Bankrate's guide to choosing the right savings rate

Summary: Best Savings Accounts

Bankrate regularly surveys 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.

Bank/Institution Interest Rate (APY) Minimum Balance for APY Best for
CIT Bank 2.15% $100 High Yield Rate
PurePoint Financial 2.15% $10,000 High Yield Rate
Vio Bank 2.15% $100 High Yield Rate
Citizens Access 2.12% $5,000 Runner-up High Interest Rate
CIBC Bank USA 2.10% $1 High Yield Rate with Low Minimum Balance
Goldman Sachs Bank USA 1.95% $1 High Yield Rate with Low Minimum Balance
Barclays 1.90% $0 High Yield Rate with No Minimum Balance
American Express National Bank 1.90% $1 High Yield Rate with Low Minimum Balance
Synchrony Bank 1.90% $0 High Yield Rate with No Minimum Balance
E*TRADE Bank 1.90% $100 High Yield Rate
Ally Bank 1.90% $0 High Yield Rate with No Minimum Balance

Savings Account FAQs

What is a savings account?

A savings account is a type of financial tool 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.

In exchange for lower rates, they offer more liquidity, allowing for up to six types of withdrawals or transfers per statement cycle.

That makes savings accounts ideal for stashing money you may need access to if unexpected costs arise.

Indeed, savings accounts can play a crucial part in your financial health. Because there's no set term for maturity with a savings account, they provide a good spot to park your emergency fund.

And safety is the name of the game with these savings products. Savings accounts are insured up to at least $250,000 at banks by the Federal Deposit Insurance Corp. (FDIC) and at credit unions by the National Credit Union Association (NCUA).

If you are applying for a savings account, consider interest rates (APY), minimum deposits, and your financial goals when choosing a savings account. The best savings accounts will provide a high-yield APY but also give you the flexibility to securely withdraw or transfer money each statement period.

"Savings accounts and money market accounts offer the security of federal deposit insurance and complete liquidity so you can access your cash at any time. Seek out competitive returns so you can preserve your buying power and benefit as interest rates rise further."

- Greg McBride, CFA, Bankrate’s chief financial analyst.

How do savings accounts work?

Savings accounts are liquid bank accounts that usually offer a higher annual percentage yield (APY) than a checking account. They are referred to as liquid because you should be able to access most savings accounts at any time. This differs from a CD, which usually has an early withdrawal penalty and requires you to keep your money in it for a certain term.

Savings accounts aren’t meant to be active transaction accounts. They are limited by Regulation D, a rule that prevents you from performing more than six transfers or withdrawals from the account per calendar month or statement cycle of at least four weeks. There are some unlimited transactions that don’t apply toward your six-transaction limit. Withdrawing money from an ATM is one of the unlimited transactions. Many banks offer some sort of ATM accessibility for savings accounts.

Why get an online savings account?

Online savings accounts have a few distinct benefits over savings vehicles found at brick-and-mortar institutions.

Most notably, online savings accounts tend to offer higher interest rates and lower fees. That's because online banks don't carry the same overhead costs compared with walk-in branches, and can pass on that savings to customers.

In exchange for being able to visit a branch and talk to a teller, online banks often offer round-the-clock customer service. And cutting-edge technology is also a big perk, which typically allows for things like online bill payment, mobile check deposit and often a larger ATM network.

What is the average interest rate(s) on a savings account?

Over the past several years, since the financial crisis, interest rates on savings accounts have been historically low. But they have been inching up lately.

The average interest rate on a savings account is 0.09 percent APY.

Fortunately, many banks and online institutions offer savings account rates well above that average. That makes it crucial to shop around for the best deal when you're in the market for a savings vehicle.

"The top-paying savings accounts and money market accounts are perfectly suited for that emergency fund that we all need or as a temporary parking place for that bonus check or proceeds from a home sale."

- Greg McBride, CFA, Bankrate’s chief financial analyst.

What are typical fees associated with a savings account?

Savings accounts may have a maintenance fee if you don’t keep the minimum balance required in the account. If you stay above the minimum balance required, you should be able to avoid fees in your savings account. There are some savings accounts that have no minimum balance or a $1 minimum balance. Some of these low minimum balance accounts also have a competitive APY.

You could incur fees if you withdraw from a foreign ATM (an ATM outside of your bank’s network or an ATM abroad). Others may charge a fee for sending a wire transfer or purchasing a cashier’s check or official bank check.

Can I take money out of my savings account?

Savings accounts are liquid bank accounts that allow withdrawals. Check with your bank to see the methods for withdrawing funds or if there are any restrictions.

Some banks may give you an ATM card, and others may include a savings account on a debit card for ATM access. Depending on the bank, you may be able to electronically transfer the money to an account that you own at another bank. Other possible withdrawal options are via a cashier’s or official bank check or by initiating a wire transfer, which generally is the most expensive option of those previously listed.

Can I write a check from my savings account?

Savings accounts typically don’t have check-writing abilities. Some alternative methods may be using an ATM to withdraw cash, sending a wire transfer or a person-to-person transfer, using bank services such as Zelle to transfer the money, transferring the money to a checking account or a money market account that has check-writing ability or requesting a cashier’s check or an official bank check. Depending on your bank, the wire transfer will probably be the most expensive option, and there may be a fee for the official check.

What is considered a high-yield savings account/rate?

High-yield savings accounts traditionally have the highest APYs. Direct banks – banks that have only an online presence and don’t have brick-and-mortar locations – typically pay the highest yields. A high-yield savings account may have a low minimum balance.

Do savings accounts have compound interest?

When choosing a savings account, it's important consider how often the account compounds interest. Generally, all savings accounts compound, but some do it more often than others — on a daily, monthly, quarterly or even annual basis.

Daily compounding is ideal. The more frequently interest is compounded, the faster your savings will grow.

Keep in mind that because of compound interest, even small deposits can add up to big amounts over time.

You can use our compound interest calculator to calculate your potential earnings on a savings account.

Is savings account interest (APY) taxable?

The IRS considers any interest earned on a savings account to be taxable. If you earn interest from your savings product, you'll be required to submit at 1099-INT form to the IRS.

Fortunately, you don't have to pay interest on your savings account's balance, only on the interest earned. So, if your savings account has $1,000 and you earn $10 in interest for the year, you only pay taxes on that $10 gain.

Is a savings account worth it? Who should get one? Who shouldn’t?

If you’re not earning interest on your money or if you have a low interest rate, you should consider opening a savings account. Everyone should have some sort of emergency fund and additional savings to achieve their financial goals. Anyone who has money that they intend to grow for some amount of time should have a savings account.

A savings account is not worth it for someone who can’t keep the minimum balance – especially if that means incurring a fee. But with saving accounts without a minimum balance requirement or others with a $1 minimum, you should be able to find a savings account that fits your circumstances.

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.

Here are some of the benefits of a savings account:

  • 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 money when needed. Savings accounts allow only 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 money at ATMs with an ATM card. Just make sure the ATM is in network to avoid any fees. Also, ATM withdrawals don’t count toward your monthly/statement cycle limit of six.

Here are some of the risks associated with savings accounts:

  • 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 for opening a savings account and maintaining it. And some banks also charge minimum balance fees. Those fees can eat up any interest earned and your principal very fast, especially with low interest earnings.

Savings account vs. money market account vs. mutual fund

Here's a quick comparison of the three:

Savings Money Market Accounts Mutual Fund
Liquidity You can take your money from this liquid account at any time. But you’re restricted to six transfers or withdrawals per calendar month/ statement cycle. ATM withdrawals don’t count toward this limit. You may withdraw from this account at any time. But you’re limited to six transfers or withdrawals per calendar month/ statement cycle. ATM withdrawals don’t count toward the limit. Allow you to redeem shares at any time for the current net asset value.
Access Some banks allow you to use an ATM card to access the account or have it on a debit card for withdrawal purposes. Your bank may allow you to have your money market account on an ATM card or a debit card. You also may have limited check-writing ability. You’re allowed to redeem shares at any time for the current net asset value.
Earnings Usually more than a checking account, but rates may be lower than some money market accounts. On average, money market accounts have higher rates than savings accounts. Often pay more than both money market and savings accounts.
Security Accounts at FDIC-insured banks are federally insured by the government up to at least $250,000. Accounts at FDIC-insured banks are federally insured by the government up to at least $250,000. These are not FDIC-insured.
Fees There are accounts with no minimum balance required to avoid a maintenance fee. These traditionally have higher minimum balance requirements than savings accounts. There may be fees, called expense ratios, on these funds.

FDIC

The best savings accounts are federally insured. Your money is safe and insured for up to at least $250,000 if it’s in a savings account at an FDIC-insured bank. It’s imperative to choose an account with FDIC insurance, since it is backed by the U.S. government.

Savings accounts, money market accounts and mutual funds often get lumped into the same broader "savings" category. But they have some differences.

Between the three, savings accounts and money market accounts are most alike. They are both insured by the government at banks and credit unions up to $250,000. Both also pay interest and allow for up to six withdrawals or transfers per statement cycle.

However, money market accounts typically pay a higher interest rate than savings accounts. Money market accounts also offer check-writing and debit card capabilities, a degree of liquidity not often found with savings accounts.

Another big difference between the two is what can be done with your money. Banks and credit unions can use the money you deposit into a money market account to make low-risk investments in financial products like CDs. But with a savings accounts, institutions can only use your money to make loans to other customers.

What to consider when applying:

  • Safety: Savings and money market accounts at an FDIC-insured bank are insured up to at least $250,000, while money market mutual funds are not FDIC insured. Since savings accounts and money market accounts have this protection, these are safe places for your money. Money market mutual funds are still considered low-risk investments.

  • 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 offer up to six withdrawals or transfers per month. Some banks will allow you to make ATM withdrawals from these accounts. And money market accounts may have limited check-writing authority. Money market mutual funds allow you to redeem shares at any time for the current net asset value.

  • Earnings: Money market mutual fund accounts typically pay more than traditional savings accounts. But there are some savings accounts these days that have both a very competitive APY and low minimum balances. But money market mutual funds often pay more than both money market and savings accounts.

  • Fees: All of these types of savings vehicles may come with some fees. But thanks to minimal minimum balances on some savings and money market accounts, you should be able to find a solution that makes the maintenance fee a non-factor.

Rather than letting money stagnate in a no- or low-interest account, consider Bankrate’s best online savings accounts to prepare for your future financially.

Overview: Best Savings Accounts in October 2018

Here is a breakdown of popular banks that offer high-yield online savings account rates.

CIBC Bank USA: 2.10% APY, $1 minimum balance for rate

cibc bank logo Overview: CIBC Bank USA, formerly The PrivateBank and Trust Company, was founded in 1991 and is based in Chicago. It was rebranded in September 2017 as CIBC Bank USA and offers one of the most competitive APYs on a savings account.

Perks: If you don’t like maintenance fees, the CIBC Bank USA Agility Online Savings Account might be for you. The bank proudly states that this account has no maintenance fee. CIBC Bank USA also has a mobile app for both Apple and Android.

What to watch for: CIBC Bank USA has a great combination of one of the highest savings APYs and one of the lowest minimum balances, which is $1. You can make an external transfer to an account owned by you at another bank. But during the first 90 days from account opening, external transfers in CIBC Bank USA NetBanking aren’t available.

Goldman Sachs Bank: 1.95% APY, $1 minimum balance for rate

marcus by goldman sachs Overview: The well-known investment firm, Goldman Sachs, opened Marcus as its consumer banking arm. And it's been very competitive on rates from the start. In fact, it's often one of the best-paying banks in the savings products category. Much of that is due to its status as an online-based bank, allowing it to save on overhead costs and pass those savings on to its customers. In addition, Marcus has loose requirements for opening an account, making its offer tough to beat. The savings account option from Marcus requires no minimum deposit to open and a $1 minimum to earn the APY. But Marcus provides more than just savings products to consumers. It also has a range of personal loan options, from debt consolidation to home improvement.

Perks: Along with a high interest rate, the savings account product from Marcus comes with easy-to-meet requirements and the benefits of an online bank. You can access your account at any time, and you'll pay no fees for transactions.

What to watch for: You won't find any branches at Marcus. And it also doesn't have a mobile app. That means you'll need to call customer service on weekdays or look at the FAQ section to get answers about your account. There's also no checking account option at Marcus, limiting your liquidity options.

Northpointe Bank: 1.95% APY, $25,000 minimum balance for rate

northpointe bank logo Overview: Northpointe Bank is a full-service bank. It offers consumer banking, home lending and insurance. For consumer banking, it provides various checking account and savings account options. But its promotional savings account — Ultimate Savings — stands out from the pack. It often pays one of the best rates in the nation. It's a free account with no minimum to open. But you'll need to maintain a minimum monthly balance of at least $25,000 to earn the APY. After the 12-month promotional period, the rate may change based on the market.

Perks: Along with the high interest rate on its Ultimate Savings account, Northpointe offers perks like mobile banking, free ATM withdrawals, online bill pay and mobile check deposit. It even has a service that allows you to send money to someone using their email address or phone number.

What to watch for: The promotional rate on Northpointe Bank's Ultimate Savings account could change after the 12-month period is over. In addition, the $25,000 minimum balance requirement to earn the APY is steep. If you can't swing that minimum, you may want to look elsewhere for an account.

Barclays Bank: 1.90% APY, no minimum balance for rate

barclays Overview: Barclays is often known for its credit cards and personal loan products, but it's also a major player in the savings product category. Indeed, Barclays provides both a high-interest online savings account and a number of online CDs. And it's typically a top contender on its interest rates. Products from Barclays are only available online in the U.S. Fortunately, for savers, that means the bank can limit overhead costs and pass its savings on to its customers. For its online savings account, the online bank is offering one of the top rates in the nation and requires no minimum to open.

Perks: Among the perks of an online savings account at Barclays, you'll find a very competitive interest rate, no minimum to open, 24/7 access to funds, online transfers to and from other banks and direct deposit. Additionally, Barclays has a mobile savings app that also allows you to deposit/transfer funds.

What to watch for: If you're looking for a full-service banking institution, Barclays isn't a great option. The bank doesn't offer a checking account option, an ATM network, or branch locations. It's best for those who like to bank online and want an outside institution for its savings options.

American Express National Bank: 1.90% APY, $1 minimum balance for rate

american express bank Overview: Though American Express is known mainly for its credit card business, it's also making some waves in personal savings. Its online personal savings account competes heavily with other online banks — it has a solid rate and no fees. Plus, the account allows you to link up to three of your online banking accounts to the American Express platform, so there's no need to switch banks. The company also offers a range of highly competitive certificates of deposit, making it a serious contender among online banks.

Perks: The online personal savings account from American Express provides a competitive rate. It doesn't charge any monthly fees, and it doesn't require a minimum balance. The ability to link current bank accounts offers an easy solution if you have outside accounts that you'd like to view on one platform.

What to watch for: Similar to other online banks, American Express does not have any branch locations. If you're looking to talk to someone in person, you'll have better luck with another bank. It also isn't a full-service bank — there's no checking account option, for instance. And there's no mobile check deposit option — American Express reserves mobile apps for its credit card customers.

Synchrony Bank: 1.90% APY, no minimum balance for rate

synchrony bank Overview: Synchrony Bank provides a range of depository products for consumers. That includes a savings account, money market account and a number of CDs. As an online bank, it has limited overhead cost, which means it can return those savings to customers in the form of higher rates. Indeed, its savings account and other depository products are consistently among the top-paying accounts. Synchrony also has a highly rated customer service department available by online chat or by phone seven days per week. And customers get a lot of perks, including complimentary identity theft resolution and travel and leisure discounts. You'll even get a dedicated customer service number as a "Diamond" customer. That's in addition to access to webinars, three free wire transfers per statement cycle and unlimited ATM reimbursements.

Perks: At Synchrony, you'll get very competitive rates. But you'll also gain access to other perks, including the ability to manage your account 24/7 online.

What to watch for: Synchrony Bank doesn't offer a checking account. It's not a full-service bank. So, if you're looking for liquidity, you might want to stash your cash elsewhere.

Discover Bank: 1.75% APY, no minimum balance for rate

discover bank logo Overview: While it's often thought of as a credit card company, Discover offers a full range of products. You'll find consumer banking opportunities, personal loans, student loans and even home equity loans. Its consumer banking products include savings, checking, money market, certificate of deposit and IRA options. Rates from the online bank are typically very competitive, easily topping brick-and-mortar institutions. Its online savings account, for instance, is often among the top-paying accounts in the country. And it requires no monthly balance or deposit to earn the APY.

Perks: A competitive rate and low fees make Discover's online savings account a very attractive option. But it's notable that Discover is also a full-service bank, offering a checking account and other consumer products. That's not something generally found at online banks. If you're looking for a one-stop shop for all of your banking needs, Discover could be a good fit.

What to watch for: Although Discover is a full-service bank, it has only one branch location. It makes up for that with mobile banking abilities. But if you're interested in a brick-and-mortar institution where you can make cash deposits, Discover may not be your best option.

Low Minimum Balance Savings Accounts

You can still save smartly using a savings account without having to maintain a high minimum balance. The experts at Bankrate have compiled our best savings rates for low minimum balance accounts. It is our goal to help users make the best financial decisions possible for spending budgets of all types.

Bank/Institution Interest Rate (APY) Minimum Balance for APY
CIBC Bank USA 2.10% $1
Goldman Sachs Bank USA 1.95% $1
Barclays 1.90% $0
American Express National Bank 1.90% $1
Synchrony Bank 1.90% $0
Ally Bank 1.90% $0

Uses for a savings account

Tips to save for the future

For more information, Bankrate's experts have compiled the following reasons for opening a savings account.

How to save at different points in your life

Bankrate's experts have compiled the following articles to help you save, customized to your age.

  • Saving in your 20s: This is a time to develop good saving habits and set a solid foundation for the future.
  • Saving in your 30s: This is an important age where many will have important life events.
  • Saving in your 40s: At this age, it’s time to assess how you’ve done previously and whether you need to alter your savings plan moving forward.
  • Saving in your 50s: Saving to cover health care costs is one thing to save for at this age.

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