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Best Cash Back Credit Cards for Gas – August 2019

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.

Gas in car_lg

Whether you’re hit by high gas prices in your area or you’re a heavy commuter, finding a credit card that offers a high rewards rate on gas purchases will definitely come in handy. There are cards that can earn you up to 5% cash back on eligible gas purchases, which can take the sting out of a stop to top off the tank.

Here are our top picks for gas credit cards.

Fort Knox Federal Credit Union Visa® Platinum Card

Fort Knox Federal Credit Union Visa® Platinum Card

APPLY NOW Secured

on Fort Knox Federal Credit Union’s secure website

Fort Knox Federal Credit Union Visa® Platinum Card

Regular Purchase APR
11.50% - 18.00% Variable
Annual fee
$0
Rewards Rate
Unlimited 5% cash back on gas and 1% cash back on all retail purchases.

The Fort Knox Federal Credit Union Visa® Platinum Card lets you Unlimited 5% cash back on gas and 1% cash back on all retail purchases. This is a great rate that can earn you significant rewards. There is also no annual fee. Since Fort Knox is a credit union, you will have to join in order to obtain this card. Anyone can join for $15, of which $5 represents one share in the credit union; the remaining $10 covers your one-time membership fee. This card is great for big spenders in gas who don’t mind working with a credit union.

Sams Club® Mastercard®

Sams Club® Mastercard®

APPLY NOW Secured

on Sam's Club’s secure website

Sams Club® Mastercard®

Regular Purchase APR
17.15% or 25.15% Variable
Annual fee
$0
Rewards Rate
A maximum of $5,000 cash back per calendar year and offers 5% cash back on gas (on first $6,000 per year in purchases, then 1%), 3% on dining and travel, and 1% on other purchases.

The Sams Club® Mastercard® offers a maximum of $5,000 cash back per calendar year and offers 5% cash back on gas (on first $6,000 per year in purchases, then 1%), 3% on dining and travel, and 1% on other purchases. You need to be a Sam’s Club member to have this card, and annual memberships start at $45. Qualifying gas purchases include spending at gas stations, Sam’s Club fuel stations and Walmart fuel stations located in the U.S. and Puerto Rico; however, there are exclusions: Purchases at fuel stations at wholesale clubs (other than Sam’s Club), certain supercenters and supermarkets won’t earn 5%. Instead, they’ll earn 1%. Take note that the cash back redemption is limited to an annual check mailed out in February. You then have to go to a Sam’s Club to redeem your check.

Costco Anywhere Visa® Card by Citi

Costco Anywhere Visa® Card by Citi

The information related to Costco Anywhere Visa® Card by Citi has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Costco Anywhere Visa® Card by Citi

Regular Purchase APR
17.24%* (Variable)
Annual fee
$0*
Rewards Rate
4% cash back on eligible gas for the first $7,000 per year and then 1% thereafter, 3% on restaurants & travel, 2% at Costco & Costco.com, 1% on all other purchases

The Costco Anywhere Visa® Card by Citi offers 4% cash back on eligible gas for the first $7,000 per year and then 1% thereafter, 3% on restaurants & travel, 2% at Costco & Costco.com, 1% on all other purchases. Most gas credit cards limit you to only U.S. gas purchases and often exclude wholesale gas purchases, but not this card. There is a $0* annual fee for this card, but you need to have a Costco membership (currently $60). The main catch with this card is it’s not simple to redeem rewards — cash back will be provided as an annual certificate in February billing statements, redeemable for cash or merchandise at US Costco Warehouses.

Bank of America® Cash Rewards credit card - $200 Cash Rewards Offer

Bank of America® Cash Rewards credit card

APPLY NOW Secured

on Bank Of America’s secure website

Bank of America® Cash Rewards credit card

Regular Purchase APR
16.24% - 26.24% Variable APR
Intro Purchase APR
0% Introductory APR on purchases for 15 billing cycles
Intro BT APR
0% Intro APR for 15 billing cycles for any balance transfers made in the first 60 days
Rewards Rate
3% and 2% cash back on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, 1% on all other purchases
Balance Transfer Fee
Either $10 or 3% of the amount of each transaction, whichever is greater.
Credit required
good-credit
Excellent/Good

If you select gas as your choice category, you’ll earn a good cashback rate on gas purchases with the Bank of America® Cash Rewards credit card - $200 Cash Rewards Offer. The card offers 3% and 2% cash back on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, 1% on all other purchases. There is a $0 annual fee. Cardholders who will have the most benefit are Bank of America Preferred Rewards members. As a Preferred Rewards member, you can increase your bonus to 25-75%, making your gas cash back an effective 3.75%-5.25%. There’s a sign-up bonus that can kickstart your rewards: $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.

The information related to Bank of America® Cash Rewards credit card - $200 Cash Rewards Offer has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Which card is the right fit for me?

Since there are many credit cards for you to maximize your rewards from gas purchases, it can be confusing to choose a card. There are cards that offer high rates without caps. Others come with additional bonus categories to consider.

The table below breaks down which gas card may be a good fit for you when factoring annual gas spending, cashback rate and annual fee. (Sign-on bonuses are not reflected.) Keep in mind: This only factors in spending on gas purchases and doesn’t consider if you spend in other categories or at the other cashback rates.

Here are several key takeaways:

  • The Bank of America® Cash Rewards credit card - $200 Cash Rewards Offer will earn you the most cash back ONLY if you’re a Preferred Rewards member with at least $100,000 in a BofA checking/savings account. Otherwise, the Fort Knox Federal Credit Union Visa® Platinum Card will earn you the most cash back.
  • Although the Costco Anywhere Visa® Card by Citi doesn’t earn you the most cash back, it may be a better fit for Costco shoppers due to the other high-cashback categories.
  • You won’t earn the best cashback rate with the Bank of America® Cash Rewards credit card - $200 Cash Rewards Offer unless you’re a Bank of America Preferred Rewards client with $100,000 in a checking or savings account — allowing you to benefit from a 75% redemption bonus
  • The Sams Club® Mastercard® is a good option for current members who fuel up at Sam’s Club and spend $5,000 or less a year on gas.
  

Card

Fort Knox Credit Union Visa® Platinum

Costco Anywhere Visa® Card by Citi

Bank of America® Cash Rewards Credit Card: without a BofA checking / savings

Bank of America® Cash Rewards Credit Card: with $100,000 in a BofA checking / savings

Sam's Club® Mastercard®

Spending

$1,000

$50

$40

$30

$53

$50

$2,000

$100

$80

$60

$105

$100

$3,000

$150

$120

$90

$158

$150

$4,000

$200

$160

$120

$210

$200

$5,000

$250

$200

$150

$263

$250

$6,000

$300

$240

$180

$315

$300

$7,000

$350

$280

$210

$368

$310

$8,000

$400

$290

$240

$420

$320

$9,000

$450

$300

$270

$473

$330

$10,000

$500

$310

$300

$525

$340

*We did not include the Costco and Sam’s Club membership fees in our calculations.

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.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

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Best of

Best Checking Account Bonus Offers

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.

It’s easy to stick with the same bank your whole life. If you’re not rate-chasing for the best deals out there, all you really need from an account is convenient access to your money to get by each day. At least that way, you get to avoid the hassle of switching your money and accounts, even if it does mean you miss out on some great savings rates.

Banks realize that it’s easy to stay put, too. So in an attempt to gain some new customers, banks can offer some great bonus offers on checking accounts. The promise of a few hundred dollars just for opening an account can be enough to incentivize potential customers to open an account. These bonus offers can be so tempting, that many people chase bonus offers to try and make a few extra bucks.

When looking for bonus offers, it’s important to look past the promotional dollar amount that’s being advertised. For starters, make sure you trust a bank before opening an account with them. You don’t want to be stuck with a new bank that has terrible customer service! Also, be sure to check what’s required of you to snag that bonus offer. Often, it’s opening the new account with a certain balance and maintaining that balance for the next few months. It could also require several direct deposits posted to the account. Make sure you can fulfill these requirements before opening an entirely new bank account.

If you should see an offer you like, just be aware that you may have to open the account from a specific webpage to qualify for the bonus. Other banks could require you to visit a branch to redeem your offer, so it’s important to double check the application requirements.

The 11 best checking account bonus offers in 2019

BankBonus*Minimum Deposit to Earn BonusWhen the deal expires
SimpleUp to $500$10,0008/31/2019
Citibank$600$50,0009/30/2019
CitibankUp to $500$15,0009/30/2019
Wells Fargo$400$2511/27/2019
Chase$300$010/14/2019
TD Bank$300 $2,5009/16/2019
SunTrust$300$3,0009/30/2019
PNC Bank$300$5,0009/30/2019
Chase$200 $2510/14/2019
Huntington$200$1,0008/30/2019
Citibank$200$5,0009/30/2019
*Terms apply

Methodology

The best checking account bonus offers are — simply put — the ones with the biggest cash amounts we could find at the time of publishing. Below, we’ll detail each of the 11 best checking account bonus offers. You’ll find out whether it’s available in your area and what the requirements you have to meet to earn the bonus.

You might also want to read more about what each account is like on its own. For example, you might want to snag the highest bonus, but what if the account normally charges a monthly fee that you can’t afford? Check it all out below.

Featured: Simple – Up to $500 bonus with qualifying activities

Offer ends 8/31/2019

Offer rules: You can earn a $250 bonus for each new Protected Goals Account (Individual and Shared) you open, up to $500 total. For each account you open, you’ll need to deposit at least $10,000 by 9/16/19 4:59PM PT. Then to qualify for the bonus, maintain a balance of at least $10,000 in each new Protected Goals Account through 12/31/19 4:59PM PT.

Who’s eligible: You must be opening a new Protected Goals account to qualify for this bonus. Eligible customers who meet the requirements will receive the bonus credit to their Protected Goals Account by 1/14/20 4:59PM PT. Your account(s) must be open and in good standing at the time of bonus credit to receive the bonus. Simple employees are ineligible for this promotion.

Account details: Simple offers a competitive 2.02% APY on all Protected Goals balances. There is no account fee. Plus, your Protected Goals account is automatically connected to your Simple Individual and/or Shared Accounts. Shared Accounts are meant for two people, whether you’re roommates, spouses or mere acquaintances.

LEARN MORE Secured

on Simple’s secure website

Citibank — $600 bonus with $50,000 minimum deposit

Offer ends 9/30/2019

The offer: To earn the $600 bonus on a new Citi Priority Account Package, you can apply at a Citi branch, call a Citi representative or through this Citibank page. You must make an initial deposit of at least $50,000 within 30 days of opening, between the new checking and savings accounts in the Package.

You must also maintain at least that balance for 60 consecutive calendar days following account opening.

Who’s eligible: Only new-to-Citibank customers who are opening a new Checking and a new Savings account qualify for this bonus offer. To open these accounts online, you must be a U.S. citizen or resident who is at least 18 years old.

Account details: The Citi Priority Package earns interest on its checking account, although at a minimal rate. You’ll also have a savings account, either Citi Savings or Citi Accelerate Savings, that earns interest depending on your balance. The package includes access to Citi Personal Wealth Management Financial Advisors by phone, investment resources and financial planning tools. It also adds extra perks like waived fees for overdraft protection, checkbooks and incoming wire transfers.

The Citi Priority Package charges a $30 monthly service fee. You can waive it by maintaining a combined average monthly balance of $50,000 or more in eligible linked deposit, retirement and investment accounts.

LEARN MORE Secured

on Citibank’s secure website

Citibank — $400 or $500 bonus with $15,000 minimum deposit

Offer ends 9/30/2019

Offer rules: You can earn $400 in bonus cash if you open a new eligible checking and savings account in a Citibank Account Package. You’ll need to deposit at least $15,000 in new-to-Citibank money within 30 days of opening. Since the package includes a checking and savings account, you can split that deposit between the accounts. You’ll need to maintain at least that much money in your accounts for 60 consecutive days to receive the bonus.

You can earn $100 more — for the total $500 bonus — when you complete at least one qualifying direct deposit (within 60 days of account opening) each month for two consecutive months.

Who’s eligible: You qualify for this offer if you are a new Citibank customer opening a new Checking and a new Savings account. To redeem the offer, you can visit a Citibank branch, call a Citibank Representative or apply online. You must be at least 18 years old and a U.S. citizen or resident to apply for these accounts online.

Account details: The Citibank Account Package

earns interest on your checking account balance, but at the lowest rate compared to the bank’s other accounts. The savings account earns interest according to balance tiers. The account includes certain perks like a free order of checkbooks, fee-free ATM access (when you meet balance requirements) and the opportunity to earn Citi ThankYou Rewards.

The Citibank Account Package charges a $25 monthly service fee. You can waive the fee if you keep at least $10,000 in eligible linked deposit, retirement and investment accounts with the bank.

LEARN MORE Secured

on Citibank’s secure website

Wells Fargo — $400 bonus with $3,000 minimum direct deposits

Offer ends 11/27/2019

Offer rules: You have a couple requirements that you’ll need to meet when you open a new Everyday Checking account with Wells Fargo in order to snag this checking account bonus offer. This offer can also apply to an Opportunity Checking account. For starters, you’ll need to open the new account with at least $25. Then within 150 days of account opening, you’ll need to receive at least $3,000 in direct deposits for three consecutive months.

Who’s eligible: You can redeem this checking account bonus offer directly from this online page or by bringing in an offer code, also found on that page, to a Wells Fargo branch in the Dallas/Ft. Worth, Texas, Orlando, Fla., and Phoenix areas. You cannot use this offer if you already have a Wells Fargo consumer checking account or have received a Wells Fargo bonus offer within the past 12 months.

Account details: The Wells Fargo Everyday Checking account is simple, with a Platinum Debit Card and access to more than 13,000 Wells Fargo ATMs. There is a $10 monthly fee on the account, which you can waive in a few different ways:

  • Make 10 or more debit card purchases or payments
  • Receive qualifying direct deposits totaling $500 or more
  • Maintain a $1,500 minimum daily balance
  • Link a Wells Fargo Campus ATM or Campus Debit Card (for college students)
  • The primary account owner is between 17 and 24 years old

LEARN MORE Secured

on Wells Fargo’s secure website

Chase — $300 bonus with direct deposit

Offer ends 10/14/2019

Offer rules: It’s pretty simple to earn this $300 bonus offer when you open a new Chase Premier Plus Checking account. You just need to make a direct deposit in this account within 60 days after opening. This can be your paycheck, pension or government benefits.

Eligibility: You cannot apply for this offer if you’re an existing Chase checking or fiduciary account holder. You do not qualify if you had an account closed within the last 90 days or closed with a negative balance.

Account details: Like its name suggests, Chase Premier Plus Checking is a high-end account. It earns interest, although at a minimal 0.01% APY on all balances. It has a high fee of $25, which you can waive with an average beginning day balance of at least $15,000 in combined balances between this account and any linked qualifying Chase checking, savings and other accounts.

The account includes four free non-Chase ATM transactions per statement cycle and free Chase design checks. You can also take advantage of a rent-free small safe deposit box.

LEARN MORE Secured

on Chase Bank’s secure website

Member FDIC

TD Bank — $300 bonus with $2,500 minimum direct deposits

9/16/2019

Offer rules: You can earn a $300 bonus when you open a new TD Beyond Checking account. The account needs to receive direct deposits of at least $2,500 within 60 days of opening to qualify. The direct deposit must be from your paycheck, pension or government benefits from your employer or the government.

Eligibility: To qualify for this checking account bonus offer, you must be a new TD Bank customer, without any previous or current TD Bank personal checking accounts. You must also live in the following states: CT, DC, DE, FL, MD, ME, MA, NC, NH, NJ, NY, PA, RI, VT, VA.

You cannot redeem the offer if you’re a Canadian cross-border banking customer.

Account details: The TD Beyond Checking account earns interest on all balances. Higher balances have the chance to get a slight rate boost, but all rates are still pretty minimal. Account holders can access non-TD ATMs without a TD fee and receive reimbursement for other ATM surcharges with a minimum daily balance of $2,500. The account also includes a free standard checks, money orders, stop payments, paper statements and incoming wire transfers.

The account charges a $25 monthly maintenance fee. However, you can waive the fee when you receive monthly direct deposits of $5,000 or more, maintain a minimum daily balance of $2,500 or maintain a combined balance of $25,000 across eligible TD accounts.

LEARN MORE Secured

on TD Bank’s secure website

SunTrust — $300 bonus with $3,000 in direct deposits

Offer ends 9/30/2019

Offer rules: This checking bonus offer applies to new SunTrust Advantage Checking accounts. You must make at least $3,000 in direct deposits per statement cycle for two consecutive cycles within the first three full months after opening the account.

The bonus will be deposited into your new account up to 8 weeks after all qualifications have been verified.

Eligibility: This offer is available to new SunTrust personal checking customers. You can’t even be a secondary account holder on another account or have closed a personal checking account within 180 days of July 2, 2018. You must also have a mailing address in Alabama, Arkansas, Georgia, Florida, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia or the District of Columbia.

To qualify, you must use the application link on this SunTrust page. You can also use the page the email yourself a coupon to bring into a SunTrust branch to redeem the offer.

Account details: The SunTrust Advantage Checking requires at least $100 to open. It earns interest on all balances, although the rate is minimal. The account charges a monthly maintenance fee of $20. You can waive this fee each month by meeting a certain balance or transaction requirements. The account also includes three free non-SunTrust ATM transactions per statement cycle.

LEARN MORE Secured

on SunTrust Bank’s secure website

PNC Bank — $300 bonus with $5,000 direct deposit

Offer ends 9/30/2019

Offer rules: The first step to snagging this $300 bonus is opening a new PNC Virtual Wallet with Performance Select. Then you must receive direct deposits totaling at least $5,000 and make at least 10 purchases with the PNC Bank Visa Debit Card linked to your new account.

Who’s eligible: You must be a new PNC customer to qualify for this offer. This means you must not own an existing PNC Bank consumer checking account, have closed an account within the past 90 days or have been paid a promotional premium in the past 12 months.

Account details: The Performance Select offers various banking perks like free non-PNC ATM use and ATM surcharge reimbursement. The account earns interest and offers the chance to boost your rate according to account relationship rates. There is a $25 fee. You can waive the fee with one of the following: $5,000 combined average monthly balance in your Spend, Reserve and/or up to six linked PNC Bank consumer checking accounts; $25,000 combined average monthly balance across PNC Bank consumer deposit and/or linked PNCI investment accounts; or $5,000 in qualifying monthly direct deposits.

LEARN MORE Secured

on PNC Bank’s secure website

Member FDIC

Chase — $200 bonus with $25 minimum deposit

Offer ends 10/14/2019

Offer rules: When you open a new Chase Total Checking account with at least $25 and set up direct deposit, you can get a bonus of $200. The direct deposit needs to be made to the account within 60 days of account opening. This can be your paycheck, pension or government benefits.

Opening the checking account alone can earn the $200 bonus. If you would also like to open a Chase Savings account along with the Chase Total Checking, you can boost your total reward to $350.

Eligibility: You cannot open a new account with the checking account bonus offer if you already have a Chase checking account. The offer also doesn’t apply to those with fiduciary accounts, who have had accounts closed within the last 90 days or closed with a negative balance.

Account details: Chase Total Checking is the bank’s most popular checking account out of its three checking options. It’s also the most basic and straightforward without any added perks or features. It charges a $12 monthly service fee that you can waive with either direct deposits of at least $500, a minimum daily balance of at least $1,500 or an average daily balance of at least $5,000 in combined linked qualifying Chase checking, savings and other balances.

LEARN MORE Secured

on Chase Bank’s secure website

Huntington — $200 bonus with $1,000 cumulative deposits

Offer ends 8/30/2019

Offer rules:You can benefit from this $200 bonus by opening either a Huntington 5 or Huntington 25 Checking account by August 30, 2019. You must make cumulative deposits of at least $1,000 within 60 days of account opening and keep your account open for at least 90 days to earn the reward.

Eligibility: You must be a resident of Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania or West Virginia to qualify for this bonus offer. You must also be a new Huntington checking customer who hasn’t closed a checking account within the last six months.

You’ll need to fund this new account with money not currently on deposit with Huntington. You cannot combine this offer with another checking offer.

You can redeem the offer by applying either online or through a code found online to bring to your local branch.

The account: The Huntington 5 Checking account earns at a modest 0.05% APY. There is a small $5 monthly fee that you can waive with at least $5,000 in total relationship balances, which includes other Huntington deposit and investment accounts.

The Huntington 25 Checking account earns slightly more interest at 0.10% APY for a higher fee of $25. You can waive the fee by maintaining at least $25,000 in total relationship balances. Additionally, the Huntington 25 Checking account allows for unlimited free ATM usage.

LEARN MORE Secured

on Huntington National Bank’s secure website

Citibank — $200 bonus with $5,000 minimum deposit

Offer ends 8/30/2019
Offer rules: Opening a new Citibank checking account in a Basic Banking Package can earn a $200 bonus if you deposit at least $5,000 in new money within 30 days of opening. You need to maintain at least that minimum in the account for 60 consecutive calendar days, too, to fully qualify for the reward.

Who’s eligible: You can redeem this offer through the offer page, by visiting a Citibank branch or by calling a bank representative. You’re eligible if you’re a new Citibank customer who is at least 18 years old and a U.S. citizen or resident.

The account: The Basic Banking Package is made for simple checking. It includes unlimited check writing and free non-Citi ATM usage for customers 62 and older. There is a $12 monthly fee that you can waive by making one qualifying direct deposit and one qualifying bill payment each cycle, or by keeping a combined average monthly balance of at least $1,500 in this account and other eligible linked accounts. Customers 62 and older can also waive the fee.

LEARN MORE Secured

on Citibank’s secure website

5 things to watch out for with checking account bonus offers

#1 Checking account bonus offers aren’t entirely “no-strings-attached.” You can see above the various requirements you typically have to meet to earn a bonus, whether that’s meeting a minimum deposit amount or completing a certain number of direct deposits. But there’s often more to checking account bonus offers than what meets the eye.

#2 Banks report bonus payouts as interest to the IRS. In the year you receive your bonus, you’ll also receive a 1099-INT form, indicating you need to file the “income” in your taxes for that year. This lessens the total reward you gain from the checking account bonus offer. The exact amount deducted will depend on your tax bracket, but the higher the bracket, the smaller your final bonus.

#3 Banks may pull a credit check and a ChexSystem verification report when you apply for an account. This allows them to check for a history of good account standing, or, to the opposite, any dings in your financial history, like a trail of unpaid fees or bounced checks. Even if you have nothing to hide, a hard inquiry into your credit can temporarily dip your score just a little, so if you’re just opening one account, the effect won’t be catastrophic. However, if you’re opening multiple new accounts within quick succession, your credit score can take a hit.

Opening several accounts can also appear in a ChexSystem report. Whenever a bank pulls a ChexSystems report, it shows up as an inquiry. While this doesn’t ding your credit score or financial history, it may hurt your chances at a new account if a bank sees all those recent inquiries.

#4 You need to keep the account open for at least a few months. If you thought you could quickly open an account, collect your checking account bonus and close the account before moving onto the next one, we’re here to tell you that’s not how it works. Remember all those requirements you need to meet to redeem the offer? Not only is there a minimum deposit requirement, but you also need to keep your balance above that minimum for a certain number of days, typically 60.

Even after waiting two months to fully qualify, you may not see the bonus deposit into your account until months later. For example, Citi will deposit your bonus into the qualified account 90 days after you complete all the required activities. You may need to wait even longer if there are delays in depositing your reward. If that does happen, though, contact customer service to see what the delay might be.

You could also lose your bonus rewards if you close the new account within a certain time period. For example, Chase will deduct the checking account bonus amount from your account at closing if you close the account six months after opening with the bonus offer. This protects banks from paying out too many bonuses without getting any new account deposits in return.

#5 Finally, make sure you’re opening your new account the right way. To snag a checking account bonus offer, you often need to start your application through the right webpage. Other banks may require you to visit a branch to redeem the offer. Pay attention to the specific bank and account requirements; otherwise, you could find yourself with a new checking account, just without a bonus.

Think beyond the bonus offer when committing to a checking account

Although it’s tempting, you shouldn’t open new accounts left and right just for a checking account bonus offer. Once you snag that bonus, you’re stuck with an entirely new checking account. You should make sure that you’re comfortable enough with the account to make chasing the bonus worthwhile.

Pay attention to the account’s fees. Banks are quick to advertise the checking account bonus offer and the account’s many benefits. But make sure you also look for the account’s monthly maintenance fee. Once you open that account, you’ll be responsible for paying that fee each month. Plus, don’t forget that it takes months to meet the offer requirements in the first place, and another few months for the bonus to be deposited into your account. Paying that fee over those months can really add up, cutting into the total bonus you’ll actually receive. No one wants to be trapped paying an unnecessary and high fee that could have been avoided.

If you do choose to close your new account, whether before or after snagging the bonus, you’ll likely face a fee for closing it early. Paying this fee certainly isn’t worth it if you didn’t earn the bonus. But even if you do earn those extra dollars, paying any fee lessens the total reward you could have received. Some banks may also deduct the checking account bonus amount from your account if you close it too early, leaving you with zero net gain.

Make sure you can meet an account’s minimum balance. You can often waive an account’s monthly fee by meeting further requirements, typically a minimum balance. These can reach pretty high, though, especially when accounts have several features and perks. These accounts also tend to offer higher bonuses, so be careful if you’re looking solely for the highest bonus.

Instead, look for the checking account bonus offers that require lower balances to qualify. These accounts tend to charge smaller monthly fees. Even better, look for an account that doesn’t charge a monthly service fee, no matter your balance.

The accounts with high bonuses may not be the most favorable ones. Banks create these checking account bonus offers to invite consumers to become a customer. But perhaps there’s a reason why not too many new customers are opening these accounts. If you take a look at the accounts above, you’ll see they’re all from brick-and-mortar banks. They all charge monthly fees and can require sky-high balances to waive those fees. Those that earn interest only earn at the most minimal rates. These accounts, while appealing in the short-term for their bonuses, may not be the most beneficial in the long run for your finances. You should invest in accounts that grow and save you money.

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

Advertiser Disclosure

Best of, Earning Interest

The Best High-Yield Online Savings Accounts in August 2019

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.

The Best Online Savings Accounts

Updated August 22, 2019

There are no excuses for sticking with a low-rate savings account these days. Online savings accounts provide consumers with interest rates that are way above those offered by conventional banks. The best online savings accounts can easily earn you an APY of 2.15% or greater, while the average rate offered by a traditional brick-and-mortar bank remains at a paltry 0.26%.

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

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

1. High Rate: Goldman Sachs Bank USA – 2.15% APY, no minimum balance (but no ATM access)

High-yield Online Savings Account from Goldman Sachs Bank USA

Our advertiser Marcus by Goldman Sachs, the consumer bank of Wall Street giant Goldman Sachs, offers a 2.15% APY on deposits. There isn’t a minimum balance requirement to earn the APY and there are no transaction fees. Upon opening the account, you can deposit funds via electronic transfer, wire transfer, or deposit by check. You can get access to your funds via electronic transfer or wire transfer. Goldman has been investing heavily in Marcus, its online consumer bank. Marcus is already offering some of the best savings accounts and personal loans in the market, and further expansion is expected. The savings account has consistently been paying one of the highest rates in the market. With a 2.15% APY, you can get one of the highest rates in the market from a well-known brand. The maximum deposit is $1,000,000 and deposits are FDIC insured up to the $250,000 limit.

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

2. High Rate: Barclays Bank – 2.10% APY, no minimum balance

Online Savings Account from BarclaysBarclays is a large, old British bank, based in London and with more than 325 years of history. Although Barclays is huge in the United Kingdom, it is a challenger brand in the US. Barclays offers savings products with highly competitive rates. These deposits are used to fund their rapidly growing American credit card business. The online savings account has a 2.10% APY with no minimum balance to open and no monthly fees. Your deposits are FDIC insured up to the legal limit. The Barclays website has a good look and feel. And you can have the confidence of keeping your money with one of the world’s largest and oldest universal banks.

LEARN MORE Secured

on Barclays’s secure website

Member FDIC

3. High Rate: Synchrony Bank – 2.15% APY, no minimum balance, (and ATM access)

High Yield Savings from Synchrony BankSynchrony Bank pays a healthy 2.15% APY. There is no minimum balance requirement and no monthly fee. In addition to the great rate, you can get an ATM card. Most internet-only banks require you to transfer funds electronically, which can take a few days. If you ever need quick access to your funds, the ATM card makes access easy. You might not recognize the Synchrony brand in the banking space, but it is a large, well-capitalized business. Synchrony used to be a part of General Electric (GE), and was spun out as a separate company. Unfortunately, the digital experience is not the best, but they now have a mobile banking app.

LEARN MORE Secured

on Synchrony Bank’s secure website

Member FDIC

4. High Rate: American Express National Bank – 1.90% APY, no minimum balance (and no fees)

High Yield Savings Account from American Express National BankOur sponsored advertiser, American Express National Bank, offers a Personal Savings account, which earns a 1.90% variable Annual Percentage Yield (APY) as of 08/22/2019. The account charges no monthly fees and requires no minimum deposit, making it an affordable account to open. You must fund your account within 60 days of applying for the account, and the FDIC insures your deposits up to $250,000. Overall, the account is a great option for anyone who wants the flexibility of earning a high interest rate on a sum of money you’ve stashed away, minus the withdrawal restrictions of a certificate deposit.

LEARN MORE Secured

on American Express National Bank’s secure website

Member FDIC

5. High Rate: Vio Bank – 2.52% APY, $100 to open

High Yield Online Savings Account from Vio BankVio Bank is the online division of MidFirst Bank, a national private financial institution with over $16 billion in assets. Vio Bank was recently created and is not yet as established as Marcus, Barclays, American Express, Synchrony, and Ally Bank. However, this online bank launched strong with a High Yield Online Savings account offering 2.52% APY on all balances. You only need $100 to open the account. You can fund the account via ACH.

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

LEARN MORE Secured

on Vio Bank’s secure website

Member FDIC

6. High Rate: CIBC Bank USA – 2.20% APY, $1,000 to open

CIBC Palladian Savings Account from CIBC USACIBC Bank USA is the U.S. division of a Canadian based bank. This division was established in 1991 and has since acquired over $27 billion in assets. Currently, CIBC Bank USA is offering an online-only savings account with a competitive APY of 2.20%. You’ll only need $1,000 to open the account. While there isn’t a monthly maintenance fee, you may be charged $10 if you make more than six transactions per statement cycle. CBIC Bank USA does have a mobile banking app, but make sure that you download the app for the U.S., not Canada.

LEARN MORE Secured

on CIBC USA’s secure website

Member FDIC

7. High Rate: CIT – 2.30% APY, $100 to open

Savings Builder from CIT BankCIT is a very large bank that you probably never heard of. It has more than $50 billion of assets and makes loans (and leases) to middle market companies and small businesses. To fund those loans, CIT operates an internet-only bank that pays some of the highest interest rates in the country. While CIT isn’t as big as other online banks, they’re currently offering a very healthy APY of 2.30% on their Savings Builder account. You only need $100 to open the account, but you’ll need to meet one of two requirements to earn the high rate. We really like the options that CIT Bank has put in place to earn this high APY. The two ways to continue earning this high rate are:

  1. Make a monthly deposit of $100 or more into this account
  2. Maintain a daily balance of $25,000 or more

Even better: there aren’t any monthly maintenance fees and interest compounds daily. Deposits are FDIC insured.

LEARN MORE Secured

on CIT Bank’s secure website

Member FDIC

8. High Rate: HSBC Direct – 2.20% APY, $1 minimum to open, no minimum balance to earn APY

HSBC Direct Savings from HSBC DirectHSBC Direct is the online division of financial giant, HSBC Bank. Based on the amount of assets HSBC Bank has acquired to date, it is the 14th largest bank in the U.S. While HSBC Direct may sound like a new player to the online banking game, this division was actually around prior to the 2008 financial crisis and offered extremely competitive rates. After the financial crisis, the bank renamed the online division to HSBC Advance and slowly started to decrease its online savings account rates, much like other online banks were doing around that time.

Fortunately, HSBC has decided to reenter the online banking space. Since the initial launch in July of 2018, the bank has consistently increased its HSBC Direct Savings Account rate from 1.70% APY to 2.20% APY. You only need $1 to open the account and the APY will be applied to any balance below $2 million. You may fund the account via ACH transfer and the account can be opened online. You will have to deposit new money to the account, which means that you cannot be a member of the HSBC Group in the United States. The account doesn’t have a monthly maintenance fee and all deposits are FDIC insured.

LEARN MORE Secured

on HSBC Direct’s secure website

Member FDIC

9. High Rate: Citizens Access – 2.20% APY, $5,000 minimum balance amount

Online Savings Account from Citizens AccessCitizens Access is the online division of Citizens Bank. This division was recently created to provide the best savings rates to consumers. While the online division is brand new, the bank its backed by isn’t. Citizens Bank has been around for a while and has grown to have over $122 billion in assets. While you need to deposit and maintain a minimum balance of $5,000 to earn the 2.20% APY, you’ll be funding an account that comes with no fees. If your balance happens to fall below $5,000, the APY will drop to 0.25%. One downside to this online-only bank is that they don’t currently have a mobile banking app. This means that you’ll have to do all of your banking through their website. Luckily, their website is mobile-friendly.

LEARN MORE Secured

on Citizens Access’s secure website

Member FDIC

10. Unique Bank + Highest Overall Rate: Fitness Bank – 3.00% APY, $100 minimum to open

Fitness Savings (12,500+ Steps) from FitnessBankFitness Bank is unique and new online bank. It’s a division of Affinity Bank, which has been around since 2002 and has acquired over $318 million in assets. Affinity Bank decided to launch a concept like no other to reward actively fit individuals with the highest APY currently available. While most institutions choose to offer tiered rates based on balance amounts, Fitness Bank offers tiered rates based on the average number of steps you take on a daily basis. To earn the high 3.00% APY, you’ll need to take an average of 12,500 steps or more per day. If you only take an average of 10,000 to 12,499 steps per day, you’ll earn an APY of 2.50% (which is still a great APY). You’ll earn 1.75% APY if you take an average of 7,500 to 9,999 steps per day. Taking an average of 5,000 to 7,499 steps per day will qualify you for an APY of 1.25%. Finally, if you take anywhere between 0 to 4,999 steps on average per day, you’ll only earn 0.50%.

Fitness Bank will track your steps by requiring you to download its Step Tracker app. The bank will then calculate your average steps from the previous month to determine which tier you qualify for. Once the bank determines which rate your activity qualifies you for, you will continue earning that rate for an entire month until the bank recalculates your activity. The activity requirement will be waived for the first month so that you can get your app all set up and start logging in some steps. For this first month, you’ll automatically earn the 3.00% APY.

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

LEARN MORE Secured

on FitnessBank’s secure website

Member FDIC

11. High Rate: Popular Direct – 2.55% APY, $5,000 minimum to open

Popular Direct Ultimate Savings Account from Popular DirectPopular Direct, the online bank of Banco Popular North America, is currently offering an outstanding APY of 2.55% on their Popular Direct Ultimate Savings Account. You’ll need $5,000 to open this account and you’ll have to maintain a daily end of day balance of $500 to avoid the $4 monthly service fee. This account does not come with an ATM card. In order to access your money, you would need to transfer funds to and from an existing checking account via an ACH transfer, which can take a few days. Your deposits are FDIC insured. Popular Direct has a mobile banking app and provides account holders with access to online banking.

LEARN MORE Secured

on Popular Direct’s secure website

Member FDIC

12. High Rate: BrioDirect – 2.46% APY, $25 minimum balance amount

High-Yield Savings from BrioDirectBrioDirect is powered by Sterling National Bank, which is a large bank in New York with over $29 billion in assets. This online brand recently launched with a high 2.46% APY. You only need $25 to open the account and you’ll need to maintain at least this amount on a daily basis to earn the APY. This account doesn’t have a monthly service fee and can be funded via ACH, wire transfer, or check. There are limitations to the amount of money you can transfer in and out via ACH. BrioDirect limits incoming ACH transfers to $500,000. The bank limits outgoing ACH transfers to $25,000 per transaction and a total of $125,000 per month. You are able to link as many external bank accounts as you’d like to this account. You can also initiate ACH deposits and withdrawals from other banks. You can manage this account online or from Sterling National Bank’s mobile app.

LEARN MORE Secured

on BrioDirect’s secure website

FDIC Insured

13. High Rate: Betterment – up to 2.44% APY, $10 minimum to open

Betterment Everyday Savings - Promo Rate from BettermentBetterment is an investment company and one of the best robo-advisors. Since its creation, the mission of this company has always been to empower its customers to make the most of their money. With this mission in mind, the online brokerage decided to offer a high-yield savings account with an outstanding rate. While this account is not like your typical online savings account, it does come up with an outstanding rate – especially if you take advantage of the promotional rate. How is it different from other savings accounts? For one, Betterment is not a bank and is not FDIC insured. Fortunately, the company has partnered with a number of banks to offer FDIC insurance to accountholders. Essentially, your funds are deposited with the partner banks and will be insured up to $250,000 at each partner bank. One big benefit that Betterment is currently offering is the ability to opt out of depositing your money at a specific bank.

If you’re comfortable with the way this account is structured, you’ll be rewarded with an APY that is up to 2.44%. There is a catch, however, to earn the highest rate. In order to earn the 2.44% APY, you’ll need to join Betterment’s waiting list for the checking product. That’s it! Once you join the list, you’ll be awarded the 2.44% APY through the end of 2019 as long as you stay on the waiting list. If you choose to not join the waiting list, you’ll still earn a great APY of 2.19%. You only need $10 to open the account and there isn’t a minimum balance amount to earn the APY. One thing to note about the promotional and regular APYs – they are still variable rates. Betterment has the right to lower or raise the rates at any time. What Betterment is guaranteeing with the promotional rate is that it will always be 25 basis points above the regular APY. This guarantee will last for the remainder of 2019.

This account doesn’t come with any maintenance fees and you can transfer money from the Betterment Everyday Savings account as many times as you want. If you choose to withdraw money from this account, it’ll be transferred to your linked checking account within 1 to 2 business days. While these types of emerging cash management accounts may not be for everyone, we do feel like they deserve a place on this list due to their outstanding rates.

LEARN MORE Secured

on Betterment’s secure website

FDIC Insured

14. High Rate: TAB Bank – 2.40% APY, $1 minimum balance amount

High Yield Savings from TAB BankTAB Bank was established in 1998 to offer businesses financial assistance. Since the bank opened its doors, it’s acquired over $715 million in assets. In September 2018, TAB Bank decided to launch a High Yield Savings account. While the bank originally launched the account with a 1.80% APY, it steadily rose its rate to 2.40% APY in January 2019. Today, TAB Bank has continued to offer the 2.40% APY. The bank doesn’t require a minimum amount to open the account, but you must maintain a daily balance of $1 to earn the APY. You can fund the account via ACH, wire transfer, or check. You’re able to manage the account online or via TAB Bank’s mobile app.

LEARN MORE Secured

on TAB Bank’s secure website

Member FDIC

15. High Rates on two savings accounts: Customers Bank – 2.25% or 2.40% APY, $5,000 or $25,000 to open depending on account

High-Yield Savings Account from Customers BankCustomers Bank was established in 1997 and has grown to be known as a “super-community bank” in Pennsylvania, Washington D.C., Illinois, New York, New Jersey, and New England. The bank has over $9 billion in assets, making it a mid-sized bank. Currently, Customers Bank is offering two outstanding rates on two different accounts. Its Digital Savings Account requires a minimum deposit and balance of $5,000 to earn a high rate of 2.25%. This account doesn’t have any monthly fees. You can open this account here.

If you have $25,000 to deposit, the High-Yield Savings Account is a better fit for you. If you can deposit and maintain a minimum of $25,000 into the account, this bank will reward you with a 2.40% APY. You’ll have to maintain this balance to continue earning the high rate. You must fund the account within 30 days of receiving application approval. This account doesn’t come with any monthly fees.

A few items to be aware of: these accounts don’t come with checks or a debit card. Customers Bank does have ACH transfer limitations of $5,000 per day and $50,000 per statement cycle. You can easily open these accounts online and manage the account via Customer Bank’s website or mobile banking app. Deposits are FDIC-insured.

LEARN MORE Secured

on Customers Bank’s secure website

Member FDIC

16. High Rate: MySavingsDirect – 2.40% APY, $1 minimum to open

MySavings Account from MySavingsDirectMySavingsDirect is a division of Emigrant Bank, which is a large bank in New York with over $5 billion in assets. MySavingsDirect is offering a 2.40% APY with a $1 minimum deposit. In the past, Emigrant liked to play games with rates, but we’ve noticed that MySavingsDirect’s rate has been consistent throughout this year. The account can be funded via ACH and MySavingsDirect will only accept a check for your initial deposit. The online experience is dated and the bank doesn’t have a banking app.

LEARN MORE Secured

on MySavingsDirect’s secure website

Member FDIC

17. High Rate: Citi – 2.36% APY*, no minimum opening deposit

Citi Accelerate Savings from CitiCiti has never been known to offer the best savings account rates, but this big bank has decided to change that (for certain people). If you live in AL, AK, AZ, AR, CO, DE, GA, HI, ID, IN, IA, KS, KY, LA, OK, ME, MA, MI, MN, MO, MS, MT, NE, NH, NM, NC, ND, OH, OR, PA, RI, SC, SD, TN, UT, VT, WA, WV, WI or WY, you’re eligible to open Citi’s Accelerate Savings account. This account is currently offering a 2.36% APY and doesn’t require a minimum opening deposit amount. While there isn’t a minimum deposit to open or balance to earn the APY, you will have to maintain an average of at least $500 on a monthly basis to waive to the $4.50 monthly service fee. If you choose to open this account, you’ll be opening it under Citi’s Access Account Package. This package doesn’t have any overdraft fees, but it also doesn’t have any paper checks. There are also additional requirements for the Access Account Package that you’ll need to meet in order to waive the $10 monthly fee: you’ll need to either make one qualifying direct deposit or qualifying bill payment per statement period or maintain a combined average monthly balance of at least $1,500 in eligible linked accounts (the Accelerate Savings account counts as an eligible linked account). If you live in one of the eligible states, we believe that this account is a great option as it’s rare to find a large, trusted bank offering a high rate on a savings account that’s linked to a free checking account.

*Note: If you live in California, Connecticut, Florida, Illinois, Maryland, Nevada, New Jersey, New York, Texas, or Virginia, you will not be eligible for this offer.

LEARN MORE 

Member FDIC

18. High Rate: Salem Five Direct – 2.20% APY, $100 to open – Be aware of transfer limitations

eOne Savings from Salem Five DirectSalem Five Direct is the online bank division of Salem Five Cents Savings Bank, a community bank based in Salem, Massachusetts. Salem has been around for more than 150 years and all deposits are insured by the FDIC up to the legal limit. You only need $100 to open this account, and there are no monthly maintenance fees. However, they do have a few limitations to be aware of. First, according to their online banking agreement, Salem Five Direct limits the dollar amount of their External Transfers to $5,000 per transaction, $5,000 in aggregate per day, and $20,000 in aggregate per month. So, if you decide to have more than one account with them, like their money market account, they’ll look at the aggregate amount of External Transfers conducted from both the savings account and money market account. Second, account holders are limited to six withdrawals per statement cycle due to Federal Regulations. If you exceed the six withdrawal limit, they’ll charge you $10 per additional transaction. Finally, the web and mobile experiences are not great. But, if you give them a call (which we have done), you will get friendly service from a community bank. While this bank does offer one of the best rates for an online savings account, we want you to be aware of their limitations.

LEARN MORE Secured

on Salem Five Direct’s secure website

Member FDIC

19. High Rate: Ally Bank – 1.90% APY, no minimum balance and you can get a free checking account

Online Savings Account from Ally BankAlly is a bank without branches that had been consistently paying high interest rates on savings accounts. While Ally is still offering rates way above what brick-and-mortar banks are offering, it seems this online bank no longer wants to be seen as the online bank with the most competitive rates. The current APY on Ally’s savings account is 1.90%. Although Ally has dropped its rate significantly, we still favor this online bank. It doesn’t require a minimum balance to earn the APY and, even better, you can open a free checking account (also with no minimum balance requirement and eligible for the 1% cash back offer). This makes access to your savings account incredibly easy – because you can transfer funds online (or via the app) and have immediate access via checks, debit cards and ATMs. With an Ally account, you will have access to their full suite of expanding (and market-leading) products such as CDs, money market account, checking account, and IRA accounts.

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

20. Runner-Up: For Small Balance Savers Digital Federal Credit Union – 6.17% APY up to $1k

Primary Savings from Digital Federal Credit Union (DCU)Digital Federal Credit Union (DCU) currently offers a nice account for people who are just starting to save. You can earn an APY of 6.17% with their Primary Savings Account. You will only earn that rate on deposits up to $1,000. Once you have more than $1k, you should consider other accounts on this list. It is a credit union – and your deposits are insured by the NCUA up to the legal limit. Anyone can join the credit union by donating to one of their participating organizations such as Reach Out for Schools, which has a membership fee of $10. You’ll be able to join one their participating organizations when you go to open your account with DCU. DCU is also part of a nationwide CO-OP network that allows their members to have access to shared branches and surcharge-free ATMs throughout the U.S.

LEARN MORE Secured

on Digital Federal Credit Union (DCU)’s secure website

NCUA Insured

How to find the right savings account for you

  • Focus on rates, but 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 online 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, compare, compare. 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.
  • Carefully consider CDs. CDs allow savers to earn more on their savings by agreeing to lock up their funds for a set period of time. With CDs, you make your initial deposit at a set APY and wait for the CD term to mature. With most CDs, you can’t touch the original deposit amount before maturity without paying a penalty. Since CDs are less liquid than a standard savings account, they’re good for setting aside money you won’t need to access in the near term. Typically, we recommend using CDs for long-term goals, like accumulating a down payment for a home.

How the Fed impacts online savings rates

The interest rates offered by banks are tied to the federal funds rate, which is set by the Federal Reserve’s Federal Open Market Committee (FOMC). This includes the deposit account rates that grow your money in savings and other deposit accounts. When the federal funds rate rises, you might see that reflected in the deposit interest rates at most banks.

As the Fed hiked rates over recent years, online banks were far quicker to raise their rates in turn than traditional banks. Just look at the average APY offered by big banks — 0.26% vs. 1.52% on average for online banks as of December 2018.

We’ve enjoyed successive Fed rate hikes for the last few years, but the trend is waning. As we continue into 2019, the odds of a rate hike this year have reached zero. The Fed did nothing at its January meeting, and didn’t raise rates at the March meeting either.

The bleak federal funds rate outlook doesn’t necessarily mean that banks will start slashing their own deposit account rates. Online banks are extremely competitive and need to remain so if they want to maintain their edge.

In the January Goldman Sachs earnings call, Goldman Sachs Executive Vice President and CFO Stephen M. Scherr noted it has no plans to walk back on rates for its online savings account Marcus, aiming to keep its rank among the top savings rates in the country.

We heard much of the same from fellow online bank Ally Bank, whose CFO Jennifer LaClair said during its January earnings call that it’s still important to take the “competitive landscape” into account.

Still, other earnings calls indicated that banks are in as much of a holding pattern as consumers are. When asked about the bank’s deposit rate outlook in the event of a Fed rate slowdown, Bank of America CFO Paul Donofrio noted, “At some point, the broader retail rates will rise. We just don’t know when. So, I think we’re just going to have to wait and see.”

As for what that all means to you, chances are that if you keep your deposits with an online bank, you’ll still get the most competitive rates regardless of a Fed pause or rate decrease. You might see an overall decrease in online savings rates (moreso in the competitive rate-chasing CD space), but they’ll still outperform most brick-and-mortar rates any day.

The bottom line

So what’s a saver to do? At the end of the day, you want the account that makes the most sense for you. Choose the one that lets you save and manage your money in the best ways possible. The most efficient way to consistently grow your money is to open an online savings account. These accounts will offer the best interest rates compared to brick-and-mortar banks, no matter where the federal funds rate goes this year — plus, they’re easily accessible in case of emergency. If you don’t need immediate access to your money and you have some extra cash lying around, open a high-yield CD as a more long-term savings alternative.

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LaTisha Styles
LaTisha Styles |

LaTisha Styles is a writer at MagnifyMoney. You can email LaTisha at [email protected]

Lauren Perez
Lauren Perez |

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