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Strategies to Save

Review: The Aspiration Account

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 1.00% APY has one of the highest rates in the country. If you move both your checking account and savings account into an Aspiration Account, you would be able to earn a high interest rate on your money while avoiding the risk of overdraft and enjoying the convenience of only having one account.

Aspiration is a fairly new financial services company that aims to be “the investment firm for the middle class.” In this video (that could pass for a parody if you didn’t realize they were serious), the company proclaims that it is possible to be a “capitalist with a conscience.” Lofty goals are behind the company and the products they have designed. The CEO (Andrei Cherny) was a former Clinton White House aide, and with Aspiration he is trying to take action and create a new type of financial services firm that lives up to his ideals.

All products offered by Aspiration (which includes two investment funds and a cash management account) have the same pricing model. You decide how much to pay. Yes, the fee is set entirely by you, the customer. You can set it to $0 or you can set it to any amount below $10. You can change the fee whenever you want. They provide a service and you decide what it is worth.

Aspiration is making a big bet.

With traditional banking, people are nickel and dimed every month. Make an out of network ATM withdrawal, and you could end up spending $10 in fees. Put your money into a savings account, and earn only 0.01%. By using Aspiration, you could be much better off financially than banking with your traditional bank. And you can do your own calculation and decide how much of that savings you share with Aspiration. They are hoping that you will share enough for the business to continue.

Application Process for the Aspiration Account

Opening an account used to be a bit challenging as you needed to be invited. However, Aspiration has made it as simple as ever to open an account. Simply click on the “Get Started” button on their website and enter your email address.

 

At that point, you should be directed to a page that allows you to open your account online and apply for the account.

 

Create your password, check the box to let Aspiration know you’ve read the Terms and Conditions, and click “Let’s Go!”. Since this is an online account, there will be extensive KYC (know-your-customer) and compliance questions. I was required to provide:

  • Answers to identity verification questions. These are questions generated by a credit bureau. So, you will be asked to provide your social security number, but they ensure that they won’t “run the kind of credit check that will ding your score”. You might also be asked to answer questions about your mortgage payments, car loans, and other credit bureau items to identify yourself.
  • A link to an existing bank account. This is used to provide the initial funds in the account. I put $10 into the account for a test drive. (By doing this, Aspiration also reduces its risk, because you will have gone through the compliance checks of your existing bank).

Once you finish the account opening process, it may take a few days for the account to be open and for you to receive your debit card in the mail. Aspiration has partnered with Coastal Community Bank in a way that is similar to how Simple operated. (Simple, for those who remember, was not a bank. It created the front-end user interface, but partnered with an FDIC-regulated bank).

Aspiration Mobile App

In 2016, Aspiration joined the rest of the financial industry with the launch of their mobile app. Their app allows you to view your Aspiration Account balance and transaction history, remote deposit checks using your phone’s camera, schedule transfers between the Aspiration Account and other bank accounts, pay bills, and track the impact of your spending habits. The mobile app also allows you to use fingerprint authentication to secure the data.
There are two features that stand out:

  1. Their Payments feature
  2. Their Aspiration Impact Measurement (AIM) feature

Payments

Payments is Aspiration’s bill pay feature. Not only does this feature allow you to pay your bills, but it also allows you to pay your friends. However, unlike other bill pay and money transfer features (like Zelle), Aspiration’s Payments feature sends payees a paper check with your name, address, and optional memo if you choose to include one. This feature is available at no charge to the account holder.

Since this feature is sending a paper check, you can expect the payee to receive the check within 5-7 business days from the send date. Fortunately, Aspiration doesn’t limit the number of payments that can be scheduled and they don’t limit the amount of money you can send.

Aspiration Impact Measurement (AIM)

AIM is a pretty unique feature as it allows you to see the impact you’re making on the planet and people based on your spending habits. This feature will provide you with a score that is determined by the types of businesses you frequent. The score is calculated by how the businesses treat their employees, customers, community, and environment. So, businesses are given a score and you’re given a score based on where you do your shopping.

Aspiration shares that they created AIM “so that we can all think about how our everyday spending can make the world a better place.” This may sound very “kumbaya”, but there’s no denying that they’ve created an innovative feature.

What We Like

  • Unlimited, global ATM fee reimbursement: With this account, you can use any ATM in the world and it won’t cost you a dime. Not only won’t Aspiration charge you a fee, but you will be reimbursed any fee charged by the other bank whether they are located in the U.S. or in another country.
  • Zero overdraft and stop payment fees: This is a huge perk as these are some of the “gotcha” fees that you’ll encounter at big banks.
  • Other fees are also fairly lower than big banks: Outgoing wire transfers and receiving an incoming wire transfer will only cost you 82 cents.
  • One of the best interest rates in the market: At a traditional bricks-and mortar bank, you would receive no interest on your checking account, and you would earn only 0.01% on your savings account. With this account, you earn 1.00% on your entire balance. The best online checking account in the market is currently paying 1.75%, but you need to maintain a balance to earn this APY.
  • You no longer need to have a separate savings account and checking account. With that, you no longer need to worry about overdrafts. At a traditional bank, you could end up paying $10 just to have money automatically transferred from your savings account to your checking account if you make a mistake. Because you can keep all of your money in one account, you will not need to worry about overdraft transfers.
  • All deposits are FDIC-insured, up to $250,000 per depositor.

What We Find Lacking

  • Bill pay functionality. While Aspiration does mention that they will be making updates and improvements to their Payments feature, they don’t seem to mention going away from the paper check method. While sending paper checks may be a good solution for a feature that once didn’t exist at Aspiration, it’s still not as efficient as most online bill pay features that other banks offer.

Who Could Benefit From the Aspiration Account Now?

The perfect profile for an Aspiration Account customer today would be:

  • You travel a lot, and frequently need to use ATMs that are outside of your bank’s network
  • You have a lot of cash that you keep in your account and would like to earn interest on that money
  • You are about the impact you make on people and the environment.

SEE DETAILS Secured

on Aspiration’s secure website

Alternatives if This Account is Not Right For You

This account is going to get better over time. It won’t come as a surprise if this account starts to become much more competitive.

Depending upon what feature is most important to you, there are excellent alternatives:

  • If you want the highest interest rate, you can earn up to 1.75% with an online savings account with a moderate deposit amount requirement. You can find the best savings account here.
  • If you want to avoid ATM fees globally, but need better bill pay capabilities, you should open a Charles Schwab checking account. You can find that account, and others, on our checking account page.

This Looks Great and Will Get Better. But is it Sustainable?

One of the biggest worries we have at MagnifyMoney is the following: when something looks too good to be true, it usually doesn’t last long. The offer can last for a few years, but eventually market forces will catch up with it.

Providing unlimited reimbursement of ATM fees globally is expensive. Ally originally offered the same perk and then capped that benefit at $10 per month ($120 per year), because it was impossible for them to make money on the checking accounts otherwise. Aspiration does not have a magic formula, and eventually the business will need to make money somewhere.

Often, banks do not make money on checking accounts. Instead, these accounts serve as the foundation account and the bank cross-sells other products. Perhaps this is Aspiration’s plan.

Regardless, the product is very consumer friendly and potentially lucrative. According to CrunchBase, the business has raised over $67 million. Clearly, the business will need to raise more capital as it scales, especially given the low level of customer profitability expected. There is certainly limited risk to taking advantage of the great offer available now. At MagnifyMoney, we just hope that they find a way to make money sustainably. As Ally customers know all too well, it can be frustrating to switch accounts based upon a strong feature (unlimited ATM reimbursement), only to have that benefit taken away when it is deemed too expensive.

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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.

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Strategies to Save

How to Build Wealth at Any Stage in Your Career

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.

Setting aside a certain amount of money each month to slowly build your savings is a key financial strategy. Overhauling your entire financial life and setting new priorities across the board is how you start building wealth.

A healthy savings account balance can help pay for your kids’ college education — but having wealth means you’ll be able to live the life you want, and pay for the college education of your grandchildren, too. You’ll need both new priorities and a great savings account to build wealth — below you’ll find our guide on how to build wealth at any stage of life.

6 Steps to Build Wealth

Set investing goals to build wealth

Your wealth-building journey should begin by setting long-term investing goals. If you’re married or share expenses with a loved one, that means having a detailed conversation about how you want to invest your money.

These are only a few points you may need to address:

The more detailed you get about these goals, the better. Because believe it or not, when it comes to investing, sometimes we’re our own worst enemy. As Matt Cooley, a certified financial planner and founder of Inspire Wealth Partners, explained, research suggests our natural biases can prevent us from making sound investment decisions. This is why it’s so important to set investing goals before funneling money into the stock market.

“Whether you’re a personal investor, an investment manager, a financial planner, or anyone else, you can benefit from understanding the internal driving forces behind your investment decisions,” added Cooley.

Invest in the stock market to build wealth

Once you’ve set goals, it’s time to invest your money in the stock market. If the stock market frightens you, Leibel Sternbach, an accredited portfolio management advisor suggests keeping in mind that since its creation in the 1800s, the market has offered an average 6% annual return — meanwhile, the current average savings account interest rate is a measly 0.27%. If you truly want to build wealth, you must be invested in the stock market.

When you invest in the market, your money grows without much effort. This is key to building wealth: passive income. If you need help figuring out how, exactly, to go about investing in the market, you can check out a robo-advisor like Betterment, which makes investing as easy as possible.

One way to break into the market is to research mutual funds that have a good historical track record and stick with them for the first few years. This will allow you to learn about the market while being invested with relatively low risk. You could also try investing in index funds, as they’re low-cost and consistent.

Don’t forget to keep building your savings

You’ll still need to build your savings as part of your wealth building strategy. One easy way to do that is to follow the 50/30/20 rule: this guideline suggests that you budget 50% of your after-tax income to needs (like paying for housing and basic living costs), 30% to wants (dining out and other discretionary spending) and 20% to savings. You might want to break each of these categories into their own separate bank accounts, which could make it easier to track. Keep those savings in a high-yield savings account.

The 50/30/20 rule will help build your savings by painting a clearer picture of your financial habits. For example, if you see that your needs are exceeding 50%, you can dig deeper and figure out why. Perhaps you need a less expensive car so your insurance isn’t so high. The concrete numbers of the 50/30/20 rule will keep you on the right track toward building a healthy savings cushion.

Reduce your expenses to build wealth

The more money you can free up from your expenses, the more you can funnel your investments for wealth. One easy place to cut back? Subscription services. Those monthly charges of $6 here and $12 there add up — and probably to a higher total than you even realize.

According to a study from West Monroe Partners, 84% of Americans underestimate how much they pay each month on subscription services. Start tracking your subscription services and then cut any that you haven’t used within the last two months.

Renegotiate your salary to build wealth

You can build wealth faster if there’s more money coming in, so try to renegotiate your salary. Before talking with your boss, research salary examples for your role and set your goal. You want to be realistic and leave some wiggle room for the actual negotiation process.

Go into the meeting with clear examples of how your performance has helped the company’s bottom line and some ways you will continue this trajectory. Your boss is more likely to give you a raise if they see your benefit.

Build wealth by avoiding lifestyle creep

Once you start getting traction in the stock market and a higher salary, don’t spend the extra money. This is the definition of “lifestyle creep” — the tendency people have to spend more as they earn more. One financial expert we spoke with cited lifestyle creep as one of the biggest mistakes that people make when attempting to build wealth: you suddenly have some extra cash and so, well of course, you buy a bigger car.

Avoid lifestyle creep by living as if you never got that raise, or never saw those extra gains from your investments. Funnel them into your investments and add more to your savings account every month. If you can avoid spending more as you earn more, you’ll turbocharge the wealth building process.

How to build wealth at any age

The first thing to keep in mind when starting to build wealth is that it’s a big picture effort. But you make that big picture happen by taking many small steps: making a budget, scheduling monthly deposits in savings, learning more about the stock market whenever you have free time.

“Above all, focus on making small incremental changes,” said Sternbach. “Don’t worry about how much you need to retire, [and] focus instead on just setting aside the savings. Any amount will do; try to increase that amount each year and two. [And] once you invest, don’t look at your investments for another few years.”

When starting out, keep a strict budget, reduce expenses and maintain your savings rate. Add additional revenue streams if you can — maybe there’s a side-hustle like selling items online that could help boost your income. Do plenty of research on the stock market and be sure to max out any retirement plans, especially if your company offers a 401(k) matching program. Remember, these small first steps will form the path that eventually leads to wealth.

Strategies for building wealth in your 20s

The sooner you start saving, the more time you’ll have to build wealth. When you’re young, don’t be so worried about setting aside huge chunks of change every month. Instead, save as much as you can and pay down debt. Stick to a detailed budget and invest in yourself through higher education. Be consistent.

“Consistent discipline is the key to building wealth,” said Cooley. “For most, it can take decades of savings to build real wealth. Building good habits and automating your saving and investing is critically important.”

How to build wealth in your 30s

Your 30s are when you should be ramping up your rate of saving and investing. Make sure you’re maxing out your 401(k) at work, as well as investing in the market outside of your retirement account.

Sternbach recommends investing in things that will eventually reduce your expenses. This includes buying a house or purchasing life insurance: “These are things that over time get more expensive, so buy them early on when they are cheap and you will save a bundle.”

Wealth building in your 40s

Be mindful of lifestyle creep in your 40s, since you’re likely making more money than ever. Increase your savings rate and diversify your investments. Make sure you’re prioritizing yourself.

“Save for your retirement first before you save for college,” said Cynthia Meyer, a certified financial planner and founder of Real Life Planning. “There are many ways to pay for college, but only one way to pay for retirement.”

Keep building wealth in your 50s

As you close in on retirement, it’s time to get a bit more protective of your money.

“Start shifting your investments to more conservative investments that have less volatility, so that if you do need to retire early you have the financial ability to,” explained Sternbach. “Few people retire when they plan to — layoffs or medical issues are a leading cause — and the last thing you want is to have to start draining your nestegg while the market is down, locking in those losses permanently.”

Where should you stash your wealth?

Build wealth by choosing the right online broker

Because investing in the market is one of the primary ways you’ll build your wealth, it’s important to choose the right investment broker. Look for one that matches your needs as closely as possible.

Hands-on investors are people who like reading about a broad selection of investment options. They like to pick their own assets, and build a portfolio themselves. The best choice for hands-on investors is an online brokerage account.

Hands-off, or passive, investors are people who want to put their money to work in the market, but would prefer not to get too involved in the details of their investment portfolio. They may not know as much about markets as a more hands-on investor, or they may have too many other things going on in their lives to devote extra time to managing investments. Hands-off investors should check out our listing of the best robo-advisors, special brokerage platforms that make investing easy.

How to choose the right savings account for your wealth

When stashing your wealth, look for savings accounts that offer you the best interest rate, and, typically, online banks have the highest rates. If you don’t already have an HSBC account, check out its HSBC Direct offering. This online-only account comes with a 1.85% APY on all balances. The catch, like we said, is that it must be your first HSBC account.

If you’re a fitness buff, check out Fitness Bank. It ties your savings rate to your monthly step count. If you log 12,500 steps or more, you’ll get the highest rate — 2.20%. However, make sure you keep your steps up, as the rate drops as your steps drop.

Credit unions also offer robust savings options. Digital Federal Credit Union offers a staggering 6.17% APY, but that’s only on the first $1,000 in the account; after that, you’ll earn 0.25% APY.

Build a CD ladder

Another strategy for stashing your wealth is to create a certificate of deposit (CD) ladder. A CD ladder is a collection of several CDs that have varying terms. You might break it out by opening a 1-year CD, a 2-year CD, a 3-year CD, a 4-year CD and a 5-year CD — all with $1,000 each. By staggering the CDs, you’re guaranteeing each CD will complete its term at predictable intervals. And because CDs carry higher interest rates than savings accounts, you’ll be sitting on a nice money generator.

The downside of a CD ladder? It’s a lot of cash locked away and, should rates increase, you won’t be able to take advantage of them if your money is tied up. However, if you’re interested in this nuanced approach of building wealth and can make it happen financially, a CD ladder could be a smart strategy.

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.

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Reviews, Strategies to Save

American Express® Personal Savings Account Review: A Solid Choice for Online Banking

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.

What you need to know about the American Express savings account

American Express Savings Account Features

APY (%)

1.70% variable

Minimum Deposit Amount

$0

Account Minimum

$0

Permitted Monthly Withdrawals

Up to 6

Annual Fee

$0

FDIC Insured?

Yes

Mobile App?

No

Transfer Time

Deposits will be available within five business days. Transfers from savings to a checking account take one to three business days.

In an American Express Personal Savings High Yield Savings account, your money earns 1.70% APY. It isn’t the highest APY you can currently earn from an online savings account listed on our site, but it’s still well above average. The account charges no monthly fee 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. If you’re concerned about safety, know that the FDIC insures your deposits of up to the legal limit.

The account appears to be a great option for savers who want the flexibility of earning a high interest rate on a large sum without the withdrawal restrictions of a certificate of deposit (CD).

How the American Express savings account works

The savings account compounds interest daily. It’s current APY 1.70%, and amount earned is credited to your account on your monthly cycle date. The rate is variable, which means that American Express can raise or lower the interest rate at any time without notice to you before or after the savings account is opened.

Account holders must fund the account within 60 days, which you can do by setting up a bank transfer or direct deposit to the savings account. If you prefer a physical method, you can send a check.

Federal law mandates certain types of telephone and electronic withdrawals, including transfers from savings accounts up to 6 per statement cycle. This applies consistently across savings accounts.

What we like about the American Express savings account

  • High APY: The account’s 1.70% APY is better than what you would earn by putting your money in the accounts offered by most brick-and-mortar banks. In fact, it’s within 0.3% of the highest-yielding savings accounts. While there could be higher rates available elsewhere, this account remains a solid choice based on yield.
  • Automatic savings: It’s easy to make saving automatic when you have an online savings account. With the American Express Personal Savings account, you can easily set up a recurring deposit to pull funds from an external savings or checking account. To make your saving automatic and without emotion, you can even have a portion of your paycheck directly deposited to the account.
  • Spending discouraged: With your money in an online account like the American Express Personal Savings account, you can get your cash only after making a transfer to an external checking account to which you have debit card access. The minor inconvenience could be just enough to keep you touching the account and making unnecessary withdrawals.

What we don’t like about the American Express savings account

  • No ATM card, no checks, no debit card: Not having card access is great when you need to prevent yourself from spending your savings. But the hassle of setting up and making an Automated Clearing House (ACH) transfer from your online American Express savings account can be problematic if you need immediate access to your funds. Also, the account terms state that transfers can take one to three business days for funds to become available in your checking account. If you’re worried about this, there are alternative high-yield accounts you can use that offer an ATM card linked to the account.
  • Variable APY: The annual yield American Express is offering on this savings account is high at 1.70% APY, but the bank can change that rate at any time and for any reason. If you’re looking for a more predictable rate of return, consider a certificate of deposit. CDs might not offer competitive yields, but you will know exactly what your return will be.
  • Limited withdrawals: Because this is a high-yield savings account, Federal law mandates certain types of telephone and electronic withdrawals, including transfers from savings accounts up to 6 per statement cycle. Some savers have a separate account for emergencies in case they max out their savings withdrawal but still need immediate funds.

American Express vs. top online banks

American Express Savings vs. Other Online Savings Accounts
Vio BankBarclays BankMarcus by Goldman SachsAmerican Express
APY1.85% 1.70% 1.70% 1.70%
Minimum Deposit Amount100nonenonenone
Account Minimum1000.01nonenone
Permitted Monthly Withdrawals6666
Annual Feenonenonenonenone
FDIC Insured?YesYesYesYes
Mobile App?YesYesYesNo
Deposit SpeedDeposits will be made available in two to five business daysDeposits will be made available within five business daysDeposits will be made available the next business dayDeposits will be made available within five business days

As indicated earlier, the American Express Personal Savings account offer is strong, but it’s not the best available. To see how it compares, we enlisted MagnifyMoney’s team to shed light on some national, online-only banks with a health rating of a B or better and with the highest APYs on savings accounts — as listed on DepositAccounts.com, another LendingTree site. If there was a tie, we chose the bank with the lower required deposit. Here are a few alternatives to the Amex personal savings account.

Vio Bank-MidFirst Bank – High Yield Online Savings Account, 1.85% APY, $100 to open (no ATM card)

The Vio Bank High Yield Online Savings Account is a solid choice for savers. The high APY and low minimum deposit make this account extremely attractive not only for savers but investors as well, as the interest rate outperforms most CD rates available at competitive banks.

The ACH transfers seem to take little time – between two to five business days – and you are limited to six withdrawals per billing cycle, but the positives outweigh the negatives. It isn’t commonplace to find an online savings bank with an app but Vio Bank delivers, all without charging monthly maintenance fees.

SEE DETAILS Secured

on Vio Bank’s secure website

Member FDIC

Barclays Bank – Online Savings Account, 1.70% APY, no balance to open, no monthly maintenance (no ATM card)

Barclays Bank, one of the largest in the world, seems to offer an account that competes against the best of the other online banks. A high APY and no minimum account balance – not to mention no balance required to open – make this an attractive choice.

The Barclays landing page for this account makes it easy for you to set savings goals and open the account. The APY may only be slightly higher than the American Express Savings account, but the ease of use and customer service give Barclays a distinctive edge.

SEE DETAILS Secured

on Barclays’s secure website

Member FDIC

Marcus by Goldman Sachs – High-Yield Online Savings Account, 1.70% APY, no minimum deposit (no ATM card)

Savers can earn a competitive 1.70% APY in their Marcus by Goldman Sachs® High-Yield account, making deposits up to $1,000,000 per account. The account needs to be funded within 60 days via transfer, direct deposit, check or wire. Goldman Sachs Bank USA doesn’t charge any fees or service charges.

Like with most accounts of this type, there isn’t any ATM access, and savers will need to withdraw their money via ACH transfer, wire transfer or check. Still, the account allows high balances and boasts a healthy APY, making it a smart choice – one that appears to outpace the American Express account.

SEE DETAILS Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

American Express CD Rates

These CDs are great for those who don’t have a lot of money to deposit. The rates are slightly lower than the best CD rates available, as listed on our site, but the ease of access keeps them attractive.

Term

APY

6 months

0.40%

12 months

0.55%

18 months

1.95%

24 months

2.00%

36 months

2.05%

48 months

2.10%

60 months

2.15%

CDs from American Express do not require a minimum deposit amount. You’re free to deposit as little or as much as you want to begin earning interest on any of its CD terms. This is great for individuals who don’t have a lot of money to deposit in CDs offered by other online banks. The downside is that you won’t be receiving as high of an APY as you could at other online banks.

How CDs offered by American Express work

American Express offers terms spanning from 6 months to 5 years on its CDs. Interested is credited on a monthly basis and compounds until the CD matures. You can choose to have the interest transferred out of the CD and into the American Express Personal Savings Account on a monthly basis, transferred into a linked account, or mailed to you monthly, quarterly or annually via a check. If you touch the principal, however, you’ll incur an early withdrawal penalty. The penalty is based on your CD’s term:

  • For CDs with a term of less than 12 months: 90 days’ worth of interest
  • For CDs with a term of 12 months, but less than 48 months: 270 days’ worth of interest
  • For CDs with a term of 48 months: 365 days’ worth of interest
  • For CDs with a term of 60 months: 540 days’ worth of interest

If you’re able to keep your principal and interest within the CD, you’ll receive notice, either by mail or email, that your CD is about to mature in 10 days. If you don’t tell American Express that you do not wish to renew your CD, it will automatically be renewed for the same term unless the bank no longer offers that term. You can call American Express any time before your maturity date to tell them that you do not wish to have your CD automatically renewed.

Online banks vs. brick-and-mortar banks

Online banks have been experiencing growth that outpaces that of their physical counterparts not only because of the rise in mobile banking among consumers due to convenience, but also because the online banks can offer more benefits as they don’t have to deal with as many overhead expenses as brick-and-mortar banks do.

A 2017 study by DepositAccounts.com, another subsidiary of LendingTree, showed the annual percentage yield that internet banks offer on savings accounts was more than four times of what brick-and-mortar banks or credit unions offer.

Simply put, the main benefit of putting your money in an online savings account is your money does more for you than it might in a traditional savings account. In its 2017 study, DepositAccounts provided an example based on the average APYs in certain savings categories: If a saver were to put $100,000 in a savings account and leave it alone for 10 years, he or she would earn $8,338.79 at an online bank versus $1,747.04 in a brick-and-mortar bank and $1,895.28 in a credit union. This test assumed a fixed APY.

Overall Review of the American Express Personal Savings Account and CDs

Overall, the American Express Personal Savings Account is a solid, high-yield online savings option. The interest rate it offers is high, and the features of the account are comparable to other online banks’ savings accounts. The account also carries the cachet of the American Express name. While there are certain aspects of the Personal Savings account that could be improved, other online banks appear to encounter similar obstacles.

American Express CDs, when compared against those by other banks, don’t quite measure up. The interest rates of the 6-month and 12-month CDs are nowhere near the best rates offered by other online banks, as seen in our rankings, and the rates on the 18-to-60-month CDs fall short of the other rates offered. The only feature that makes American Express stand out from most of the other online banks is that it doesn’t require a minimum deposit to open an account and start earning interest. If you’re not quite ready to deposit a huge chunk of money into a locked account, you may want to start out small with one of the CDs offered by American Express.

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.