Online savings accounts represent one of the best guaranteed options for growing your money, especially if you need to maintain access to cash on short notice. Still, not all online savings accounts are created equal.
We’ve rounded up a list of the best online savings account rates in 2018.
We'll also discuss the following:
- Savings account rate history
- Why online savings accounts produce better yields
- The difference between savings accounts and CDs
We obtained the following rates by searching through our comprehensive Personal Savings Accounts list. We set a deposit amount of $25,000 and only included nationwide banks that do not offer local branches. These are the top results for the best online savings account rates.
Although these are the current best rates, make sure to keep an ear to the wind. As the Federal Reserve raises interest rates, it’s possible that we’ll see further increases in high-yield online savings account rates as well.
The Best Online Savings Account RatesRates are current as of July 16, 2018
|Institution||Rates||Minimum to open||Account name|
|Salem Five Direct||2.05% (up to $1m), 0.05% ($1m+)||$100||eOne Savings|
|Utah First Federal Credit Union||2.00% ($50+)||$25||Dedicated Savings|
|Citizens Access||2.00% ($5k+), 0.25% (Up to $4,999.99)||$5,000||Online Savings Account|
|Northpointe Bank||1.95% ($25k-$1,000,100), 1.12% (any amount)||$0||Ultimate Savings|
|CIBC USA||1.90%||$1,000||CIBC Agility Savings - Online Only|
|PurePoint Financial||1.90% ($10k+), 0.25% (up to $9,999.99)||$10,000||Online Savings|
|Incredible Bank||1.88% ($25k+), 1.21% ($2.5-$25k)||$2,500||Incredible Savings|
|Radius Bank||1.86% ($25k+), 1.50% ($2.5k-$24,999.99), 0.05% ($10-$2,499.99)||$100||Radius High-Yield Savings|
|ableBanking||1.85%||$250||Money Market Savings|
|Popular Direct||1.85%||$5,000||Popular Direct Plus Savings Account|
|ConnectOne Bank||1.82% ($2.5k-$1,000,000.99), 1.01% ($1,000,001+)||$2,500||OneConnection Savings - Online|
|MutualOne Bank||1.81%||$0||Online Savings|
|SFGI Direct||1.81%||$500||SFGI Direct Savings Account|
|Goldman Sachs Bank USA||1.80%||$0||Online Savings|
|DollarSavingsDirect||1.80%||$0||Dollar Savings Account|
|Synchrony Bank||1.75%||$0||High Yield Savings|
|Ally Bank||1.75%||$0||Online Savings Account|
|Quorum Federal Credit Union||1.75%||$0||HighQ Savings|
|Sallie Mae Bank||1.75%||$0||High-Yield Savings|
|Discover Bank||1.75%||$0||Online Savings|
|American Express Bank, FSB.||1.75%||$1||High Yield Savings Account|
|FNBO Direct||1.75%||$1||Online Savings|
|West End Bank, S.B.||1.75%||$1||Online Savings (New Money Only)|
|Barclays||1.75%||$0||Online Savings Account|
|HSBC Direct||1.70%||$0||HSBC Direct Savings|
|Live Oak Bank||1.70% (up to $5m)||$0||Savings Account|
|Alliant Credit Union||1.70% ($100+)||$5||High-Rate Savings|
|Community Bank of Pleasant Hill||1.66%||$0||Premier Money Management Account|
|Community Bank of Raymore||1.66%||$0||Premier Money Management Account|
|Goldwater Bank||1.65%||$0||Savings Plus Personal|
|Amalgamated Bank||1.60%||$0||Give-Bank Savings Account (Online Only)|
|CIT Bank||1.55%||$100||Premier High Yield Savings|
|E*TRADE Bank||1.50%||$100||Premium Savings Account|
|Communitywide Federal Credit Union||1.50%||$500||High Rate - Quarterly|
|McGraw Hill Federal Credit Union||1.45%||$100||S3 Prime Savings|
|Bank of Internet USA||1.30%||$0||Smart Savings Account|
|Nationwide Bank||1.30%||$25||Savings Account|
|UFB Direct||1.30% ($25k+), 0.20% (up to $25k)||$100||UFB Premium Savings|
|Amboy Direct||1.26% ($3k-$100k), 0.40% ($300-$3k)||$100||Personal eSavings Account|
|Colorado Federal Savings Bank||1.25%||$1||High Yield Savings|
|Hanscom Federal Credit Union||1.25%||$25,000||Higher-Yield Savings|
|North American Savings Bank||1.16% ($15k-$1.49m), 0.10% ($1.5m+)||$15k||Super Saver Account|
|Wings Financial Credit Union||1.11% ($50k+), 1.00% ($10k-$50k), 0.10% (Up to $10k)||$0||High Yield Savings|
|Digital Federal Credit Union||1.06% ($25k+)||$0||DCU Ltd Savings|
|Capital One||1.00%||$0||360 Savings Account|
|Service Credit Union||1.00% ($2.5k+), 0.95% (up to $2.5k)||$2.5k||STAR Shares|
Savings Account Rate History
We're currently above the national average rates we used to see on savings accounts five years ago, when the average interest rate was 0.200% APY. Since then, we’ve experienced an interest-rate desert, with average rates on savings accounts bottoming out at 0.178% APY in November 2016. Today, the figure’s hovering around 0.221% APY. Although the average rates are rising, you can do significantly better at internet-based banks.
Last year, the Federal Open Market Committee (FOMC) raised the Federal Funds Rate three times to reach 1.00-1.50%. This year, the FOMC raised the Federal Funds Rate once to bring the level to 1.50-1.75%. Banks now seem to be picking up steam in raising interest rates, giving us a much-needed reprieve from ultra-low returns of the past few years.
We’ve seen a consistent upward trend in raising interest rates on savings accounts over the past year, with average interest rates consistently going up. They're not anything to write home about, but what is exciting is that it shows banks are willing to play ball now and compete against each other for higher rates — all of which benefits us as consumers.
As a matter of fact, Citizens Access recently created an online savings account, which locked them into a top spot on our list.
Besides the FOMC interest rate hikes, there’s another reason banks like to raise rates. When they raise rates, they attract new customers and, of course, that means more deposits. Banks use those deposits to fund the loans that they give out. They’re willing to pay deposit account customers a bit more on their money. That’s because the higher the bank’s deposits are, the more they can fund lending to other consumers and generate potentially greater returns in the form of interest payments.
If these trends continue, we’ll see even higher rates throughout 2018.
Why Online Savings Accounts Produce Better Yields
If you’re looking to get maximum returns on your money while still keeping it liquid, an online savings account is definitely the way to go. The way these banks offer the highest interest rates is simple: They keep costs elsewhere low because they aren’t paying for expensive staff and brick-and-mortar locations.
Furthermore, online banks typically come with a less heavy fee structure. Rather than being charged for every little ATM transaction or overdraft, a lot of online banks let those “infractions” slide.
In fact, some online banks will even refund some ATM surcharge fees. This results in even more money back in your pocket at the end of the day.
The Difference Between Savings Accounts and CDs
There are different pros and cons to saving money in a savings account versus a CD. In general, CDs offer higher rates than savings accounts, especially for long-term CDs. That means maximum returns for your cash, especially in today’s low-interest savings account environment. Currently, the average interest rate on a five-year CD is 1.88% APY and although the current highest online savings account has an APY of 2.05%, institutions are starting to offer five-year CDs for 3.30% APY.
That might make you think CDs are the wiser decision, but consider this: Your money is locked away when you deposit money into a CD. You can still get it at any time, but you might have to pay a fee for doing so that can chew up your earnings. There are some no-penalty CDs but their rates may be lower.
If you know you might need access to that cash at any time (such as for an emergency fund), it’s better to save in a regular savings account. CDs are better investment tools for money that you can afford to tuck away and not touch until the term has ended.