Keeping your extra money lumped together in a checking account is convenient, but you’re limiting yourself when you miss out on the potential interest that cash could earn. Choosing the best savings account might be a better option. An online high-yield savings account may be your best bet to earn higher interest and other perks.
Featured High Yield Savings Accounts
Earn up to 4.75% APY1 <p>LevelUp Rate of 4.75% Annual Percentage Yield (“APY”) is applied to the full balance of LevelUp Savings accounts that receive a total of at least $250 in deposits during the Evaluation Period. Otherwise, accounts will earn the Standard Rate of 3.75% APY. Interest payments, account bonuses, account credits and reversals or refunds from the bank are not considered deposits for rate evaluation purposes. All LevelUp Savings accounts earn the LevelUp Rate at account opening and continue to earn the LevelUp Rate until the First Evaluation Period, to provide an opportunity to set up deposits. </p> <p>An Evaluation Period is a statement cycle. The First Evaluation Period will be the third statement cycle after you open your account, with any rate change becoming effective the next statement cycle. For example, if you open in August, the first Evaluation Period would be October with any rate change effective in November. Any rate changes will take place on the second business day and will be based on deposits in the previous statement cycle. </p> <p>APY accurate as of 11/25/2024. Rates are variable and subject to change at any time without notice, at the sole discretion of the bank. Fees may reduce earnings. $0 minimum opening deposit.</p> when you open a new LevelUp Savings account and deposit $250+ per month. Member FDIC.
Earn up to 4.00% APY2 <p>New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) <b>OR</b> $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at <a href="http://sofi.com/banking">sofi.com/banking</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC.</p> <p>SoFi members with Direct Deposit can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the 4.00% APY for savings (including Vaults). Members without Direct Deposit will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a></p> and collect up to a $300 cash bonus with direct deposit or $5,000 or more in qualifying deposits.3 <p>SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a></p> FDIC Insured.4 <p><b>SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a></b></p>
What is an online savings account?
- Typically higher interest rates than traditional savings accounts
- Many accounts charge no or low monthly fees
- May have no or low minimum balance requirements
- Manage your money from anywhere with an internet connection
- Harder to deposit and withdraw money without physical branches
- Can have limited ATM access via third-party networks
- No in-person customer support
- Not all online banks offer both savings and checking accounts
An online savings account is an account you open with a company that doesn’t have brick-and-mortar branches. You’ll never visit a branch in person; they’re online-only institutions you access through a website, a mobile banking app, or over the phone.
While the setup isn’t traditional, the account part usually is. You can find the same banking rules at most of the best online banks as you would with traditional ones. For example, accounts are usually FDIC-insured, and federal regulations only allow for six withdrawals a month from savings accounts.
Learn more about how online savings accounts work.
5 smart reasons to open an online savings account
If you’re unsure about opening an online savings account, check out the following perks you could discover. There are plenty of reasons why you should take the plunge.
1. You could find better interest rates
Online-only savings accounts often have much higher annual percentage yields compared to brick-and-mortar banks.
For example, Bank of America’s Rewards Savings Account offers a standard APY of 0.01% (as of 10/28/24).5 <p class="">The product and annual percentage yield (APY) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your area. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. Always verify account details and availability with the financial institution before opening an account.<br></p> You can access higher rates if you’re a member of their Preferred Rewards program, but the highest APY available is 0.04% (as of 10/28/24) and requires you to keep a minimum of $100,000 in Bank of America or Merrill Lynch accounts.
On the other hand, the online-only Aspiration Spend and Save Account offers up to a 3.00% APY — that’s a lot more than the best rate offered by Bank of America.
2. There may be lower fees
No matter where you bank, fees will be a reality you’ll have to face. But some banks levy more fees than others.
For instance, a Chase savings account will charge you a monthly maintenance fee of $5 to $25 unless you meet monthly balance minimums or you fall into one of their other limited exceptions. You’ll also be charged $5 for each transaction that exceeds the federal monthly limit of six.
In contrast, online-only banks may be able to charge fewer fees because they have no physical locations to maintain. The American Express Personal Savings account, for example, has no maintenance fees, regardless of what your balance is. There’s no minimum balance to open an account or consistently maintain to avoid fees.
3. There are often no account minimums
Many savings accounts from traditional banks may require at least a $500 minimum account balance or more to avoid fees, which doesn’t help you save money if the bank is constantly collecting it. Many online banks don’t require a minimum balance to open or maintain an account, which means more money is going into your pocket.
I had a back up brick and mortar bank account that I kept open just in case. However, since this account didn’t meet the minimum account requirements, it was charged a $25 monthly fee — not worth it!
For instance, Ally offers an APY of 4.00% (as of 10/28/24) and doesn’t require a minimum balance requirement. That gives you more flexibility in how you choose to manage your money.
4. You’ll never have to wait in line at the bank
Sometimes going into a bank can feel like a complete waste of time, especially if you’re only making a deposit or signing up for a bank account. While most big-name banks have made strides in online banking options, they still put a lot of effort into running in-person branches.
Online accounts don’t require visits or waiting in line when you need to complete something important. Rather, you sign up, deposit money, and set up transfers all from the comfort of your own home. Many have easy mobile apps you can access straight from your phone.
5. Apps and websites are easy to use
Sometimes traditional banks’ apps or websites are difficult to navigate — particularly with smaller regional banks or credit unions. That’s because online banking technology isn’t their main operation. But for online banks, it’s the only operation.
My SoFi® bank app allows me to budget and set specific savings buckets. I can even manage my personal loan and invest in stock all on the same screen. Other online banking apps also have automatic savings features and real-time money tracking to help you manage your budget without needing to pay for a different app.
The websites and apps for online banks are usually customers’ only interactions with the business, so the banks spend a lot of time and money optimizing the process. When you pull up the app on your phone or the website on your computer, it should be seamless to register, make transfers, or otherwise handle your money.
5 reasons not to open an online savings account
There are plenty of perks to having an online savings account, but even the best savings accounts have some drawbacks.
1. Cash deposits could be more complicated
When you’ve got cash you want to put into your account, it’s easy for your local branch at a traditional bank to handle money. But it’s not always that seamless for online banks.
Ally and SoFi, for example, doesn’t allow cash deposits but will accept wire transfers, online transfers, and direct deposits. That means if someone gives you cash and you want to put it in your savings, you may have to deposit it in a separate checking account, then transfer the money to your savings.
When I sold a car last year for $5,000 cash, I had no way of depositing it into my SoFi account. The cash ended up sitting in an envelope in my cupboard, slowly dwindling as I used it to pay for miscellaneous things. If I had left that $5,000 untouched in my savings account at the old 4.50% APY (the current APY is up to 4.00% with direct deposit3 <p>SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a></p> ), I could have earned up to $225 in interest.
2. Finding ATMs can be annoying
Because online banks don’t have physical branches, they may offer debit cards and provide third-party ATM networks for their customers. For example, the Allpoint network has 55,000 ATMs across the world, and you can use them surcharge-free. While that can make it easy to find an ATM near your house, it might be difficult when you’re driving around and looking for an ATM for some quick cash. For me, I live in a mountain town in California. Even though there are a handful of banks and ATMs around me, I can realistically only use two within a 25-mile radius that does not charge a fee.
With big banks, there are usually plenty of easy-to-find branches, whether you’re close to home or traveling. Because of this, having a brick-and-mortar account may mean quicker, more convenient access to your cash.
3. Routine banking tasks can be slower
At online banks, you may need a little extra patience to complete relatively small tasks. For example, if you have to mail in a check to deposit, it could take several days to post to your account. The same can be true for moving money virtually — if you want to transfer money to a checking account at another bank, for instance, it can take a few days to complete.
If you like instant access to your money, you may feel better about opening a savings account at a bank where you already have a checking account.
4. No in-person help
Sometimes you just need to talk it out with a knowledgeable person. Having a bank branch you can visit with account questions might be important to you. If that’s the case, an online bank may not be up your alley.
Many online banks have supreme online and phone customer service due to the lack of in-person options. However, you may prefer speaking with someone face to face.
5. Lack of checking accounts
Some of the highest yielding savings accounts, like the account that Bread Financial offers, have a lot of perks, including no hidden fees and an APY just under 5.00% at the time of publishing. However, the company does not offer a checking account. Having to manage your money with two different financial companies or banks can make budgeting a nightmare.
Our recommended online savings accounts
Many online savings accounts offer high APY rates, low fees, and online convenience. However, not all online savings accounts are created equal. Some may have higher minimum balance requirements, lower APYs, or limited access to your funds. Here is a list of our recommendations to help you find a good fit for your needs.
Bank account | Annual Percentage Yield (APY) | Minimum balance | Monthly service fee | Learn more |
CloudBank 24/7 Savings Account | 4.576 <p>APY means Annual Percentage Yield. APY is accurate as of October 28, 2024. Interest rate and APY may change after initial deposit. Minimum opening deposit is $1.00.</p> | $0 | $0 | Visit CloudBank 24/7 |
Varo Online Savings | 5.00% (as of 12/11/24) with direct deposit | $0 | $0 | Visit Varo |
Wealthfront Cash Account7 <p>Wealthfront Cash account is offered by Wealthfront Brokerage LLC, Member of FINRA/SIPC. Wealthfront Brokerage is not a bank. We convey funds to partner banks who accept and maintain deposits, provide the interest rate, and provide FDIC insurance. Rate is subject to change.</p> | 5.00% | $0 | $0 | Visit Wealthfront |
CIT Bank Platinum Savings | 4.35%8 <p>Platinum Savings is a tiered interest rate account. Interest is paid on the entire account balance based on the interest rate and APY in effect that day for the balance tier associated with the end-of-day account balance. APYs — Annual Percentage Yields are accurate as of December 20, 2024: 0.25% APY on balances of $0.01 to $4,999.99; 4.35% APY on balances of $5,000.00 or more. Interest Rates for the Platinum Savings account are variable and may change at any time without notice. The minimum to open a Platinum Savings account is $100.</p> | $0 (balances under $5,000 earn a lower APY) | $0 | Visit CIT Bank |
Citi® Accelerate High-Yield Savings | 4.30% (as of December 22, 2024) | $0 to open account | $4.50 (waived with an average monthly balance of $500) | Visit Citi |
Online savings accounts FAQ
Can an online savings account help me build an emergency fund?
Yes, especially if you use an online bank that offers unique features like automated savings. For example, all of my purchases round up and are automatically placed into my savings account. If I spend $13.49 on lunch one day, $0.51 rolls is transferred to my savings account. I don’t even feel the difference and by the end of the month, it is easy to have an extra $100 stashed away with absolutely no effort on my part.
Once money hits my savings account, it earns a higher APY than my checking account offers, so my stashed savings works even harder. If you use the same perks or make a regular transfer of $25 per week from your checking to savings, you will be able to build an emergency fund quickly.
What's the opening deposit for an online savings account?
The required opening deposit varies among online banks, but it is generally lower compared to traditional banks. Some online savings accounts have no minimum deposit requirement, while others may require a small initial deposit, such as $100.
The process of opening an online savings account can typically be done online by providing your personal information, such as your name, address, and Social Security number.
Are CDs better than online savings accounts?
Certificates of deposit (CDs) are financial products that typically offer higher interest rates than traditional checking or savings accounts. However, several online savings accounts today offer APY rates that are relatively similar to CDs.
CDs are a good fit for individuals with specific savings goals and a longer-term outlook, but remember, your money is locked in for a fixed term. I needed to access money from a CD early due to a financial emergency, and the early withdrawal fees made me regret opening a CD in the first place.
Bottom line: Are you ready for an online bank?
As we keep advancing into the digital age, online bank accounts make it easier to manage money. With higher interest rates, lower fees, and fewer account minimums, using an online bank could be a great option for many people. They’re low maintenance and easy to manage no matter where you are.
But the lack of face-to-face interaction may hold you back. As you’re exploring online banking options, make sure to choose one of the best banks for you.