The Best Savings Account Rates in November 2020

Methodology

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.