I spend a lot of time talking about the need to have your money in a high-interest or high-yield online savings account, so I thought it was time I put together a list of the top high-yield online savings accounts.
This is by no means a complete list of the accounts out there. It’s just the one’s I’ve had some experience with. I will link to this post from the home page and periodically update this listing with new accounts that I find and all the rate changes that take place.
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The rates are constantly changing, so don’t focus on that too much. One thing to note though is that any of these accounts would be great compared to the savings accounts held at traditional brick and mortar type institutions. And don’t forget that all of these savings accounts are FDIC insured.
The Best High-Yield Online Savings Accounts
There are many of these accounts now available across the web. All contain different features, both positive and negative. But most, if not all, are FDIC insured, contain no fees, and pay an interest rate significantly better than traditional savings accounts. You should definitely find one that’s right for you and get started saving. And don’t just consider this list. These are just some of my favorites.
SmartyPig – SmartyPig is a unique place to save your money. At first you might not think you’re dealing with a full-fledged savings account. But you are. They have one of the best interest rates available. They are consistently at the top of my table. The reason they offer this great rate is because the understand they are a bit different. But I contend these differences make them better for some savers: (1) they have tools to help you make your savings goals and progress known socially (imaging sharing your goals with friends on Facebook, for instance), and (2) when you open up an account, you must be goal focused. You can’t just save without a purpose (well, technically you can, but they strongly encourage you to make a specific goal). The bottom line on SmartyPig is that they help you achieve more savings by encouraging you to be specific about your goals and share it with friends. They are FDIC Insured, and owned by BBVA Compass.
EverBank – EverBank has a great interest rate. They have an initial deposit requirement of $1,500, but their account, both online and mobile have no surprise fees. This account is FDIC insured and gives you the ability to make six withdrawals each month. One of the best features of this account is the check deposit by scanner feature. No other online bank offers this service.
Sallie Mae Online – Sallie Mae just introduced this online savings account which offers a competitive interest rate, no minimums or fees, and FDIC insured. The advantage to having this account is if you are a Upromise member. Your annual Upromise earnings get matched at 10% if you put them in this savings account. Not bad if you earn a lot through Upromise. But this account isn’t bad for general use as well. They have a nice compliment of CDs to go along with the savings account.
Discover Bank – Most people don’t realize that Discover also has an online bank. They started offering the online savings account in the Summer of 2009, and they have a really good offering. The offer one of the better rates. They have an initial deposit requirement of $500. They have no excessive fees of any kind and they are FDIC Insured. In addition to the savings account, they have a really attractive set of CDs, and their one-of-a-kind IRA CDs.
Ally Bank – Ally Bank is one of the newest faces in the online banking world. Although, they are really just a re-brand. They used to be GMAC bank. Either way, they offer some pretty nice services aimed at treating their customers responsibly (you’ve seen the commercials). They have both a savings and an interest checking account. They also offer some of the best CDs available today. Not just because of rates, but because of their flexibility. They have a no penalty CD and a one-time rate adjustment CD. They are FDIC insured and charge no ridiculous fees.
WT|Direct – WT|Direct is a product of the Wilmington Trust Corporation. They promise a very competitive APY for the first 60 days of opening the account and if you open the account with at least $10,000. This rate has historically been one of the stronger rates out there. If you don’t have the 10K to get the good rate, the account doesn’t pay much better than a regular savings account. Still, you might want to check them out for the 60 days. The customer service is reported to be excellent. They are FDIC insured and charge no stupid fees.
Zions Bank – Zions Bank reminds me a lot of FNBO in that they are a very old bank that has long served a specific geographical region, and are no expanding into the online world. In doing so they understand what it takes to compete and stand out. They’ve created a great set of online-based products that are worthy of consideration. They have a savings account, CDs, and like Discover Bank, they have an IRA CD. They are FDIC Insured and the fees are pretty standard for your online bank: no minimums, no weird banking fees, etc.
ING DIRECT Orange - ING DIRECT is, in my opinion, the reigning leader in online savings because of their great website, excellent customer service, and multitude of other financial products. They are owned by ING Group, based in the Netherlands. You mean you couldn’t tell they were Dutch based on that bold orange? They offer a great savings account, a $25 bonus to get started, electric orange checking account, as well as debit cards to access your money. Like others, there is no minimum to open an account and they extend their services into CDs. They also have mortgages, life insurance, and low-cost investing through their Sharebuilder product. They are also FDIC insured, and have no crazy fees.
FNBO Direct – FNBO Direct is a product of the very old and stable First National Bank of Omaha. That’s where Warren Buffet lives. That’s got to be a good sign right? Anyway, they offer a nice, FDIC-insured savings account with a leading interest rate. There is no minimum to open a savings account. They also have a bill pay (checking) account, certificates of deposit (CDs), ATM card, credit card, and now a debit card. Their website is very user friendly, but maybe not as easy to maneuver as others. They are FDIC Insured and void of any bad fees.
HSBC Advance – HSBC Advance is a product of the massive global banking leader HSBC. They were voted “best of the breed” by Money magazine in 2007. They are very similar to the other major players in the online savings world. No fees or minimums, historically competitive interest rate, and access to a variety of related financial products.
Why You Need an Online Savings Account
I love the online savings account. It has so many uses. Mainly it will simply help you start saving more of your money. When I first started getting passionate about my finances and making changes with managing my money, one of the first things I did was open up an online savings account. Here’s why I did and some of the benefits to having one. Hopefully this list will convince you to open one up of your own.
High Interest / High Yield – If you do like I did for so long and keep your savings in a regular savings account like Bank of America or Chase, you will earn a very small amount of interest on your savings. Typically this is something like 0.50%. That stinks. That won’t even allow you to keep up with inflation. Boo. With a high interest online savings account, you can earn much more. Look at the rate chart above to see the current annual percentage yield on these accounts. These rates also fluctuate with the LIBOR rate,so when interest rates start to rise again, you’ll see these rates shoot back up. I remember when the rates were something like 5.00%. Wow!
Put Your Savings Behind a Wall - Since these online savings accounts are usually online-only, getting to your funds isn’t as easy as say a regular savings account, where you can walk into the bank, or move the money in a second to a checking account using an online feature. Online banks don’t have physical locations. To get your savings in and out of these account, you’ll typically need to transfer your money to another bank and then make a withdrawal and or use the ATM. I know this sounds like a negative. But it isn’t. Your savings is money you should only need for emergencies or for a short-term savings goal. It wouldn’t kill you to have a 2-3 day barrier to getting your money. I’ve found that this barrier often dissuades me from spending money that I shouldn’t, or keeps me from raiding the emergency fund for something frivolous. So you see, this faux-wall to your savings actually helps you to save more in the long run.
No Fees or Minimums to Worry About – Let’s face it. The big guys on the banking block have run the show for far too long. A Chase checking and savings account can cost you hundreds in stupid fees every year. There’s no reason you should put up with ridiculous fees and minimums from banks, just so you can lend them your money. They should be paying you. But they can’t because they are fat and bloated and need your money and fees to cover their fat cat expenses. Don’t play that game any longer. Move to an online bank where you can enjoy a fee-free environment.
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{ 14 comments }
When I first joined ING, it was around 4%. How I miss those days…
I was actually going to email you today about high interest savings accts. When did you start reading minds???
MrsRefney – Yeah, I hate to see these rates now. Just another way us responsible folks are getting the short end in this economy.
Oh, and high-interest savings is always on my mind.
Should this list also include High-yield Money Market accounts? Over recent months, the Capital One MM account (with no minimums) has had a higher rate than the Capital One Savings account. Once you get over $10k, it makes sense to move that to a Capital One Savings acct (minimum to achiever higher rate).
RBJ
Charles Schwab has a 2% savings account right now- my friend told me about it and I recently filled out the pw to open one myself.
@RBJ – Good points. I will consider MMAs if I ever add another section to this list.
@Sarah – I use Schwab for my 401K. Thanks for the tip.
I have used Emigrant Direct for years and their current rate is 1.65%. Their site is very easy to use and you can have multiple accounts with one log-in to help separate your different savings categories.
dollarsavingsdirect.com. 2.05%, $1500 minimum. VERY easy to use. I beleive it is a part of Emigrant Bank, which as far as I know is different than Emigrant Direct.
I’ve added Schwab, EmigrantDirect, and Dollar Savings Direct.
GMAC bank has 2.23%. Etrade is now down to .95% as of today, 5/8/09. When I joined Etrade less than a year ago, it was at 5%.
ING is the best, although their rates have gone down, they provide good services
I agree, thom. We use ING DIRECT pretty exclusively now. I have a BOA account just for making check deposits.
Looks like the best online savings account out there today is SFGI Direct at 2.25%. Beats my Onbank account which dropped below 1%
Emigrant Direct is currently at 1.1% It was 1.4% 6 months ago and has decreased since then.
I have checking accounts at 2 small banks that each pay just over 3%. Both the EZ Rewards Checking at Crow River Bank in Delano, MN and the Power Checking at BankWest in Rockford, MN are completely free checking accounts. There is no minimum balance and the 3+% rate is paid on any balance less than $25,000. The only requirements are: to access online banking and receive electronic statements, have one automatic (electronic) deposit or one ACH automatic debit (ie, automatic payment of a utility bill) and make 10 purchases with the free debit card you receive. There is no minimum purchase, so you can charge little things like lunch at McDonald’s or any small purchase. The requirements must be met each statement cycle to receive the higher interest rate. If you don’t meet the requirements, you receive a lower rate for that cycle. ATM fees are reimbursed as long as you meet the above requirements for each statement cycle. There is unlimited check writing too. It’s a great deal.
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