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March 23, 2020
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With so many bank savings accounts on the market, it can be hard to discern which one is best suited to your personal and financial situation. There are plenty of factors to consider before choosing a bank account, including your budget and likely balance, flexibility of deposits and withdrawals, and interest rates — so that you can get some return on your money.

A good savings account will provide features that help you strategize contributions and reach your savings goals. It will also be easy to manage and keep track of your finances.

Some features to look for when considering a savings account include online banking, mobile apps, few (or even no) fees, and the availability of quick, seamless transfers between your accounts. These things can lead to a happier, more stress-free financial life. After all, if setting money aside isn’t easy, you’re not as likely to follow through with it.

What really separates the best savings accounts from the rest of the pack, however, is a high interest rate. The average savings account rate is a pathetic 0.09% annual percentage yield (APY), according to the most recent estimate from the Federal Deposit Insurance Corporation (FDIC). That’s more like a puff of smoke than a turbocharge for your savings.

On the other hand, some online savings accounts have APYs over 1.50%. As the Federal Reserve has cut interest rates, it’s become more difficult to get a decent return on money stashed in a savings account. Luckily, some online banks today are offering rates that are much higher than average, and it only takes a few minutes to set up your account.

Important Things To Know About the Best Savings Accounts

  • Both “APY” and “interest rate” refer to how much you earn on your savings account.
  • Some savings accounts advertise high APYs that only apply to a given amount of money, such as the first $500, or on balances over $10,000.
  • Many banks and credit unions allow you to open multiple savings accounts to help you save for different goals.
  • Banks and credit unions are both governed by different agencies, but the rules are essentially the same for both.
  • Credit unions may have membership requirements to join, while banks generally don’t.
  • Most banks and credit unions offer up to $250,000 in insurance in case the business fails.

5 of the Best Savings Accounts

Reviewing the Best Savings Accounts

It’s important to consider what you want in a savings account before signing up. For example, if you want to be able to withdraw cash from an ATM, you should obviously avoid opening a savings accounts with no ATM access. If you want to earn a high interest rate on your entire balance, you should stay away from savings accounts that pay different interest rates at different balance levels.

PenFed Credit Union

Working with a credit union has several advantages because of its non-profit structure and friendly local atmosphere. However, most credit unions are left back in the 20th century as far as their online offerings are concerned. Not so with PenFed Credit Union: this financial institution boasts all of the handy online and mobile features you’d expect from a big-name national bank.

That’s especially true of its Premium Online Savings account. It offers a high interest rate of 1.60% APY as of March 2020, and this interest rate will be paid on your entire balance (up to $250,000). Furthermore, there are no monthly fees, and it only takes $5 to open your account.

The only thing to watch out for is that PenFed’s Premium Online Savings is an entirely online-only account, so you won’t be able to go into a PenFed Credit Union branch or an ATM to withdraw your money in cash; you’ll have to do it entirely with online transfers to and from your normal savings or checking account.

Most credit unions restrict membership to certain groups of people, such as those that live in a certain area or are employed by certain companies. And while PenFed Credit Union was originally founded to help military members and features special assistance just for them, today anyone is free to join.

Capital One 360

The Capital One 360 Performance Savings account advertises that its rates are 5X higher than average, but the truth is that they’re more like 16 times higher than normal, at least according to the FDIC. That’s because as of March 2020, Capital One offers 1.50% APY on all balance levels in this account—far higher than the measly 0.09% APY offered on average.

There are no minimums to open this online savings account, so you can get started today with whatever you have, even if it’s nothing. There are no monthly fees, either. If you need to withdraw money you can do so with an online transfer or by visiting a Capital One banking location, but you can’t use an ATM with this account.

Capital One has over 500 branch locations and is the seventh largest bank in the United States according to the Federal Reserve. With big-name banks like this you often sacrifice high interest rates and customer service, although Capital One bucks the trend here too. J.D. Power named Capital One as the second-highest rated mobile app in a 2019 study, which will especially help with managing this online savings account.


Barclays is one of the oldest banks in the world, having gotten its start in London well before the United States was even a nation (the bank started in 1690, to be precise). Much like the British Empire, it’s grown in size to feature several country-specific divisions, including the U.S. online banking division based in Wilmington, Delaware. Given that this division focuses entirely on online banking, you can be confident that you’ll have a good experience with this account.

Barclays offers an online savings account with a high interest rate of 1.60% APY (as of March 2020) and no monthly fees and no minimum balance requirements. Barclays has no U.S. branch locations, and you won’t be able to get access to your money through an ATM with this account.


NBKC Bank’s savings account works a little differently, because it’s not actually a true savings account at all. It’s a Personal Money Market Savings account which means it works a little differently on the bank’s end, but for you it’s essentially the same thing. It still comes with the same amount of FDIC insurance and the same rules as a regular savings account.

The real beauty of NBKC Bank’s Personal Money Market Savings account is that not only does it offer a relatively high interest rate (1.01% APY as of March 2020), but it comes with generous ATM policies as well. You can use any one of 32,000+ Moneypass ATMs for free. NBKC doesn’t charge ATM fees if you use an out-of-network ATM, but the ATM’s owner might, and if this happens, NBKC Bank will refund you up to $12 per month in ATM fees. This means that as long as you don’t use ATMs excessively throughout the month, you can pretty much use whichever ATM you want and not have to worry about annoying ATM fees anymore.

Discover Bank

You may know Discover from its credit card commercials, but it also has a robust online banking division too. Discover’s Online Savings Account is one of the best out there, offering 1.50% APY as of March 2020. Even better is that Discover Bank doesn’t charge any of the fees you might see at other banks. In fact, the only fee it does charge is a $30 wire transfer fee if you need to get money into someone else’s account fast. Otherwise, you can simply do a regular automated clearing house (ACH) transfer to move money to a different account within a couple of business days, so the wire transfer fee is easily avoided.

Discover Bank also gets one of the best ratings in the online banking world for customer satisfaction, according to a 2019 J.D. Power study. According to these rankings, Discover Bank scored highly for its stellar online support and easy account-opening process. It also has a handy mobile app you can use, which even offers facial or touch recognition logins to make for a secure and smooth experience.

The only downside with Discover Bank is that like many online savings accounts, you won’t be able to use an ATM to get access to your cash. You’ll have to make do with online transfers, and Discover Bank also offers the option of free cashier’s checks.

How Are Online Savings Accounts Different?

It used to be that the best way to get a savings account was to visit whichever bank branch was most conveniently located to you. That meant that most banks invested heavily in opening as many branches as possible, but this is a costly approach. Furthermore, since most people were more interested in convenience than earning a good rate, physical banks simply didn’t offer savings accounts with high APYs.

If you flash-forward to today, the internet has opened up a world of possibilities — literally. Banks that are operated entirely online, with no branches at all, are becoming more and more common. Even many traditional banks now offer high-yield online savings accounts, and some even still offer you the option of visiting local branches in-person.

Since most online banks don’t offer branches, they’ve focused more on developing a positive online and mobile experience that’s equally matched with ultra-high interest rates. According to the 2019 J.D. Power study mentioned above, online banks score 53 points higher than traditional banks on a 1,000-point scale for overall satisfaction. At least before the Federal Reserve began cutting interest rates in 2019, online banks had engaged in a sort of reverse bidding war, increasing interest rates at a neck-in-neck pace. Online savings account interest rates have fallen hand in hand with cuts by the Fed, but these account still offer a far better return than standard accounts.

Aside from not being able to have a weekly chat with a bank teller, people with online bank accounts often have to worry about what to do with cash. With most online banks there’s no easy way to deposit cash, so an online bank may not work for you if you handle cash frequently. Many online banks don’t offer ATM use either, while others, like NBKC Bank, have more consumer-friendly ATM policies than traditional banks. The solution for many people is to maintain multiple accounts — at least one with local branches and easy ATM access (even if it has minimal or no interest) in addition to a high-yield online savings account.

Online Savings Accounts Can Help Your Savings Strategy

Online savings accounts are equally protected by $250,000’ worth of Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) insurance for banks and credit unions, respectively. However, there are other reasons why choosing an online savings account can make more sense in many cases.

Protect Your Savings Account From Yourself

Online banks are especially well-suited for savings accounts because getting access to your money can be slightly more difficult than with a regular bank. At first this sounds like a downside (and it can be in some cases), but remember: the purpose of a savings account is to serve as a spot to park your money for a specific use at a later date. If it’s too easy to get ahold of, you might be tempted to withdraw the money to pay for an ultra-sweet (but ultra-unnecessary) sale on something you really want.

If your main checking account is at another bank, it can take a few days to transfer the money over from your savings account. This buffer can help lessen the temptation of using the money too soon.

If you are someone who’s not easily tempted and prefers to have quick access to your savings account funds, you still have options. You can always opt for a savings account with ATM access or open a checking account at the same online bank so you can take advantage of instant transfers between these two accounts.

Savings Accounts for Different Goals

Many online banks allow you to open multiple savings accounts. For example, you may choose to open separate savings accounts for:

  • House down payment
  • Emergency fund
  • Vacation
  • New car

You can essentially do the same thing on paper with a budgeting program and a single savings account. However, many people find that it’s easier to stay on track with their savings goals by separating their savings like this.

Protect Your Savings Against Inflation

The rate of inflation in the U.S. averages around 3% per year. That means if you’re not earning at least 3% per year on your savings account balance, your money is losing value as the years go by. And since savings accounts are designed to be held for the long haul, this is especially important to consider.

It’s a rare feat to find a savings account that offers 3% today, even with an online-only bank. However, you can at least minimize the damage by choosing a savings account with the highest interest rate possible. Your money will still slowly lose value over time, but at least it won’t be as bad as if you choose a savings account offering the national average of 0.09% APY.

Should you choose a savings account at a bank or credit union?

Banks and credit unions both offer very similar products, but there are some slight differences that might push you one way or another.

Banks are for-profit businesses that offer FDIC insurance. Anyone can join a bank as long as you meet the minimum account opening requirements. While many banks offer a full suite of financial products, you can also find online banks that specialize in offering just one or two types of high-quality savings accounts.

Credit unions, on the other hand, are non-profit organizations that offer NCUA insurance. At a credit union, you’re considered a member rather than a customer, and members can even be involved in governing the credit union if they choose. Most credit unions have restrictions on membership, so you may not qualify to join all credit unions. In addition, most credit unions focus more on in-person, brick-and-mortar development than online offerings, although many forward-thinking credit unions like PenFed Credit Union are becoming more open to a digital existence.

Summary: Best Savings Accounts


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