Watch your nest egg grow in real time with often stronger rates.
Online savings accounts are accounts you set up and manage online from your computer, tablet or phone. They’re just like your traditional savings account, helping you to earn interest on money you’ve socked away. But instead of visiting a local branch to manage your account, you log in to your account to transfer money, confirm your balance — even deposit checks.
With less overhead, these accounts generally offer a higher APY and charge lower fees than conventional bank accounts. All with 24/7 convenience.
- Interest compounded daily
- 24/7 online account access
- FDIC insured
Our top pick: CIT Bank Savings Builder High Yield Savings Account
A super-high interest rate if you're in the habit of saving at least $100 per month or have $25K in the bank.
- APY: 2.45% with a minimum balance of $25,000 or a monthly deposit of $100+
- APY: 1.17% with a balance below $25,000 and monthly deposit of less than $100
- Monthly fee: None
Compare the best online savings accounts
How do online savings accounts work?
To sign up for an online account, you often need to link an active transaction account — like an everyday checking account at a traditional bank. That’s because most online savings accounts don’t come with a debit card. The only way to access your money is by transferring it to your transaction account, where you can then access it through your bank’s branches and ATMs.
Online accounts don’t usually charge transfer or monthly account fees, offering an inexpensive way to build your savings. With most accounts, interest on your balance is calculated daily and deposited into the account at the start of the following month, but compounding and pay periods vary by bank.
Regulation D and the six-transaction limit
Regulation D is a Federal Reserve regulation that requires savings accounts to limit withdrawals and outgoing transfers to six monthly. If you exceed the six-transaction limit, you face a fee from your bank.
The six-transaction limit extends to:
- Preauthorized or automatic transfers.
- Transfers or withdrawals by phone.
- Transfers or withdrawals by check.
- Transfers or withdrawals by bank draft.
- Transfers or withdrawals by debit card.
However, many transactions aren’t subject to the six-transaction limit, including:
- Deposits or incoming transfers.
- Withdrawals or transfers at ATMs.
- Transactions in person at a bank.
- Withdrawals by phone if the check is mailed to the depositor.
Why do online accounts generally offer stronger interest rates?
Interest rates tend to be higher for online accounts than conventional ones because they don’t require expensive physical branches. By forgoing wages for tellers and branch managers, janitorial staff, utility bills and other expenses, banks can pass the savings on to customers in the form of stronger interest rates.
As with traditional accounts, rates fluctuate according to the federal interest rate, especially if you received an introductory offer that expires after a set period.
Do I get instant access to transferred funds?
It depends. If your online savings account is linked to a transaction account from the same institution, you can generally access transfers instantly. However, if the money comes from another financial organization, it can often take up to three business days for the funds to process into your online account.
Sarah compares processing time for her accounts
Sarah owns accounts across multiple financial institutions. She has a Synchrony Bank savings account that she uses for short-term savings, a separate Synchrony savings account for long-term financial goals and a Marcus by Goldman Sachs online savings account for her long-term nest egg.
When she transfers money between her Synchrony Bank accounts, she sees the transfers complete instantly. However, when she transfers from Marcus to her Synchrony Bank accounts, it can take two business days for the funds to clear. The longer processing time is partly due to increased fraud-prevention measures for transfers among multiple institutions.
What features do online savings accounts offer?
If you think an online savings account might encourage you to save, compare the features available across accounts to find the right rate and most convenient options for your needs.
Link your online savings account to a conventional account.
Many online banks make it easy to transfer money between your linked accounts. If your accounts are with the same institution, you might see same-day transactions.
24/7 access to your money — even on the go.
Online savings accounts offer easy access to your money whenever and wherever you like. Some banks go beyond your computer to offer the flexibility of a mobile banking app. These apps allow you to monitor your savings and even deposit checks from your phone.
Deposited funds are typically insured.
Check that your bank is an FDIC-insured institution, which guarantees your deposits of up to $250,000 if the institution goes bust.
You get a competitive interest rate.
In most cases, online savings accounts offer higher interest rates than your standard savings account. If you’re lucky, you might get a hold of a promotion or special offer for an introductory interest rate, which generally offers a stronger rate for a specified period, reverting to the bank’s standard rate after.
You’ll pay few, and sometimes no fees.
Generally, online savings accounts don’t come with transaction or monthly fees. You can save yourself even more by avoiding accounts that charge maintenance, statement and ATM fees.
Flexible transaction limits.
Your daily transfer limit could be as high as $10,000 with select accounts. Call your bank to ask for an adjustment.
What are the upsides and downsides?
Consider the benefits and drawbacks of an online savings account before logging on.
- Generally no minimum balance. The majority of online savings accounts remain in good standing no matter how much they hold. Some even allow you to open an account without a deposit. If you’re interested in a bank, ask about terms and conditions before making a decision.
- Competitive rates. Interest rates on online savings accounts are typically higher than those at your local bank. You may even qualify for a bonus introductory rate.
- Flexible terms. Deposit what you can and withdraw whenever you’d like. You often don’t need to meet specific terms, though bonus interest rates may require a minimum deposit monthly.
- Must link to a bank account. Although you don’t face many fees, your linked account may charge you to manage transactions.
- Transfers are slow between banks. If your linked account is with a different bank, your transactions may not be instant.
- Six-transaction limit. All savings accounts are subject to Regulation D, which imposes fees or fines for exceeding six withdrawals in a month.
- No bank branches or debit cards. Many online savings accounts aren’t supported by physical bank branches or debit cards, which could be inconvenient if you rely on them.
The most common account questions answered