Best savings accounts for July 2022

Bankrate's guide to choosing the right savings rate

Online banks tend to offer higher rates than brick-and-mortar banks. They are able to do this because they usually have fewer overhead costs. Online banks also need a way to attract your money, so they tend to offer higher yields than banks with branches.

Banking with an online bank that’s a member of the Federal Deposit Insurance Corp. (FDIC), can be a great way to earn a higher rate and ensure your money stays protected. Just make sure you’re within the FDIC’s limits and guidelines.

Bankrate's experience on financial advice and reporting

At Bankrate, we regularly survey approximately 4,800 banks and credit unions in all 50 states to provide you with one of the most comprehensive comparisons of interest rates. All of the savings accounts below are insured by the FDIC at banks or the NCUA at credit unions. When selecting the best savings account for you, look for the highest yield while also considering introductory rates, minimum balances and accessibility.

We strive to help you make smarter financial decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. The top banks listed below are based on factors such as APY, minimum balance requirements and broad availability.

Best online savings accounts and rates of July 2022

Here are Bankrate's selections for the best widely available savings account rates from top online banks:

*Minimum balance of $25,000 or a monthly deposit of $100 required for APY.

Note: Annual percentage yields (APYs) shown are as of June 30, 2022. Bankrate's editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated and may vary by region for some products. Bankrate includes only FDIC banks or NCUA credit unions in its listings.

What is a savings account?

A savings account is a type of financial account found at both banks and credit unions. These federally insured accounts typically pay interest, but often at lower rates than other interest-bearing financial products insured by the government, like certificates of deposit (CDs).

In exchange for lower rates, savings accounts offer more liquidity, allowing for up to six types of withdrawals or transfers per statement cycle (and potentially more). That makes savings accounts ideal for stashing money you may need access to if unexpected costs arise.

Savings accounts can play a crucial role in your financial health. Unlike a CD, which forces you to lock up your money for a specified period of time, there’s no set term for maturity with a savings account. So, it’s a good spot to park your emergency fund.

Savings accounts are insured up to at least $250,000 at banks backed by the Federal Deposit Insurance Corp. (FDIC) and at credit unions backed by National Credit Union Administration (NCUA), which operates and manages the National Credit Union Share Insurance Fund (NCUSIF).

How do savings accounts work?

Savings accounts are liquid bank accounts that usually offer a higher APY than checking accounts and can be accessed at any time. Easy access sets them apart from certificates of deposit, which require account holders to lock up savings for a specified term, typically months or years, and which usually charge an early withdrawal penalty for taking money out prematurely.

Though it's possible to withdraw cash from a savings account, doing so diminishes the amount of interest earned. The higher the account balance and longer it remains, the more the power of compound interest will work in your favor. Compound interest — or earning interest on top of interest — allows even small deposits to add up to bigger amounts over time.

That feature makes it crucial to compare APYs when choosing a savings account (because APYs include compound interest you earn during the year). APYs are the best way to compare how much interest you're currently earning or could be earning.

Use Bankrate’s compound interest calculator to calculate potential earnings on a savings account.

Making purchases or withdrawals from a savings account isn’t as easy as from a checking account. Unlike checking accounts, savings accounts typically won't come with a debit card to make point-of-sale transactions in person or online, for example.

Savings terms to know

• Compound interest: Method of calculating interest where interest earned over time is added to the principal. Compounding is usually done on a daily or monthly basis and more frequently it is done, the faster your savings can grow.
• Interest: Money that you earn for having your funds deposited with a bank.
• Interest rate: A number that doesn't take into account the effects of compounding.
• Annual Percentage Yield (APY): A rate that takes into account the effects of compounding during the year. It’s best to compare yields rather than interest rates.
• Minimum balance requirement: The minimum amount needed in a savings account to avoid a monthly maintenance fee.
• Money market account: A type of savings account that may offer checks, and/or an ATM or debit card for teller machine withdrawals. Here’s more on the best money market accounts.

What are the different types of savings accounts?

Generally speaking, there is only one type of savings account. Some savings accounts may be called high-yield savings accounts but that doesn’t necessarily mean that they offer higher yields. Money market accounts also fall under the official definition of savings deposit accounts.

Some banks may also offer special savings accounts for children, while other institutions may one one account for everyone but allow accounts to be titled as custodial savings accounts.

Here are some possible titling options to designate the owner(s) of a savings account:

• Individual account: An account owned by a single person. No one else is allowed to access this account. (An exception can be if someone has a power of attorney for the individual account holder.)
• Joint account with rights of survivorship: If two people have a joint savings account — with no other beneficiaries on the account — and one of the joint owners dies, the account is paid to the living account holder.
• Payable on death (POD): If an individual savings account has one or more beneficiaries listed and the account owner passes away, these beneficiaries will receive the balance of the account. Appropriate proof, generally a death certificate, is needed. A beneficiary on a joint account, listed as POD, wouldn’t obtain a right to this account until the last account owner passes away.
• Uniform Transfers to Minors Act/Uniform Gifts to Minors Act (UTMA/UGMA): Typically, these types of accounts stipulate one custodian and one minor. The custodian manages the account for the minor until the child reaches age 18 or age 21, depending on the state.

Not all savings accounts are created equal. Many online banks, for example, pay higher yields than their brick-and-mortar counterparts. When choosing a savings account, consider APY, minimum deposit requirements and your financial goals. The best savings accounts should provide a competitive APY, but also give you the flexibility to securely withdraw or transfer money each statement period.

Online savings accounts vs. traditional savings accounts

One big difference between savings accounts offered by online banks and those offered by traditional banks is the APY offered. Online banks usually offer much more competitive yields. Brick-and-mortar banks tend to offer something closer to the national average, which is currently 0.10% APY, or they offer something that’s nearly nothing — 0.01% APY.

Another difference is branch access. Online banks offer savings accounts that give customers the ability to bank from anywhere at any time, but these online institutions typically don’t have any branches — so customers can’t visit them in person to perform basic banking tasks. Here's how to make deposits into an online savings account:

• Direct deposit
• Mobile check deposits
• ATM deposits
• Mailing in checks
• Electronic funds transfers
• Wire transfers

In addition to offering branches for conducting bank business, some banks may provide an ATM card and/or a debit card for ATM access. Depending on the bank, you may be able to electronically transfer the money to an account that you hold at another bank. Other possible options for accessing money are cashier’s checks or official bank checks or by initiating wire transfers, which, generally, are more expensive methods.

Here are some of the ways withdrawals can be made from an online savings account at a traditional bank:

• ATM withdrawals
• Debit cards
• Checks
• Electronic funds transfers
• Wire transfers
• Requesting a mailed check

Savings accounts are limited by Regulation D, which limits the number of transfers or withdrawals from the account to six per calendar month or statement cycle of at least four weeks.

Transfers, which are similar to withdrawals, made online, via check or some other method made by the depositor and payable to third parties apply toward your six-transaction limit. Withdrawals from ATMs are not counted toward the six-transaction limit, and many banks offer ATM access for savings accounts.

In late April 2020, the Federal Reserve Board announced an interim final rule to amend Regulation D so that consumers can make an unlimited amount of withdrawals or deposits from savings accounts. Banks aren’t required to suspend the rule, however, so the six-limit rule may still apply.

Requirements for opening a savings account online

Banks will likely have some slightly different requirements for opening a savings account online, though most require U.S. citizens to provide a form of ID and a social security number.

Here are sample requirements at three of the largest banks in the U.S. for opening a bank account:

Do you need to scan/submit your driver’s license/photo ID?

• Bank of America: No.
• Chase: The online application required information provided on an ID.
• Wells Fargo: ID information can either be entered on the website or a photo of the ID can be taken and submitted.

Do you need to lift a credit freeze/security freeze? (If you have one)

• Bank of America: Yes.
• Chase: Yes.
• Wells Fargo: Maybe. A visit to a Wells Fargo branch may be required.

Do you need to fund the new account immediately using an existing routing number/account number?

Online banks vs. brick-and-mortar banks

Why do online banks pay more interest?

In some cases, the biggest banks still pay their savings account customers less than 0.10% APY — the national average. Online banks, on the other hand, typically pay much more because they don’t have the costs associated with physical branches, giving them the opportunity to pay customers higher yields. Though online banks offer higher savings rates and charge fewer fees than traditional banks, consumers should also consider their individual financial needs, such as the need or desire to bank in person at a branch, when weighing where to open an account.

Benefits and risks of a savings account

Savings accounts, like all financial tools, come with benefits and risks. It's wise to weigh the pros and cons to see if one of these accounts is ideal for your financial situation.

Benefits

• Security: Savings accounts at an FDIC-insured bank are federally insured up to at least $250,000, making them great places to stash cash.
• Liquidity: You can access your savings in your account when needed. Savings accounts only allow for up to six withdrawals or transfers per statement cycle, but you won't have to sell investments in order to get your money out.
• Earnings: The money you keep in a savings account earns interest over time and compounds, offering a return on the principal.
• Higher interest: The best savings accounts usually earn more interest than a checking account – and some even have a higher yield than money market accounts.
• Low-fee options: There are many savings account options that either have a $1 minimum balance or no minimum. With these options, it’s easy to avoid a maintenance fee.
• Access: Many savings accounts allow you to access your savings at ATMs with an ATM card. Just make sure the ATM is in the network to avoid any fees. Also, ATM withdrawals don’t count toward your monthly/statement cycle limit of six.

Risks

• Low interest: Savings accounts do pay interest, but it's often much lower than can be earned with other savings vehicles like certificates of deposit or even some money market accounts. That can lead to a big opportunity cost — you may find higher returns elsewhere.
• Accessibility: Unlike checking accounts, savings accounts have a limit on the number of withdrawals and transfers you can make each month. Withdraw more than six times during a month, and you could get hit with a withdrawal penalty.
• Fees: Some banks charge minimum balance fees. Those maintenance fees can eat up any interest earned and your principal very fast, especially with low interest earnings.

Who should have a savings account?

Are there fees associated with a savings account?

Savings accounts may charge a maintenance fee if the minimum balance requirement isn’t maintained. Some savings accounts, however, don’t require a minimum balance or only require a nominal amount — and still pay competitive APYs. If the account’s minimum balance requirement is too high, consider finding a bank offering a similar APY with no minimum balance requirement — or a lower one. Finding a savings account with no monthly fee is the easiest way to avoid having surcharges eat into your interest earnings or principal.

Out-of-network ATM fees are another charge to watch out for, as are fees for closing a savings account before a specified period, typically three to six months. Banks may also charge fees for sending wire transfers, or purchasing cashier’s or official bank checks, utilizing funds in a savings account.

What do the best savings accounts have in common?

A low minimum opening balance requirements, competitive APY, and low or no fees are common traits among the best savings accounts. Monthly maintenance fees are an especially important consideration, because they can eat into any earned interest, principal or a high-interest savings account that pays a particularly high yield.

The good news is it’s easy to find an account that pays a high APY without getting hit with costly fees. Here’s what to consider when shopping for a savings account.

• High APY: Aim for the best APY that will generate the most payout on your savings. Usually, the best rates are offered by online banks, which have lower overhead than brick-and-mortar banks.
• Low fees: Accounts that charge no fees or make it easy to waive any monthly fees, by maintaining a minimum monthly balance, for example, offer the best value.
• Easy withdrawals and deposits: A savings account is meant for growing your money, but it should also be accessible in case of emergencies. Look for accounts that offer an ATM card or a mobile that allows peer-to-peer payments or account transfers.
• FDIC insured: Choose a bank that’s backed by the FDIC to keep your savings safe — and be sure your account is within FDIC limits and guidelines.
• Bank account bonus: Some banks offer new customers a cash bonus for opening an account, providing a boost to help to grow your savings. 
• Safety: Savings and money market accounts at an FDIC-insured bank are insured up to at least $250,000.
• Liquidity: Savings accounts and money market accounts are liquid accounts, so you can withdraw from them at any time — there are no early withdrawal penalties. Savings and money market accounts may limit withdrawals and transfers to six a month.