Best online savings accounts:
If you have a typical checking or savings account you are probably earning almost nothing on your deposit. Bank savings account averages 0.07%.
However, there are online savings accounts where the yield on your deposit is more than 32x the returns on a traditional bank savings account.
These are not risky accounts. In fact, deposits are insured by the FDIC up to $250,000.
If you have excess cash sitting in a traditional bank savings account, you are missing out on much larger-guaranteed returns.
If you have an opportunity to stop letting your money languish in a traditional bank account with a low Annual Percentage Yield (APY).
Here are Acsent’s picks for the best online savings accounts for 2019:
- CIT Savings Builder — 2.45% APY (tiered)
- American Express National Bank — 2.10% APY
- Barclays Online Savings — 2.20% APY
- Marcus Savings by Goldman Sachs — 2.25% APY
- Synchrony Bank High-Yield Savings — 2.25% APY
- Ally Online Savings — 2.20% APY
- Discover Online Savings — 2.10% APY
- Alliant High-Rate Savings — 2.00% APY
Why an Online Savings Account?
As you can see from the higher APY’s listed above, an online savings account can offer a much higher rate on your deposit. Bear in mind, these are not time deposits where your money must remain invested for a minimum period like with a certificate of deposit (CD).
You are allowed to make withdraws any time you want. However, you are allowed a maximum number of withdraws each month.
Why can an online bank offer such a high rate on a savings account?
Online banks have less overhead than traditional banks because they don’t have to pay for maintaining expensive branches and ATMs. Because their overhead costs are lower, they can pass on these savings to customers by offering higher deposit rates.
With an online banking account, unfortunately, you won’t have the ability to walk into a branch if you want to speak with someone. Bank transactions, such as depositing and withdrawing money, must be done online using a computer or mobile app.
If you have excess cash sitting around and want a guaranteed low-risk return, opening an online savings account is a good idea.
Let’s say that you have $100,000 in cash lying around. You could put the money in a traditional savings account and earn almost nothing. Or, you could place the money in one of the online banks listed above and earn at least 2%, which equals $2,000. At the end of the year, you would have $102,000 instead of $100,000.
Obviously, with an online savings account, you won’t be able to achieve the returns found in more riskier brokerage accounts. However, you can’t lose money with this option. Deposits are 100% insured (up to $250,000) by the FDIC.