You don’t need a large balance to open a savings account with a top yield.
A number of online banks offer an annual percentage yield above 2 percent and require a minimum balance of only $0-$100 to earn the yield.
“It’s literally within reach of everyone,” says Greg McBride, CFA, Bankrate chief financial analyst. “Accounts that are available nationwide but no minimum deposit — there’s no excuses for letting your money sit in a low-yielding account instead of taking advantage of that opportunity.”
Where simplicity and a high yield are the norm
Many online banks stick to the simple model that all balances, unless there’s an account maximum, earn the same APY. Checking account and transactional requirements are rare at online banks, and that keeps saving simple.
“It’s great because you could have a dollar, you could have $50, you could have $100 — throw it in there, and you’re still getting that great savings rate,” says Charlie Horonzy, a certified financial planner and certified public accountant at Focused Up Financial LLC in Chicago.
Some online banks may cap how much you can keep in your savings. But if these account maximums exist, they’re typically on balances north of $500,000 or in the millions.
Banks with high yields and low balance requirements
Here are some savings accounts that have a low or no minimum balance and a high APY.
|Bank||APY||Minimum to open||Minimum to earn APY|
|Western State Bank||2.50%||$0||$0|
|Marcus by Goldman Sachs||2.25%||$0||$1|
Generally, online banks give you a higher APY and don’t make you sacrifice when it comes to customer service.
Yes, you won’t be able to walk into a true online – or direct bank – because they don’t have branches. But if you really wanted to walk into a brick-and-mortar branch to withdraw funds, you could transfer money from your high-yield savings account into a checking account at a brick-and-mortar bank.
Direct banks have been quietly earning a reputation for their level of customer service. According to the J.D. Power 2019 Direct Banking Satisfaction Study, “direct banks continue to significantly outperform traditional retail banks in overall customer satisfaction.”
“I know that some people prefer walking into a branch or talking directly to a person,” says Cynthia Flannigan, a certified financial planner at MainStreet Financial Planning. “But since a lot of people do their banking online these days, they may have a brick-and-mortar location, but they’ll do a lot of their banking online or on their mobile phone. And so, it’s a natural step to do your emergency fund or an account to save for your short-term goals through an online, high-yield savings account.”
As long as your online bank is a Federal Deposit Insurance Corp. bank and your money is in a FDIC-covered account, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.