The cornerstone of every financial life is a good bank.
A good bank won't ding you with fees.
A good bank won't require a huge minimum balance.
A good bank will even give you some interest for your money.
So how do you find a good one?
Look at online banks.
My first online savings account was with a little-known Dutch bank with a funny name. They were orange, not a typical banking color (most prefer blues and greens here), had an acronym for their name (or was it just the name? No one knew!), and everyone was skeptical about online banking let alone an online bank.
I.N.G.? Ing? For a while, no one knew!
I loved them.
ING (which is actually an acronym for Internationale Nederlanden Groep) was fantastic and the bank was acquired by Capital One a short time ago. I've considered it one of the best online banks for quite some time.
Today, online savings accounts are commonplace and extremely versatile. The interest rates are all similar so to find the best you need to look at the different perks.
How do these rates compare with traditional banks? See for yourself, not a single one is even close to an online bank (I was embarrassed to even type them):
- Bank of America: 0.01% APY
- Citi: 0..04% APY
- Chase: 0.01% APY
- U.S. Bank: 0.04% APY
- Wells Fargo: 0.01% APY
- National Average: 0.12% APY (via Informa Research Services)
All the banks on this list are FDIC insured (don't let phrase “online bank” scare you, they're just like regular banks). You can confirm that by searching the FDIC's Bank Find tool and confirming the FDIC numbers listed. These banks are presented in no particular order.
HSBC Direct Savings — 2.25% APY
HSBC Bank is one of the largest international banks with a geographic footprint that rivals the former British Empire.
What's even more appealing is that if you open a checking account, you could make anywhere from $200 to $750 in welcome bonus money, depending on the checking account you open.
Couple this with a high APY interest rate and you have yourself a solid banking package. 24/7 online account access, no monthly maintenance fee, and an HSBC Mobile Banking app that lets you do things like deposit checks online.
Aspiration Spend & Save Account – 2.00% APY
Aspiration offers a Spend & Save Account, their names for a checking and savings account, that has some features you rarely find in either type of account.
On their Save Account, you earn a very high rate of interest and there is an optional, you pick what you want to pay, monthly fee. The Spend account has a debit card that earns unlimited cash back rewards. There are no ATM fees (unlimited ATM fee reimbursement), no overdraft fees, no inactive account fees, no dormant account fees, and you get to pick what you wish to pay as a monthly fee.
You also get $600 in cell phone damage insurance and $1,000 in expense reimbursement if your identity is stolen. And, like all banks on this list, your money is FDIC insured.
Discover Bank — 2.10% APY
Discover, the credit card folks, also has an online bank! Discover Bank (FDIC #5649) may not be a familiar name to you but they've been actively insured by the FDIC since 1934!
Their savings account has one of the highest interest rates, no maintenance fees, and no minimum balance. Plus they frequently have a bonus when you open a new Discover Savings Account. Right now that bonus is up to $200 depending on how much you can deposit.
The checking account also has no minimum balance, access to over 60,000 ATMs in the ATM network, plus a generous reward structure. You can earn 1% cashback on up to $3,000 in debit card purchases each month, pay a bill online, or write a check that clears (up to 100 such cashback transactions a month)
Learn more about Discover Bank
(click here for our in-depth review of Discover Online Savings Bank)
American Express® Personal Savings — 2.10% APY
You are probably more familiar with their credit cards than their savings account but American Express National Bank (FDIC #27471) has been in business since 2000, when American Express sold their previous banking division to Standard Chartered.
American Express® Personal Savings is their high yield savings product and it currently has a very competitive interest rate. They also have certificates of deposit as well but they do not have a checking account, you are permitted to link up to three of those from external banks.
We have a full review of American Express Personal Savings.
Barclays Bank — 2.20% APY
Barclays is a British based international banking corporation and the online bank is part of their US subsidiary, Barclays Bank located in Delaware (FDIC #57203).
Their online savings account product has a competitive interest rate, no minimum balance to open, and to earn interest you need to keep enough such that the interest rate earns you a penny each period (so you won't earn fractional interest, this is typical).
Barclay's has a competitive lineup of Certificates of Deposit, with terms as short as 3-months all the way up to 60 months. The rates are competitive with other online banks.
Synchrony Bank — 2.25% APY
Synchrony Bank (FDIC #27314) is probably the least well known name on this list but they were formerly GE Capital Retail Bank, a part of GE Capital.
Their savings account is tied for the highest interest rate with no minimum balance and no maintenance fees.
They don't have a “checking” account but instead what is known as a money market account. This account pays a higher interest than similar online checking accounts and has no minimum balance and no maintenance fees either.
Their CD rates are competitive with others on this list.
Learn more about Synchrony Bank
Ally Bank — 2.20% APY
Ally Bank (FDIC #57803) is the online bank I use (I consider them the best online bank, which is why I use them) and I've been a fan of theirs for years. I opened my account shortly after they rebranded from GMAC (General Motors Acceptance Corporation) in the late 2000s.
Their savings account has a solid interest rate, no maintenance fees, and no minimum balance.
Their CD rates are also competitive, the early termination period is only 60 days on a short-term CD (versus the more typical 90 days), and they often give you an interest rate bonus if you roll your maturing CD into a new one.
They offer a free checking account with no minimum balance, they refund up to $10 in ATM fees each statement, have a large ATM network, and they have a competitive interest rate on the checking account too.
Their app is solid too. It has all of the typical bells and whistles plus a great remote deposit feature for when you have checks to deposit. If you need to deposit checks and don't want to use the app, there are postage-paid deposit envelopes for you to use too (absolutely free).
Finally, they also recently acquired TradeKing, rebranding it Ally Invest. This gives you access to a low-cost stock broker too that only charges you $4.95 per trade ($3.95 if you have a daily balance over $100,000).
(read our full review of Ally Bank)
Marcus by Goldman Sachs — 2.25% APY
Marcus by Goldman Sachs (FDIC #33124) is the online bank of Goldman Sachs, most well known as an investment banking firm. They do quite more than that and Marcus by Goldman Sachs (this is a recent rebranding) handles their online bank offerings.
They currently have the highest interest rate for savings accounts and they have no minimum deposits and no transaction fees (there do not appear to be maintenance fees either). They were named the Best Stand-Alone Account for Savings by MONEY® Magazine ‘Best Banks' 2016 issue, for whatever that's worth.
Learn more about Marcus by Goldman Sachs
Alliant Credit Union — 2.10% APY
Alliant Credit Union is the only credit union on this list and they are NCUA insured (NCUA is the equivalent of the FDIC for credit unions, same protections and same amounts – NCUA #67955).
The account minimum to open is $5 (but they will give you $5 to open an account!). The interest rate is available if you have $100 or more in your account and there are no maintenance fees if you elect e-statements (many of the online banks do not even offer paper statements, so this is not a huge distinction). They have 80,000+ ATMs in their network.
The same terms exist for their checking account too but their interest rate on the checking account is slightly higher than many others. There is no minimum balance required on the checking account and you can get $20 in ATM surcharge refunds per month.
Why bother including a credit union? Because this credit union offers two remarkable products – a Kid's Savings Account and a Free Teen Checking Account. They are joint accounts with perks to help teach your kids responsible money habits – fantastic idea.
Learn more about Alliant Credit Union
Funny, I used to work for ING Direct and then very briefly for Capital One 360. Then was definitely a change in culture when Capital One took over.
These days I use Ally and I’ve been very happy with Ally’s rates and service.
I was kind of excited when Ally acquired TradeKing, it put two services I enjoyed under one umbrella.
Great summary, Jim! I started reading the intro on your home page, and as soon as I read “Acronym” and “Orange”, I knew you were talking about ING. I was torn back when I was moving to an online bank between ING and Ally, but I also ended up going with Ally.
I’ve actually written to them a few times about setting up an affiliate program, but unfortunately I don’t think I have the clout to get them to move on it. But I know lots of bloggers that love Ally, and would love to promote them more. I’m thinking we all need to band together and see if we can get them to create a program. Granted, I’ll keep promoting them, regardless.
I wonder if they’ll start dabbling because they acquired TradeKing and kept that affiliate program as Ally Invest, so maybe that’ll get them into the space!
Surprised to see Goldman Sachs on the list, but that’s cool that they have a high interest account. Lots of good options on this list. Hard to complain about 1%+ for a savings account.
I know! 1% is fine… but you are still behind inflation. But you’re less behind than 0.05%!
Plan out savings goal for yourself and think about setting up an automatic deduction from your bank account each month to go towards your savings.
I use Ally and Cap 1 360 .
I’m looking to open another online saving account but I can’t find a bank that will allow the account to be under revocable living trust.
Ally is the only bank that allows it. I don’t want to keep more than FDIC insurance limits in one bank.
Any ideas ?
Live Oak Bank is 1.50% APY
Not on list, any particular reason?
1. Until now, I’d never heard of them before. (this is the biggest reason)
2. I am leaning towards banks with a larger footprint (large geographically or online) and brand recognition, because people are hesitant to open a bank account from a company they’ve never heard of. Another bank I didn’t list was CIT Bank, which is lesser known but has a competitive APY and a $100 new account bonus.
Barclays no longer offers Dream account as of Oct 2017
Looks like they did away with it! Thanks for the note, I’ll update the list.
No particular reason, they’re a solid bank!
hi jim,
i am considering amex personal savings with 1.55% APY. the fine prints stated that the rates are subject to change at any time without notice. is it common for these banks to change the rates? do they usually stay constant (minimal fluctuation is understandable) or can they change drastically? TIA for your time!
Savings account interest rates are not set in stone (unlike certificates of deposit) but they usually stay fairly constant. With the Federal Reserve raising rates recently, the trend for interest rates on savings accounts will go up.
You may see 0.25% increases (or decreases, but in early 2018 this seems extremely unlikely) – but it won’t be like a sudden drop to 0% or anything crazy.
You should also list All American Bank – it doesn’t have the geographical footprint you mentioned but they offer a 1.75% money market and a 2.25% checking account – at those rates they are worth mentioning.
Hi Jim,
Thanks for your current update. I too currently have savings accounts at Cap One 360 as I left my savings there when it transferred from ING. After doing some research and reading your posts, I am trying to find the best option to move from Cap One 360 to a higher interest rate for savings. I have a small amount <$500 now to put in savings to get started. Why do you choose Ally over the other online banks with higher interest rate? If I am basically using these accounts to save for my son a car, he turns 15 this summer so I have a year or so to help pay 1/2 or 1/3, and to save for education after high school, should I look into a CIT Bank or maybe even a CD? I had considered Synchrony as an option with 1.55% HYS. As for a 529, I am unsure if I can open an account since my son's father, non-custodial parent, opened one without my consent. What are the best options for me to save for his college or technical school? Since my current husband told me I have to figure out how to pay for my son's car and college, I have to get this ball rolling fast and maybe find another husband (just kidding).
I chose Ally because it had the highest interest at the time. The differences in rate are so small now that it’s not worth the hassle of switching. I don’t know if a CD is worth the lock-up period though. Half a percent on $500 is $2.50 so you can decide whether the hassle is worth it.
Thanks for your reply. Too bad Cap 1 isn’t competing for customers. I’ll definitely be adding to that savings whenever possible but I need to start somewhere. I did see where one credit union was offering a 5.12% on your 1st $1000 at DCU but seems like a bait and switch and it drops to 0.05% afterwards. Anyway, thanks for your research.
It’s hard to “compete” for customers on interest rate, you have to be a lot higher for people to move and then you start running into other problems like how you can afford the higher interest rate. There are rewards checking accounts and “kasasa” checking accounts (named after the company that runs them on behalf of small community banks and credit unions). They give a higher interest rate when you make X transactions a month with their debit or credit card. Those transactions collect fees and they pass some of that onto customers.
Good information in this article but I’m going to stick with the 28 day T-bill. No third party (bank) counter-risk, your money is invested with the government, the same place they will go if a major bank goes bust and kills off the FDIC, much like the defunct FSLIC in the 1980’s. Our savings is divided into quarters with each quarter reinvested each week. This gives you 13 cycles in a year (52/4=13) and is currently paying out at 2.2% APR. It has been rising all year and we believe will likely continue to do so with the massive buys of capital the government is sucking out of the economy to fund their deficits. As the cycles are so short, we aren’t locked into a vehicle like a CD that penalizes you for an early withdrawal, and we minimize losses of ongoing increases in interest by only being locked in for 28 days, easily catching the rise in as close to real time as possible. You only need $100 to start and invest in $100 increments. In the off chance the federal government would be at risk of default, something that hasn’t happened in 200 years, we are on a short enough time frame to get your money out before the real damage hits. Thanks again.
Do you have any feedback for online savings accounts with Citizens Access. It looks like their APY is a bit higher than any of the options posted here, and I was wondering if there are any cons to choosing that bank over the others.
None that I can see, it’s actually the first I’ve heard about them before. Citizens Access is FDIC insured, a division of Citizens Bank, and they have a solid APY. I say go for it!
Hi Jim,
Nice blog! Do you have any credit/debit card with Ally? if so, what is your point of view about it? I’m planning to open a saving account with them and put my house down payment money to work a little. However, will it be easy to pull out that money when needed with a minimum fee?
Thanks and happy holidays!
Hi Karim – I have their debit card and I use it as an ATM card. They reimburse me ATM fees up to $10 per statement but I rarely use it more than once a month.
Great article Jim! I have a question for you. I currently have a Capital One 360 savings account at 1%, so hence why I have been doing my research and came across your article. I am considering the Amex savings at 2.1% since I already have a card with them, figured it would be under one roof. But then read that there is no app to go with that account? Also considering a money market with Capital One 360 at 2%. I purely am switching over for the APY that is higher. Which of those two would you recommend?
I don’t have an AMEX account so I don’t know about the app but Capital One 360 is a great account. You can open several savings accounts quickly, so you can save towards different goals, and the interface is pretty good.