As traditional banks continue to offer abysmally low interest rates, millennials are turning to non-traditional, online banks that offer higher interest rates for savings accounts. The rates are definitely lower than in days of yore, but they are still much higher than the brick-and-mortar banks’ average of 0.09%.
Why Use a High-Yield Savings Account?
A savings accounts isn’t an investment. You don’t keep your money there to watch it grow; you use a savings account to keep it safe. Think of it as a virtual mattress box that at least attempts to keep up with inflation.
Unlike other financial products like bonds or mutual funds, savings account balances are insured by the Federal Deposit Insurance Corporation (FDIC). So even if your bank goes out of business, your stash of cash is safe.
Best High-Yield Savings Accounts with Low Minimums
Everyone hates pesky, sneaky fees. Especially minimum balance fees for empty bank accounts. (If you don’t have any money, how are you going to pay the fee anyway?)
Luckily a few banks clued into this problem and now offer high-yield savings accounts with low minimum balances and small opening deposits. Here are some of our top picks:
HBSC Direct Savings. This account only requires a minimum of $1 to open. All balances collect a 2.00% APY interest rate, one of the best rates available.
In other perks, HBSC Direct Savings accounts have no monthly maintenance fees and offer services like mobile deposit, online transfers, and money management tools.
The HBSC Direct Savings account has won numerous distinctions, like the best savings accounts in 2020 by Ascent, a brand owned by Motley Fool, and Money Under 30s top pick.
While this account is a great choice, it’s not without downsides. HBSC Direct Savings is only available as a personal savings account (not a business account) and it does not offer an ATM card. Also, be aware that if you close the account within 180 days you will be charged $25.
Vio Bank. Vio Bank is a division of MidFirst Bank (which has been in business since 1911), and comes in a close second to HBSC. Their high-yield savings account offers 1.95% APY and only $100 minimum to open an account. Vio Bank does not charge monthly account fees.
Those who put money in a Vio Bank high-yield savings account should intend to keep it there. If you withdraw more than 6 times in a statement cycle, each withdrawal is a hefty $10 charge. Excessive withdrawals could result in account closure.
Comenity Bank. Comenity Bank is new to the high-yield savings game, founded in 2018. They are on par with Vio’s $100 minimum required to open an account, and they offer a competitive 1.90% APY on all balances. Deposits start earning
interest immediately. Comenity offers free maintenance, online statements, and ACH transfers.
Comenity is refreshingly transparent with their fees. The only ones they charge are outgoing wire transfers ($25), paper statements ($5), and official check requests ($15)—all of which track with the industry standard.
Best High-Yield Savings Accounts with ATM Access
The biggest downside of online banking is when you need cold, hard cash. Several banks have paired an ATM card with their high-yield savings account offerings to sidestep this issue. Here are our favorite savings accounts with great rates and an ATM card for getting to your cash fast.
Citi Bank. If you are looking for an online savings account at a bank with a presence nation-wide, Citi Bank’s Citi Accelerate offering might be a good choice for you.
Citi Accelerate savings accounts offer a 1.85% interest rate, which is fairly competitive with the new, online-only banks. They also offer ATM access—a feature that is difficult that many online banks lack.
While Citi Bank requires no account minimum to open or to earn interest, and they do charge a $4.50 service fee unless the account balance remains above $500.
FNBO Direct. If a longstanding track record of your bank is important to you, FNBO Direct may be a good choice. FNBO Direct has existed since 2007; its parent company, First National Bank of Omaha, has been around for over 160 years.
FNBO Direct offers an online savings account with a high-yield interest rate of 1.70%. It’s not the highest rate available, but it does offer the perk of ATM access, which may be worth the trade-off for some customers.
As an extra feature, FNBO Direct online savings accounts feature Popmoney, a person-to-person money transfer app similar to Venmo and Zelle. Watch out for the $33 overdraft fee, however.
Synchrony. While it’s not a full-service bank, Synchrony offers a high-yield savings account at 1.70% APY and no minimum balance to collect interest.
Synchrony also offers benefits like three free wire transfers per statement cycle, free webinars, and unlimited ATM reimbursements for Diamond customers.
Their online and telephone customer service is available seven days a week—an anomaly among online banks, which often
cut corners on customer service to keep rates low.
Best Savings Accounts with Bonuses
Instead of offering high interest rates, many banks have begun to offer enticements for new customers in the form of big bonuses for opening an account. If a big bonus is more appealing than a slightly better APY, a heavily-bonused savings account might be for you.
These accounts usually require large deposits, so you have to weigh the potential long-term growth of your cash in an account with a higher interest rate against the amount of the bonus. Check the fine print for how long your money has to stay in the account to avoid paying back the bonus and/or fees.
Discover Online Savings Account. This account offers a handsome $150 bonus to new customers who deposit $15,000 in a new Discover Online savings account. That bonus gets bumped to $200 for deposits of $25,000 or more.
A major perk of Discover’s accounts is their lack of fees—no account maintenance, low balance, insufficient funds, or excessive withdrawal fees. If extra charges are your pet peeve, a Discover Online savings account is an excellent choice.
Discover’s bonus offer is good until 2/3/2020, however it has already been extended since January 2020, so another date extension is likely.
Chase Online Savings Account. Chase offers a similar $150 bonus for deposits of $10,000 or more into a new online savings account. Add a Chase checking account, and their bonus increases to $350 total. While the bonus posts fairly quickly after the deposit, you must maintain a balance of $10,000 for at least 90 days to avoid paying it back.
While Chase’s bonus has a lower deposit threshold, the interest rate is underwhelming: only %0.01. Clearly those who open a Chase Online savings account do so for the bonus, rather than the interest rate.
Chase charges a $5 monthly account fee, which can be avoided if you keep a balance of $300 or more in the account each day or link it to a Chase checking account.
This bonus ends 4/20/2020, but like Discover’s offer, it seems to be renewed on a rolling basis.
Do you have a favorite high-yield savings account that didn’t make this list? Tell us which one we missed in the comments below!