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Editorial Disclaimer: Please note that, although we regularly update this page, you should research a bank’s website to get the most up to date information available (including information on annual percentage yields). Some of the links on this page may be from our partners. Here’s how we make money.

Online banks — especially online savings accounts —  have become increasingly popular over the past few years.

According to a recent Statista report, the number of online banking customers in the U.S. rose by nearly 24 million from 2014 to 2018. That number is projected to increase even more in the coming years.

So, what is it about online banks that have customers signing up in droves? Great benefits and high interest rates.

» Jump straight to our savings account ratings.

Benefits of Online Banking

1. Higher interest rates: Online banks have lower overhead (since they have no physical branches, bank tellers, etc.). Having fewer expenses typically means that online banks are able to offer significantly higher APYs to customers than traditional brick-and-mortar banks.

national average interest rate of traditional savings accounts
national average interest rate of online savings accounts

2. Lower fees: Another perk of lower overhead is that online banks aren’t forced to nickel and dime their customers by hitting them with extraneous fees.

3. Convenience: Driving around town to find a branch location for your bank, only to find that they close at 5 o’clock and aren’t open on weekends, is a pain. Many online banks are open 24/7, and you can access everything you need from your smartphone or computer.

High-Yield Online Savings Accounts in November 2019

DollarSprout Reviews: Banks with the Best Savings Accounts

While a high interest rate is great, it’s not the only variable we take into consideration when determining who has the best online savings accounts. Fees, customer service, locations, and more, can all impact your banking experience, and potentially even lower returns. If you’re stuck between two banks with seemingly good savings accounts, check out our bank and credit union reviews. We look at dozens of variables to help you determine which bank best fits your needs. Here’s our methodology.

CIT Bank 1.85% APY (tiered) – By rewarding people who actively add to their savings, the CIT Bank Savings Builder Account helps people build their savings account’s balance while building good saving habits, giving it a strong leg up on the competition.

»Read DollarSprout’s CIT Bank review

Discover Bank 1.80% APY – If you’re not sure about online banking, using a reputable, established company like Discover Bank should offer some peace of mind. Zero-fee savings, checking and money market products, along with industry leading interest rates, make Discover Bank a great option for online banking.

»Read DollarSprout’s Discover Bank review

Synchrony Bank 1.90% APY – Similar to other banks on this list, Synchrony Bank offers an annual percentage yield that is significantly higher than the national average. If you are looking for a high yield account to grow your savings, but also want ATM access to your funds, Synchrony is worth looking into.

»Read DollarSprout’s Synchrony Bank review

Ally Bank 1.80% APY Ally offers high rates, low fees, an easy-to-use app, and great customer service. $10 in ATM fee waivers each statement makes it easy to use any ATM you want, and their 24/7 customer support more than compensates for the lack of physical branches.

»Read DollarSprout’s Ally Bank review

Barclays Bank – 1.90% APY – Barclays has no physical branches in the United States, but makes up for it with a very competitive annual percentage yield. There are no monthly fees and no minimum balance you must maintain.

»Read DollarSprout’s Barclays Bank review

Other Banks with Top Rates:

  • MySavingsDirect – 2.00% APY
  • CIBC Bank USA – 2.05% APY
  • Citizens Access – 1.85% APY
  • PurePoint – 1.80% APY
  • Marcus by Goldman Sachs – 1.90% APY
  • American Express National Bank – 1.90% APY

How to Open a New Online Savings Account

1. Get Your Documents Together

In particular, you may need these documents:

  • Social Security Number or Social Security Card
  • Driver’s License Number or Driver’s License (or other state-issued ID)

If you’re not a U.S. citizen, you may also need to scan and send in your immigration papers.

2. Research and Choose an Online Bank

You can’t go wrong with any of the banks featured on this page. They are all FDIC insured and they all offer great Annual Percentage Yields (APYs), so find one that suits you and move forward.

3. Complete Your Application

You’ll need to provide the documentation you gathered earlier in this step as well as details about yourself such as your name, address, and phone number. If you’re applying with a credit union, you’ll need to provide proof that you meet the membership criteria.

Some banks require you to mail in a page with your signature on it so they know what it looks like. You may have to print out and mail in a form or wait for them to send you a form with a stamped envelope to mail back. This can take a few days to process, so keep this in mind if you’re looking for a bank account you can open and start using quickly.

4. Fund Your Account

The last step is to make an opening deposit. The easiest way to do this is by linking your current bank account by providing your new bank with the necessary routing and account numbers.

Some banks will make a small test deposit of $1.00 or less into your account to verify that you actually do own the account. If this happens, you’ll then need to go back to your new bank and report the exact amount of the deposits to confirm the link between the two accounts.

From there, you can deposit as little or as much as you want into the new account and close your old one if you wish.

Online Savings Account FAQs

How Do Savings Accounts Work?

If you need a safe, reliable place to store and save your money, an online savings account might be a perfect solution. A savings account acts as a secure way to store your hard-earned cash while you gain interest on the deposit that you place into the savings account. The best savings accounts are those with high minimum deposits and higher interest rates so that the returned earnings are higher. Traditionally, savings accounts are some of the safest ways to earn income, though the saving accounts that your parents may have signed you up for are probably not the best high-yield savings if you are looking to build wealth.

You store your money and earn a little interest as time goes on. And by little, we do mean little. Don’t expect anything more than .01-1% annual returns at most major banks. Online banks allow for higher returns, around 2% or a little more, but the intent here is to have a fund of money that you intend to keep for safeguarding and not use as a central place for your investments. It’s simple and secure, and you can easily track your savings as you continue to make deposits and build up your wealth.

However, unlike a checking account, a savings account isn’t something that interacts with your daily cash flow and balances. The comparison between a checking vs savings account is simple, one is for daily use and the other is not. In the same way, you would not give and take from a piggy bank. You are not allowed – or supposed to – have daily interaction with your savings account. Instead, you store it away to accrue wealth, save for something, or establish some sort of savings fund.

Are There Drawbacks to Online Savings Accounts?

As you might expect, banking entirely online isn’t without some limitations. Here are the most common:

1. Getting cash can be difficult: If you regularly deposit and withdraw cash from your bank account, you might find online banking inconvenient. Because there are no physical branches, it’s not possible to walk into the bank and deposit cash. Some online banks belong to ATM networks, but these ATMs may be harder to find than major banks’ ATMs.

2. Less personal service: Of course, online banks typically have a customer service hotline or online chat service. But with online banks, you don’t have the option of walking into a branch and sitting down face-to-face with a banker.

You can read more about the pros and cons of online banking here.

Choose the Account That Fits Your Needs

Finding the best online savings account doesn’t do much good if you aren’t committed to making saving money a habit.

If you aren’t ready to fully commit to online banking, you may want to consider a hybrid approach.

For example, you can use an online bank for most of your everyday banking needs but still keep a small savings or checking account at a local bank or credit union for when you need access to cash or in-person banking services.

The good news is that no matter what your preferences are, there’s a banking style out there that’s right for you.

How DollarSprout Rates Online Savings Accounts

The Editorial Team at DollarSprout looks at multiple factors when determining a 1-5 star rating for online savings accounts. Here are the most important factors that weigh into our ratings:

  • Annual Percentage Yield (APY)
  • Fees, and the likelihood that a user will incur them
  • Account balance requirements
  • Customer service
  • Mobile app reviews

For savings accounts in particular, APY and fees play a heavier role in our ratings than other factors because they directly affect your bottom line. For other product categories (such as checking accounts, for instance), we may place an emphasis on other factors when determining a rating.

The star ratings are broken down into half-star increments, with 1 star being poor and 5 stars being excellent.

Research Team
Research Lead: Cat Alford
Product Reviewer: TJ Porter
Final Review: Jeff Proctor
Review Date: October 17, 2019

Author

Our mission at DollarSprout is simple: we want everyone to worry less about money and spend more time on the things that truly matter in life. By bringing you our latest ideas on how to make money, save money, and make smarter financial choices, we are doing our small part to help.