Find the best savings account to make your money work harder for you.
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The best overall savings accounts
What’s in this guide?
The best savings accounts for earning interest
The primary feature of a savings account is to safely grow your money over time, so the interest rate offered by the bank determines how little or how much you can earn. An extra 1% yield on an account with a balance of $5,000 will pay out about $50 each year, which is more than you likely pay in fees. When considering a savings account, look at the APY to determine how much you can earn on your savings. As with any income, though, you’ll have to pay taxes on the interest you earn.
The best free savings accounts
Fees can rob you of the interest you’d earn in your savings account. Fortunately, you can still get great rates with an account that charges absolutely no monthly, quarterly or annual fee to maintain it. Here are some of the best.
Think about the ways you save money. Do you need access to your accounts or do you want to tuck a large chunk of money away for the future? Match your savings style to the points below to help you choose the best savings account type for your situation.
Basic savings account
This account is great for beginner savers. Consider a basic savings account if you’re okay with regularly moving money between accounts and you want the security of a bank you’re familiar with and can visit. This is a “Set it and forget it” option.
Online savings account
This option is ideal for experienced and advanced savers. If you want a better rate of return on your money, make regular deposits and don’t intend to make frequent withdrawals, you should consider this option.
Money market account
If you are an investor and cash management is part of your investment strategy, you may want to consider a money market account. This account allows you to earn a high interest rate but it usually requires you to maintain high balances.
What are the biggest benefits of savings accounts?
There are so many savings options out there, it can be hard to determine how to pick the best for your savings style. Here are the benefits to look for:
- A $0 minimum deposit. With some savings accounts, you can open the account with a low, or even no, initial deposit. Some accounts don’t require a minimum monthly balance requirement to earn interest or avoid fees.
- No monthly fees. Thanks to competition, you’ll find that many banks waive monthly maintenance or account-keeping fees.
- Set it and forget it. Savings accounts allow you to grow your money without thinking about it. You can make one large deposit and let it earn interest, or schedule payments into your account to help it grow.
- Transfer funds. With the growing popularity of mobile and internet banking, look for banks that let you easily transfer money between your savings and other bank accounts.
- Protect other accounts. A great feature of some savings accounts is their ability to protect against overdrafts for a linked checking account. If the checking account runs out of money, you’ll simply draw the funds from the savings account without any penalty.
What are the biggest drawbacks of savings accounts?
Savings accounts are a great place to start growing your money, but there are also other ways to make your money work even harder for you. Consider these drawbacks:
- Limited accessibility. Federal law limits the amount of activity you can have in your savings account to six transactions per month, and most accounts don’t come with a debit or ATM card.
- Minimal return on investment. Savings account interest rates often hover around the rate of inflation. To earn a better return on your money, look beyond savings accounts.
Is a joint savings account right for me?
Joint accounts are a great way to reach joint financial goals. Generally, joint accounts allow up to two account holders, but some providers allow for even more. Before opening a joint savings account, consider if it’s right for your financial situation.
Pros of joint savings accounts
- See lower fees and more interest with a high balance.
- Less legal complications if a partner dies.
- Easier to manage household budgeting and long-term goals.
- Create accountability between you both.
- Easier to reach higher minimum deposits for bigger savings.
Cons of joint savings accounts
- Have less financial independence.
- Could create communication issues around spending.
- Creates complications in a separation or divorce.
- Tough to divide funds for individual costs like a car accident or expensive hobby.
Beyond savings accounts
When interest rates are low, where can you get the best return for your money? If the best high-interest savings accounts aren’t enough or don’t fit your financial goals, there are other ways of getting the most out of your money.
Consider these other ways to save:
- Whole life insurance. If you want to save up for a major purchase or save for retirement, you can put your money into the cash value portion of a whole life insurance policy. If you need access to cash, you can withdraw it, borrow against your policy, surrender the policy or even sell it. Some policies can consistently pay more than 5% interest on the cash value. Universal life insurance policies offer the potential for even greater returns because they focus more on investments.
- Health savings account. If you want to save up specifically for medical expenses, a health savings account can provide tax advantages for any money you put into it, and your savings roll over from one year to the next. However, to open an account, you’ll also need a high-deductible health insurance policy, and you’ll pay a penalty if you spend the money on anything unrelated to medical expenses.
- College savings account. Often called a 529 plan, college savings accounts provide tax advantages for money saved up for future education expenses. But if the money is spent on anything else, taxes and penalties may apply.
- Bonds or other investments. If you’re interested in higher rates of return and are willing to accept more risk, you could consider investing in government or corporate bonds. There are no guarantees with bonds, but they’re less volatile than stocks, mutual funds and ETFs. Either the government or company whose bonds you buy pays them back with interest or it’ll default on them.
Traps to avoid
The FDIC (Federal Deposit Insurance Corporation) was designed to promote financial stability in the US. While your deposits likely are insured for up to $250,000, you should also keep an eye out for these risks:
Not meeting the terms of your savings account
If you don’t meet your monthly minimum deposit, you might be hit with fees. If you’re unsure if you can meet the minimum deposits, an online savings account may suit you better.
What happens to my savings account if my bank goes bust?
Normally, shareholders are affected first, followed by the bonds issued by the banks. Deposits that are guaranteed by the FDIC won’t be affected. In the case of a bank failure, eligible deposits are insured for up to $250,000 per person, per institution.
Your introductory rate won’t last forever
Many institutions have special offers or promotions as an incentive to bank with them, usually higher introductory interest rates for a set period of time. Keep in mind that introductory rates won’t last forever, so while you might get a great rate for the first few months, it will likely revert to a lower rate at the end of the introductory period.
Regulation D and the six-transaction limit
Regulation D is a Federal Reserve regulation that sets reserve requirements for banks in the US. It places a limit of six outgoing transfers per month, resulting in a fee or fine from your bank for going over. However, it only applies to “convenient” withdrawals, which include preauthorized transfers, transfers by phone, or payments made to third parties by check, draft or debit. Making withdrawals in person, by mail, at an ATM or by phone if the check is mailed to you won’t count towards the limit.
Variable interest rates could mean that you lose out if the federal rate decreases.
Banks often adjust interest rates based on the markets and economic changes. If your account has a variable interest rate, you may lose out if the federal rate drops. Contact your financial institution if your interest rate drops and you’re not sure why.
How do I open a savings account?
In most cases, you can apply and open the savings account online as long as you can provide documentation that confirms your identity. If you’re a new customer, legally, you’ll need to verify your identity, and may have to do so in person. For those younger than 18, a joint or custodial account may be necessary.
How to get the most out of your savings account
- Make sure you keep a minimum balance. Some accounts may require you to hold a minimum balance from month to month, otherwise, you may be hit with fees. Find out if your account requires a minimum balance and make sure you keep your account above that number.
- Monitor account activity. You should always monitor account activity to stay on top of any unexpected charges or fees. Most savings accounts allow you to do this from your computer or mobile phone.
- Think about investing. After your savings account has grown, you may want to consider other types of investments. Money market accounts and CDs can provide better returns than standard savings accounts, whereas mutual funds, stocks and other investments can offer even greater potential.
- Limit your transactions. Don’t forget that savings accounts are limited to six outgoing transactions per month, and you’ll face a fee for every transaction above that limit.
- Keep an eye out once the introductory rate expires. Most special offers and introductory interest rates aren’t permanent, meaning your interest drops to a lower rate after the introductory period ends. Decide whether your new rate is enough or if it’s worth shopping around for other savings accounts that offer higher introductory interest rates.
How did we choose the best accounts?
All savings accounts serve the same purpose, but some accounts do a better job at helping you reach your savings goals. Since fees, access and other variables can all affect the way you save, we analyzed a number of savings accounts to determine which ones are the best. In doing so, we considered factors like annual percentage yield (APY), monthly fee, the minimum deposit to open the account, minimum balance to earn interest and signup bonuses.