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Best Online & High-Yield Savings Accounts of November 2020
By: Kailey Hagen
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A savings account is a great way to put your money to work for you without risking it in the stock market. Some of the best online savings accounts can have an APY (annual percentage yield) that is more than 15 times the national average APY of 0.06%. If you're interested in growing your savings, the following key features are what we think makes for the best savings account:
- High APY: The top savings accounts should include a high APY in range with our picks.
- No monthly maintenance fee: It's commonplace for the best savings accounts to not charge a monthly maintenance fee.
- FDIC insurance: Whether you're putting money aside to build an emergency fund or wanting to earn more interest, security is important.
Our picks of the best savings accounts below all offer these essential features, among other market-leading benefits. Check out our picks below to get started and read further to learn if a high-yield, online, or traditional savings account is right for you.
Check out The Ascent's shortlist of the best high-yield and online savings accounts:
- 0.60% APY: American Express National Bank
- 0.60% APY: Discover Online Savings
- 0.61% APY: Axos High Yield Savings
- Up to 0.50% APY: CIT Bank Savings Builder
- 0.66% APY: Vio Bank High Yield Online Savings Account
- 0.60% APY: Marcus by Goldman Sachs Online Savings Account
- 0.81% APY: Varo Savings
- 0.60% APY: Ally Online Savings
- 0.60% APY: Synchrony Bank High-Yield Savings
Rates as
of Oct. 29, 2020
The Ascent's picks of the best savings accounts of November 2020
Below you'll find quick reviews of our best online and high-yield savings account picks for this month. Click through to the full review to learn more.
Good for: No monthly maintenance fee
American Express National Bank
-- 0.60%
You probably know American Express as a popular credit card issuer, but its savings account is garnering a lot of positive attention because of its low fees and high APY, available to anyone who maintains a balance of $1 or more.
Read our full review to learn more.
Good for: No monthly maintenance fee
Discover Online Savings
-- 0.60%
The Discover Online Savings account is a top choice for customers looking for a quality online savings account with a high APY. Discover takes the no-fee approach to the next level with none of the monthly fees or hidden fees that you might see with other banks. Discover offers a top-rated mobile app that lets customers stay connected to their savings from almost anywhere.
Read our full review to learn more.
Good for: High APY
Axos High Yield Savings
-- 0.61%
Axos Bank packs in one of the highest current APYs. Importantly as well, the high APY doesn't come with any strings attached (all balances receive the same APY) and doesn't charge a monthly maintenance fee.
Read our full review to learn more.
Good for: No monthly maintenance fee
CIT Bank Savings Builder
-- Up to 0.50%
The CIT Bank Savings Builder account employs a tiered APY system that can net you up to 0.55% APY if you maintain a balance of $25,000 or more or have at least $100 in deposits every month. The latter qualification is likely what most savers can maintain, making the highest APY tier widely available.
Read our full review to learn more.
Good for: High APY
Vio Bank High Yield Online Savings Account
-- 0.66%
The Vio Bank High Yield Online Savings account offers among an industry-leading APY to all account holders, and it doesn't charge monthly maintenance fees. This makes it a great fit for anyone hoping to grow savings over time.
Read our full review to learn more.
Good for: No monthly maintenance fee
Marcus by Goldman Sachs Online Savings Account
-- 0.60%
The Marcus by Goldman Sachs Online Savings account is a newer entrant to the market, but it's already proven that it's here to stay with a competitive APY, low fees, and no minimum balance requirements.
Read our full review to learn more.
Good for: High APY and modern banking experience
Varo Savings
-- 0.81%
Varo's modern spin on banking means it has a high-quality mobile app and no monthly maintenance fee. Not to be left overlooked, you can earn 0.81% APY on balances over $10,000 and 2.80% on balances up to $10,000 (with qualifying activities).
Read our full review to learn more.
Good for: No monthly maintenance fee
Ally Online Savings
-- 0.60%
Importantly, Ally Online Savings includes a high APY. Not to be overlooked, it also includes no monthly maintenance fees, no minimum balance requirements, and includes useful desktop and mobile tools to make hitting your savings goals easier.
Read our full review to learn more.
Good for: High APY
Synchrony Bank High-Yield Savings
-- 0.60%
Synchrony's banking products share a common thread: Each tends to be among best-in-class, all while cutting fees. Synchrony High-Yield Savings is no different. Beyond a high APY and no monthly maintenance fee, accountholders can access a somewhat rare savings account perk, ATM access.
Read our full review to learn more.
How does a savings account work?
A savings account is a type of bank account that enables you to earn interest on your money in exchange for limited fund access. You can put as much money as you'd like into a savings account, but by federal law, you can only make up to six free withdrawals per month. Exceeding this amount could result in extra fees.
Banks use your savings to help fund loans for other customers. Borrowers must pay back what they borrowed with interest, and your bank passes along some of those earnings to you in the form of interest on your savings account. A larger balance or a higher savings account interest rate results in more interest.
Savings accounts may have monthly maintenance fees, and they usually do not include ATM cards or check-writing capabilities, so if you want to withdraw money from the account, you must do so via automatic bill pay or transfer the funds to a linked checking account.
Like other types of deposit accounts, traditional savings accounts and online savings accounts are typically backed by the Federal Deposit Insurance Corporation (FDIC). This protects your money, up to $250,000 per person per bank, against bank failure. So if your bank goes under, you won't lose all of your hard-earned cash.
What is a high-yield savings account?
A high-yield savings account works the same way as a traditional savings account, but it offers a much greater APY. There is no clear boundary separating high-yield accounts from their lower-earning peers, but the best high-yield savings accounts can offer close to 2% APY -- almost 25 times the national average savings account APY of 0.07%.
High-yield savings accounts are most commonly found at online banks. They don't have to pay to maintain a large network of branches and they're able to pass those savings on to you in the form of higher APYs and lower fees.
Most online savings accounts carry the same Federal Deposit Insurance Corporation (FDIC) insurance traditional banks have, so your money is protected up to $250,000 per person per bank against bank failure. But because these banks don't have branches, you're more limited in how you can access your funds. This shouldn't pose a serious issue for most people, though, as these accounts are intended for saving, not frequent spending.
What is the difference between an online savings account and a traditional savings account?
Traditional savings accounts are typically those offered by a brick-and-mortar bank. Online savings accounts don't have the overhead of running a physical bank location, so they can pass on their savings to interest rates. The best online savings accounts are often high-yield—earning more than traditional savings accounts. Early on, many bank customers were concerned about the possibility of hackers gaining access to their information. To attract deposits, online banks responded by offering interest rates that brick-and-mortar banks couldn't match.
Now, the banking world has turned upside down. Many people prefer the convenience of banking online, so much so that even traditional brick-and-mortar banks have had to create online systems to give their customers the same services online banks have always provided.
Here are some of the key differences between online and brick-and-mortar banks as they pertain to savings accounts:
- Interest rates: The best online banks still offer far better rates than their brick-and-mortar counterparts, especially on basic savings accounts. Many brick-and-mortar banks pay next to nothing in interest, relying on other features to bring customers in.
- Hours of operation: Online banks are always available to conduct regular business. You don't have to worry about branch location hours or what transactions your brick-and-mortar bank will let you do through an ATM.
- ATM networks: Brick-and-mortar banks have extensive networks of proprietary ATMs that most online banks don't have. However, many online banks offer rebates for ATM fees that you might have to pay to use another bank's ATM.
- Customer service: Online banks typically have call centers that provide service on an extended schedule, with a few giving their customers 24/7 support. Some also offer online chat assistance. However, no online bank can match the in-person relationships brick-and-mortar banks rely on as their main competitive advantage against their internet-focused rivals.
- Account access: Most online bank transactions require customers to transfer funds electronically, which typically takes a couple of days to complete. Wire transfers are available for more time-critical needs, but you'll often pay an extra fee. When you need quick access to your money that goes beyond what an ATM can provide, brick-and-mortar banks give you the chance to go to a branch and immediately withdraw as much as you need in whatever form works best.
Whether you prefer brick-and-mortar or online banks depends on what's most important to you in a bank. Unless it's really important to you to be able to visit a branch and speak to a live person, an online bank should be able to satisfy your needs most of the time while enabling you to earn a higher APY in the process.
The best savings accounts have a high APY, no monthly maintenance fees, and FDIC insurance. Be sure to keep those things in mind as you choose the savings account that is right for you.
TIP
Is an online savings account FDIC-insured?
Every good savings account has to have deposit insurance from the Federal Deposit Insurance Corporation, or FDIC. This protects covered deposits up to $250,000 against any problem your bank might have, up to and including the complete failure of the entire banking institution. Most online banks, including all the ones that offer the best online savings accounts, are covered by the FDIC.
Savings account terminology
Here are a couple of key terms you should know if you plan to open a savings account. All of these terms are important for online savings accounts, traditional savings accounts, and high-yield savings accounts.
APY: This stands for "annual percentage yield." People often use this term interchangeably with interest rate, but the two are not exactly the same. APY takes into account how often interest compounds, in addition to the actual interest rate. A higher APY means more interest for you.
Monthly maintenance fee: A monthly maintenance fee is a fee your bank charges you to maintain your savings account. Some banks, especially online banks, don't charge this fee, and others will waive it if you meet certain requirements.
Liquidity: Liquidity refers to how easy it is to turn your money into cash. Highly liquid accounts make this simple, while low-liquidity accounts make it a lot more challenging to get cash when you need it.
What should I look for in a savings account?
The best high-yield savings accounts, both online and traditional, will meet the following criteria:
- FDIC insurance: Most banks should offer FDIC insurance. It's not likely you'll ever use it, but you don't want to get caught without it. If your bank fails and your funds aren't insured, you lose them.
- High APY: APYs fluctuate from bank to bank and over time, so there's no solid definition of a high APY. You don't need the highest rate available right now, but you should choose one that's close to the highest around. This will earn you more interest.
- Low fees: Fees can eat into your profits and possibly cost you more than you're earning in interest. Check your bank's fee schedule to learn about any costs associated with the account, and avoid a monthly maintenance fee if you can.
- Accessibility: Check with the bank to learn about the ways you can deposit money into and withdraw it from your savings account, and make sure you're comfortable with them. You likely also want a bank with an online portal and mobile app for managing your funds remotely.
TIP
How to get extra FDIC insurance
You can get extra FDIC coverage beyond the $250,000 limit depending on the accounts held at a single bank. For instance, you could get $750,000 in coverage at a single bank by putting money into both a joint savings account under yours and your spouses name and an individual CD in just your name. That's because the $250,000 limit is per depositor, per account category. Spreading the funds across depositors and account categories increases coverage within a single bank.
What should I use a high-yield savings account for?
A savings account is a good place for money you don't need for everyday spending but want quick access to. You should keep your emergency fund in a savings account, as well as money you are saving for a large purchase in the next few years. Investing these funds is usually not a good idea -- while there's a chance you could earn more money than you would with an online or high yield savings account, there's also a risk of losing money when investing, particularly over the short term. You could be forced to sell your assets at a loss when you need money, and even then, it takes some time to get the funds you need. With a savings account, it's always right there when you need it.
Savings accounts are not good places for money you plan to use for everyday spending, because withdrawals in excess of six per month could bring fees. They're also not the best choice for money you don't plan to use for decades, because savings account interest rates are usually lower than the return you can get from investing.
Alternatives to consider
One of these other bank accounts might suit you better if one of our best savings accounts doesn't sound like a good fit.
CD accounts: A certificate of deposit (CD) is a special type of savings account that offers a higher interest rate than a high-yield savings accounts, but doesn't allow you to access your deposit plus earnings for a set number of months or years (your CD "term"). If you withdraw your money before this deadline, you will pay a penalty in lost interest.
Money market accounts: Money market accounts offer the high interest rates you find with savings accounts and CDs as well as some checking account features. Some offer ATM cards and checks so you can withdraw funds directly from this account, though you're still limited to six withdrawals per month.
Checking accounts: Checking accounts rarely earn interest, and when they do, their rates are usually lower than high-yield savings accounts. But checking accounts have no restrictions on withdrawals, and most include ATM cards and checks for easy access.
Savings vs. checking vs. CDs: Which should you pick?
Choosing the right home for your money is essential for minimizing frustration and earning the most interest. This chart provides a quick overview of some of the key features of the best savings accounts, checking accounts, and CDs.
| Features | Savings accounts | Checking accounts | CD account |
|---|---|---|---|
| Interest rates | Savings accounts offer higher APYs than most checking accounts and some CDs in exchange for more restrictions on withdrawals | Typically offer a low interest rate, if any | Depending on the CD term and bank, a CD may offer a better rate than savings or checking accounts in exchange for restricted withdrawal options |
| Variable or fixed interest rates? | Variable | Variable | Fixed for the CD term |
| Liquidity | Fairly high, but there are fewer withdrawal options and penalties for excessive withdrawals | High -- several deposit options, and no restrictions on withdrawals | Depends on the CD type, but typically low, with penalties for early withdrawals |
| ATM card? | Possible, but rare | Yes | No |
| Check-writing capabilities? | No | Yes | No |
How to open a savings account online or in-person
You can open a savings account by visiting a bank branch if your chosen bank has one, or filling out an online application form. You will need to provide some personal information, including:
- Your address
- Your Social Security number
- A government-issued ID, like a driver's license or a passport
If you are opening a joint savings account, both parties will need to provide this information.
Your bank may also require a minimum deposit to open the account. This may be different than the ongoing minimum balance required to avoid monthly maintenance fees, if your bank charges these. If you're transferring the funds from another bank account, you'll need to know its routing and account number.
FAQs
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Savings accounts hold money you don't plan to spend immediately and earn interest over time. How much depends on the balance in your savings account and the interest rate. In exchange for this interest, you agree to limit your monthly withdrawals from your savings account.
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Yes. Savings account funds are FDIC-insured up to $250,000 per person per bank, so there's no risk of losing money if your bank goes under. The risk of losing money with a savings account at all is pretty slim, but it is possible if you incur a lot of fees or if your identity is stolen or a hacker gains access to your online account.?
As long as you are aware of the fees your bank charges (and methods of avoiding them) and you protect your personal and account information, you should only make money with a savings account.
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The best savings accounts have:
- High APY: The top savings accounts should include a high APY in range with our picks.
- No monthly maintenance fee: It's commonplace for the best savings accounts to not charge a monthly maintenance fee.
- FDIC insurance: Whether you're putting money aside to build an emergency fund or wanting to earn more interest, security is important.
-
A high-yield savings account is a savings account that offers a much higher APY than average. The national average savings account APY is currently 0.07%, but some high-yield savings accounts offer APYs close to 2%. This means your savings can grow more quickly.
| Offer | APY | Best For |
|---|---|---|
| American Express National Bank | 0.60% | No monthly maintenance fee |
| Discover Online Savings | 0.60% | No monthly maintenance fee |
| Axos High Yield Savings | 0.61% | High APY |
| CIT Bank Savings Builder | Up to 0.50% | No monthly maintenance fee |
| Vio Bank High Yield Online Savings Account | 0.66% | High APY |
| Marcus by Goldman Sachs Online Savings Account | 0.60% | No monthly maintenance fee |
| Varo Savings | 0.81% | High APY and modern banking experience |
| Ally Online Savings | 0.60% | No monthly maintenance fee |
| Synchrony Bank High-Yield Savings | 0.60% | High APY |
About the Author
Kailey has been writing about banks, credit cards, loans, and all things personal finance since 2012. She also writes for The Ascent's parent company, The Motley Fool. Her work has appeared on USA Today, CNN Money, Fox Business, and MSN Money. She's a graduate of the University of Wisconsin and happily lives in the woods of northern Wisconsin where she grew up.
