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 0.27% (as of March 2020). 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.
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.
Rates are accurate as of March 5, 2020
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. Barclays – 1.60% APY, no minimum deposit to open account
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 1.60% 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.
2. American Express National Bank – 1.70% APY, no minimum deposit amount
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 1.70% variable Annual Percentage Yield (APY) 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.
3. Goldman Sachs Bank USA – 1.70% APY, no minimum deposit to open account
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 1.70% 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.
4. Capital One — 1.50% APY, no minimum deposit to open account
Turn to Capital One 360 for Capital One Bank’s more competitive rates. As an online-only operation, Capital One 360 accounts provide savers with higher deposit rates for better savings. They’re not just a flash in the pan either; Capital One remains one of our top picks for their consistently competitive rates.
The Capital One 360 Performance Savings earns a 1.50% APY on all balances. There’s no monthly fee, so your savings can grow in peace without the bank taking out a chunk. You can open the account with any deposit amount that works for you, as there is no minimum deposit nor balance requirement.
Capital One 360 accounts can be managed easily online, on the bank’s mobile app or at a Capital One Cafe or branch.
5. Discover Bank – 1.50% APY, no minimum deposit to open account
Known for its credit cards, Discover’s first card was first used in 1985. In that same year, Discover acquired Greenwood Trust Company, which officially changed its name to Discover Bank in 2000. Today, you can find several online banking products from Discover Bank, including certificates of deposit and a cashback checking account.
Dip into Discover Bank’s deposit offerings with its competitive Online Savings Account. There’s no minimum to open the account or start earning its 1.50% APY. Plus, interest is compounded daily and paid monthly for faster earnings. Discover also promises no fees so you can avoid fees on items like monthly maintenance, checks, returned deposited items, excessive withdrawals and insufficient funds.
Discover Bank is accessible solely online, which includes its mobile app, available both in the Apple App Store and Google Play. Its mobile app offers check deposit.
Best Rates from New Online Savings Accounts
Over the last year or so, there have been several 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. North American Savings Bank (NASB) — 1.97% APY, $50,000 minimum deposit to earn APY
Founded in 1927, North American Savings Bank is headquartered in Kansas City, Mo. It is a full-service bank with a range of deposit and lending products. You can find NASB locations in the Kansas City area.
NASB’s High Rate Savings account reserves its 1.97% APY for high balances between $50,000 and $5 million. Any balance outside of that range that will earn 0.10% APY instead. Whatever your balance, NASB guarantees your rate for six months after opening. You’ll need at least $50,000 to open the account. There is no monthly fee to worry about, and you will have to enroll in E-Statements.
You can access your account online, over the phone and through Mobile Banking, which includes Mobile Check Deposit.
2. CIBC USA – 0% APY, $1,000 minimum deposit to open account
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 0% 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.
3. HSBC Direct – 1.70% APY, $1 minimum deposit to open account
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 1.70% 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.
4. Vio Bank – 1.75% 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 1.75% 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.
5. CIT Bank – 1.75% APY, $100 minimum deposit to open account
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 2.20% 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 1.75% 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 1.15%. 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.
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. FitnessBank – 2.10% 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 2.10% APY is reserved for customers who log 12,500 steps or more. The rate drops to 2.00% APY for an average daily step count between 10,000 to 12,499; to 1.75% APY for 7,500 to 9,999 steps; and to 1.25% 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 2.10% 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. BrioDirect – 1.65% APY, $25 minimum deposit to open account
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 1.65% 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. First Foundation Bank — 1.75% 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 1.75% 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.
4. Prime Alliance Bank — 1.96% APY, $10,000 minimum balance to earn APY
Prime Alliance Bank was founded in 2004 and is headquartered in Woods Cross, Utah. This is its one location that you can bank at, otherwise reachable over the phone, email and fax.
Prime Alliance Bank’s Personal Savings account earns its competitive 1.96% APY on balances $10,000 and over. Balances between $1 and $9,999 will earn 1.86% instead, which is still a solid rate at which to grow your money. There is no monthly fee on the account.
You can access your account online and on mobile, where you can use Mobile Deposit to deposit checks remotely.
5. Customers Bank – 0.25% APY, $25,000 minimum deposit to open account
Established in 1997, Customers Bank is a subsidiary of Customers Bancorp, Inc., a bank holding company in Phoenixville, Pa.
You’ll need quite a big deposit to snag the Customers Bank High-Yield Savings Account’s 0.25% APY — it requires $25,000 to open and to earn interest.
There is no maximum balance limit, though, so this may work best for individuals with higher balances. Interest is compounded monthly.
Smaller-balance savers can choose Customers Bank’s Digital Savings account. It also earns 0.25% APY, but with a $5,000 minimum balance requirement instead.
To fund a High-Yield Savings Account, you can transfer money from an existing Customers Bank account, make an online transfer or wire money from an external account or mail a check.
Customers Bank offers a mobile app available in the Apple Store and 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 – Up to $200 bonus with $25,000 minimum deposit + 1.50% APY on all balances
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 April 6, 2020 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 April. 20, 2020, 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 May 4, 2020. You can apply online or by phone.
The account itself earns at a solid 1.50% APY, and interest is compounded daily. There are no minimum deposit or balance requirements or a monthly fee.
2. Citibank – $700 bonus with $50,000 minimum deposit
Citibank got its start way back in 1812 as the City Bank of New York. Part of the larger Citigroup, Citibank offers customers deposit, lending and investing products for both individuals and businesses. Citi has a physical presence in 98 countries, including in 12 U.S. states plus Washington D.C. Citibank’s headquarters are located in Sioux Falls, S.D.
You have until March 21, 2020 to snag this huge $700 bonus offer from Citibank. To earn the bonus, open a Citi Priority Account Package and deposit at least $50,000 in new money within 30 days of opening the new account. New money means the funds must be held outside of Citibank to qualify. You must maintain at least $50,000 between the checking and savings accounts in the Package for 60 consecutive calendar days to qualify.
The Citi Priority Account Package charges a $30 monthly fee, which you can waive by keeping a combined average monthly balance of $50,000 or more in eligible linked accounts. As a premium account, the Citi Priority Account Package includes access to Citi Personal Wealth Management, relationship rates, free and unlimited checks and more. Its Interest Checking account earns 0.03% APY and the Citi Savings account earns between 0.04% and 0.15% APY, depending on your balance. Higher balances earn higher rates.
3. Citibank – Up to $500 bonus with $15,000 minimum deposit
Based in Sioux Falls, S.D., Citi traces its history back to New York City in 1812. Snag a $400 reward from Citibank by being a new customer and opening a Citibank Account Package by March 31, 2020. 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. Add an extra $100 to your reward by making at least one qualifying direct deposit each month for two consecutive months within 60 days of account opening for a total bonus of $500.
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.
4. Associated Bank — $400 bonus with $25,100 minimum deposit
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 0.01% 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 0.03% and 0.25% APY.
5. Chase – Up to $350 bonus with $10,000 minimum deposit and direct deposit in a qualifying checking account
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 April 20, 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.
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
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. Blue Federal Credit Union — 5.00% APY, $25 minimum deposit
Blue Federal Credit Union formed in 2016, as a merger of Wyoming-chartered Warren Federal Credit Union and Colorado-based Community Financial Credit Union. Blue has locations in Colorado and Wyoming, as well as thousands more CO-OP Shared Branches around the country.With a Blue Federal Credit Union Accelerated Savings account, it’s best to keep a maximum of $1,000 in the account. Balances between $25 to $1,000 maintain the high rate of 5.00% APY, while anything over $1,000 drops to 0.10% APY. To earn dividends at all, you must maintain a $25 minimum balance and make a transfer of at least $5 per month into the account. Dividends are calculated daily and paid monthly.Blue Federal Credit Union is accessible in person, over its 24/7 call center phone line, online and on mobile.
3. St. Mary’s Bank — 5.00% APY, $25 minimum deposit
Founded in 1908, St. Mary’s Bank is headquartered in Manchester, N.H. It was the first credit union founded in America, known then as St. Mary’s Cooperative Credit Association. All its locations are in New Hampshire, but membership is open to anyone who purchases one share of capital stock for $5.
For higher-than-usual savings at St. Mary’s Bank, look to its Rainy Day Savings account. It gives a big 5.00% APY boost to balances $25 – $499. Balances between $500 and $999 earn 3.00% APY, remaining competitive, but balances $1,000 and over drop to a mere 0.05% APY. To earn interest, you must make a monthly automatic transfer of at least $25 from direct deposit or a St. Mary’s Bank checking account.
Almost quite literally meant for rainy day savings, this account limits you to one free withdrawal per month. Each subsequent withdrawal will cost $2. There is no monthly fee on the account.
St. Mary’s Bank is accessible online, over the phone, at branches and through its free mobile banking app, available for Android and Apple devices.
4. CommunityWide Federal Credit Union – 1.90% APY, $1 minimum deposit to open account
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 1.90% 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.
5. USALLIANCE Financial – 0.33% APY, $500 minimum balance amount
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 0.33% 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.
Savings Account FAQs
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 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.