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Best Online Savings Accounts - Summary for December 2017


Best Online Savings Accounts - Summary for December 2017

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 2017.

We'll also discuss the following:

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 Rates

Rates are current as of December 4, 2017
InstitutionRatesMinimum to openAccount name
Incredible Bank1.55% ($25k+), 1.21% ($2.5-$25k)$2,500Incredible Savings
DollarSavingsDirect1.50%$0Dollar Savings Account
Salem Five Direct1.50% (up to $1m), 0.05% ($1m+)$100eOne Savings
Live Oak Bank1.45% (up to $5m)$0Savings Account
Popular Direct1.40%$5,000Popular Direct Plus Savings Account
PurePoint Financial1.40% ($10k+), 0.25% (up to $10k)$10,000Online Savings
CIT Bank1.35% (up to $250k), 1.30% ($250k+)$100Premier High Yield Savings
SFGI Direct1.31%$500SFGI Direct Savings Account
Goldman Sachs Bank USA1.30%$0Online Savings
Synchrony Bank1.30%$0High Yield Savings
Barclays1.30%$0Online Savings Account
BankPurely1.30%$1SavingPurely
Radius Bank1.30% ($2.5k+), 0.05% ($10-$2.5k)$10Radius High-Yield Savings
Nationwide Bank1.30%$25Savings Account
ableBanking1.30%$250Money Market Savings
UFB Direct1.30% ($25k+), 0.20% (up to $25k)$100UFB Premium Savings
CIBC USA1.30% (promo rate), 1.10% (Regular rate)$1,000CIBC Palladian Savings Account
Alliant Credit Union1.25% ($100+)$5High-Rate Savings
Ally Bank1.25%$0Online Savings Account
American Express Bank, FSB.1.25%$0High Yield Savings Account
Hanscom Federal Credit Union1.25%$1Higher-Yield Savings
Discover Bank1.20%$0Online Savings
FNBO Direct1.15%$1Online Savings
SmartyPig1.15% ($10k-$250k), 1.05% (up to $10k)$0SmartyPig Savings
Northpointe Bank1.12%$0Ultimate Savings
Quorum Federal Credit Union1.10%$0HighQ Savings
AlsoStar Bank of Commerce1.05%$50Savings Account
Bank of Internet USA1.05%$0Smart Savings Account
Digital Federal Credit Union1.00%$0DCU Ltd Savings
Sallie Mae Bank1.00%$0High-Yield Savings
iGObanking1.00%$1iGOsavings
MySavingsDirect1.00%$1MySavings Account
Amboy Direct1.00% ($3k-$100k), 0.30% ($300-$3k)$100Personal eSavings Account
Colorado Federal Savings Bank1.00%$2.5kHigh Yield Savings

Savings Account Rate History

We saw moderately higher rates on savings accounts just five years ago, when the average interest rate was 0.233% APY. Since then, we’ve been in an interest-rate desert, with average rates on savings accounts bottoming out at 0.179% APY in August 2016. Today, the figure’s hovering around 0.194% APY. You can do significantly better at internet-based banks.

Since last year, the Federal Open Market Committee (FOMC) has raised the Federal Funds Rate three times to its current high of 1.00-1.25%. 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 going up by 0.014% APY. That’s 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.

Indeed, one of the highest-yielding savings account on our list, the Incredible Savings account from IncredibleBank, has increased rates three times over the past year to lock in one of the top spots 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 in 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 1.57% APY — that beats out the top savings account rate on our list here at 1.55% 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.

Related Pages: savings accounts, nationwide deals, Internet banks
Comments
RichL40T
RichL40T   |     |   Comment #1
Unless I can't read, the rate at Alliant CU is 1.25%, not 1.35%-
see- http://www.alliantcreditunion.org/bank/high-yield-savings

Not to knock the credit union, but this aspect of the post seems inaccurate.
Ken Tumin
Ken Tumin   |     |   Comment #6
You are correct. The table has been updated. Thanks.
Cracker
Cracker   |     |   Comment #2
You need to add the Capital One 360 Money Market account to this list. They are paying 1.3% on balances of $10,000 or more. They do have local branches, but 360 accounts are only available online, not at the branch locations.
Dunmovin
Dunmovin   |     |   Comment #3
Cracker....What accounts/rates are available at branch locations?
Cracker
Cracker   |     |   Comment #4
Don't know. I guess you would have to call one to find out. Capital One branches and Capital One 360 (formerly ING Direct) are still treated separately by Capital One. You can't perform Capital One 360 transactions in a branch. They are completely different computer systems which have never been linked.
abcd
abcd   |     |   Comment #11
You can't perform Capital One 360 transactions in a branch.

I have made deposits into my 360 accounts at a branch.
DCGuy
DCGuy   |     |   Comment #13
When Capital One took over the ING Direct deposits and created Capital One 360, both sites were accessed separately without being able to transfer money between them. They recently integrated their interface and the prior ING Direct signon process disappeared. Now all Capital One accounts appear on your summary page and you can transfer money between them.
Cracker
Cracker   |     |   Comment #14
Good to know that they finally consolidated things. Unfortunately for me, the nearest branch is about 400 miles away. I wonder if they still have different rates for branch transactions versus online 360 account rates.
DCGuy
DCGuy   |     |   Comment #20
The weird thing is that the B&M rates are not displayed on their site. You only see the online (360) rates on their website. They used to display the in-branch rates along with the Capital One Direct division rates on their website prior to the consolidation with Capital One 360. I still have accounts opened through the branch (and Capital One Direct) and the rates there are much lower than Capital One 360. They have different routing numbers from the Capital One 360 accounts. One of my relatives has an IRA with the in-branch part of Capital One. I asked if the account can be transferred over to Capital One 360 which offers much higher rates. It looks like you have to do a direct transfer between their branches (close one IRA and transfer the balance to another) just as if you were moving it to another bank. The IRA accounts for the in-branch division are not directly connected to the IRA accounts for the Capital One 360.
Ken Tumin
Ken Tumin   |     |   Comment #7
The table is only for savings accounts. Money market accounts were excluded. We'll continue to include both in our bi-weekly summaries of the best liquid accounts.
deplorable 1
deplorable 1   |     |   Comment #5
Redneck/All America bank should be right at the top of this list. The cap is actually $70,000/ person and $140,000/ couple. Not to mention they have had a great rate for years now and have maintained it.
deplorable 1
deplorable 1   |     |   Comment #8
I see no MMA's were included. With the same 6 withdrawal per month limit on both savings and money market accounts maybe it would be easier and more practical to put them all in the same category. I'm not seeing any difference between MMA's and regular savings accounts anymore. Could someone explain the distinction if there even is one anymore. On a side note: I don't understand why MMA's are still subject to the 6 withdrawal per month limit as the savings accounts. I think they should still have unlimited check writing/withdrawal privileges as they used to.
DCGuy
DCGuy   |     |   Comment #15
For the case of Ally Bank and Synchrony Bank, the MMA has check writing privilege while the savings account do not. Some MMA do not have check writing privilege, so it seems they should not be called MMA accounts. MMA accounts were originally a hybrid between a checking account and a savings account. The 6 withdrawal limit was imposed to prevent you from using them as checking accounts. The non-transfer withdrawals (those done by mail or in person) were allowed to be unlimited back in the 1980s.

The MMA at Ally Bank allows unlimited ATM withdrawals, but does limit certain type of withdrawals to six per month due to Federal law. The limitation appears to apply to withdrawals where the money does not go direct to you. Below is from their website description.

Federal law limits certain types of telephone, check and electronic transfers and withdrawals from money market accounts to 6 per statement cycle. These limited transactions include things like Point of Sale transactions, Online and Mobile Banking transfers, our Overdraft Transfer service, and transfers from your Money Market Account to another of your Ally bank accounts. If you go over this limit, we charge $10 for each of these transactions after the initial 6. If you exceed this limit on more than an occasional basis, we are required to close your Money Market Account. Some transactions are unlimited. You can make as many deposits as you'd like. You can make unlimited ATM withdrawals or call us anytime to request a check made out to you
DCGuy
DCGuy   |     |   Comment #16
Error in my previous sentence.

The non-transfer withdrawals (those NOT done by mail or in person) were allowed to be unlimited back in the 1980s.
DCGuy
DCGuy   |     |   Comment #17
Second error to my sentence. The adding of the word NOT was incorrect.

The non-transfer withdrawals (those done by mail or in person) were allowed to be unlimited back in the 1980s and still is unlimited for the most part.
deplorable 1
deplorable 1   |     |   Comment #18
That is very interesting as it was my understanding that it was 6 withdrawals per month of ANY type even in MMA's. I was not aware of any exceptions to this rule. I received a warning on one of my accounts because I went over 6 withdrawals the first month due to them counting those small trial deposits and withdrawals in order to link accounts. I told them that those shouldn't count because they were a necessity in order to link accounts. I'm for going back to the 80's rules myself as I seem to recall unlimited check writing privileges as well. I never ran into a cap back then.
DCGuy
DCGuy   |     |   Comment #21
A trial deposit that is then "taken back" by the issuing bank is money going to a third party (not direct to you), so it should count as one of the six limit per month. Any withdrawal going to someone other than you directly counts against the six limit. It would not make sense for MMA to have unlimited check writing privilege because if that were true, then they would be the same as a checking account (why bother to create them in the first place?).
Cracker
Cracker   |     |   Comment #19
There is another transaction type which is unlimited and it surprised me. A transfer from a savings account to make a loan payment does not count against your 6 per month limitation.

I discovered this at a credit union. I paid my credit card with a transfer from savings and it didn't reduce my monthly withdrawal count. If I were to transfer it to a checking account it would. Why the difference? I have no idea.
DCGuy
DCGuy   |     |   Comment #22
Savings account may have different rules from MMA accounts. Normally, you cannot write checks with a savings account, so their rules may permit different treatment of withdrawal type. You probably need to read the "fine print" for savings account since they do not have the same limitations like MMA.
HollyHolly
HollyHolly   |     |   Comment #9
CapOne360 has online savings acct - 1.30%if balance in excess of $10,000. Very easy to use. Money is at your local bank in 2 days.
HollyHolly
HollyHolly   |     |   Comment #10
TCF Bank -IL has savings acct paying 1.30% and rate is guaranteed until Dec. 2018. Must put in at least $10,000 to get rate.
CC in CA
CC in CA   |     |   Comment #12
I just noticed tonight that my Discover Bank savings account is now showing as having increased to 1.30% APY. That might have just happened today. Now I will not move money over to Capital One as I had been considering. I like Discover Bank, and this is even more reason for me to keep my liquid money there.