excessive transaction fee; however, they will close the account if an account holder makes excessive transactions more than occasionally.
You should also watch out for a paper statement fee. Technically this is not a monthly service fee, but many institutions charge you on a monthly basis if you choose to receive paper statements in addition to electronic statements. Some savings accounts have done away with paper statements altogether; check with your bank to confirm their terms and conditions.
Should I have a savings account at the same bank as my checking account?
You certainly could choose to keep your savings account at the same bank as your checking account for convenience’s sake, but that doesn’t mean you should. Your savings deserve the best interest rate available, which earns you the highest possible return. If you keep your checking account with a traditional brick-and-mortar bank, you’re not likely to find the best savings account rates at the same institution.
To get the best return on your savings possible, open a savings account with a competitive APY. These accounts are most often found at online banks, but a handful of brick-and-mortar institutions have started offering high-rate savings accounts that outearn their regular savings accounts by a mile.
It’s not that there aren’t any advantages to keeping a savings account at the same institution as your checking account — you do get slightly quicker transfers between the accounts, and you can see both accounts in a single app dashboard. If these benefits are important to you, check out Ally Bank, Discover Bank or Capital One 360. They offer competitive rates on both savings and checking, and Capital One 360 also has the benefit of branches in select states.
Savings Account FAQs
Your money is safe in a savings account as long as you bank with a reputable, insured institution. Your money is protected in case of bank failure by the FDIC for bank deposits or by the NCUA for credit union deposits. Your money should also be protected by safety measures taken by each institution, like firewalls, encryption, antivirus and anti-fraud detection and more. If you want to know more about the systems your bank has in place, you can typically find the information on their website or by giving them a call. It’s a good idea to take safety and privacy into account when shopping for the best savings account.
Savings account rates are one of the most important features when looking for an account. 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. It’s important to note that institutions tend to reserve the right to change their rates at any time, without warning. Luckily, there are institutions that notify you of upcoming changes, especially if it’s a substantial rate change. Each institution’s level of transparency and communication is something to consider when shopping around for the best savings account. Looking at an institutions historical rate changes will allow you to choose a bank that has consistently high rates.
The choice between bank and credit union is largely based on personal preference. Credit unions tend to be more community-focused than banks. You’re a member of a credit union, not a customer, so credit union members often have a say in credit union governance matters and elections. Plus, credit unions are often based around a specific geographic area, so you can build relationships with employees and fellow members.
You have to pay taxes on your savings account (and other deposit accounts) if you earned $10 or more in interest per year.Your bank will send you (and the IRS) a copy of Form 1099-INT if you meet or exceed this interest earnings threshold. If you don’t receive a 1099-INT from your bank, but earned $10 or more in interest, you’ll still need to report the earnings on your tax return.
Interest earnings are considered regular income for tax purposes. If you earned more than $1,500 in interest, you’ll need to detail the sources of that income on Schedule B of Form 1040.
You may wish to open multiple savings accounts if you’re an individual with over $250,000 in savings. The FDIC and NCUA insurance only cover your bank accounts at the institution level. If you have an amount that exceeds the $250,000 insurance limit, you should spread your money out between multiple banks.This means that even if you have multiple savings accounts at the same bank, they would all be subject to the same $250,000 insurance limit. However, if you were to open multiple savings accounts across different institutions, you would be guaranteed up to $250,000 at each bank. This would allow all your money to be FDIC- or NCUA-insured.
Technically, there’s nothing stopping you from opening as many savings accounts as you want. However, this can get pretty cluttered and you can lose track of all your finances easily if you’re not careful. Make sure you’re getting the best savings rates for each account you open by shopping around.
You usually can open two or more savings accounts at the same bank, depending on the bank’s own policies. Each account will have its own account number. This tactic can be good for separating different savings goals. Oftentimes, banks can offer more than one type of account which can fit different needs. However, this doesn’t mean that you’ll get the best rates at the same bank. It’s still a good idea to shop across multiple banks to find the best savings account that suits your needs.
You can make ACH transfers and wire transfers from a savings account. If your account includes a debit/ATM card or checks, you can also make payments via those methods. Still, don’t forget that savings accounts are limited to six transfers and withdrawals per statement cycle. If you exceed these limits, you run the risk of incurring excessive withdrawal fees or having your savings account closed altogether.