7 of the Best High-Yield Online Savings Accounts in 2020

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Clark.com presents the seven best high-yield online savings accounts in 2020.
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The best savings accounts help you grow your money safely.

But there are major differences in the interest rates you can earn depending on what kind of savings account you choose.

In this article, I’ll take a look specifically at high-yield online savings accounts. High-yield savings accounts earn much more interest than standard savings accounts. But the rates are more variable because they’re heavily influenced by the federal funds rate (more on that later). And since we’re narrowing down the choices from hundreds of accounts, I’ve also limited my choices to online accounts because of their convenience.

I’ve researched the current rates, and in this article, I’ll offer some recommendations for good high-yield online savings accounts that will put more money in your pocket. Some of the options I recommend have physical locations, but it’s possible to open and maintain a savings account at every institution on the list without ever setting foot in a branch.

I’ll also tell you the best ways to use your savings account.


Best High-Yield Online Savings Accounts in 2020

It may be tempting to focus on finding the highest possible interest rate and ignore everything else.

But you should look for a financial institution that also won’t charge you fees, doesn’t require a high minimum balance or initial deposit, offers strong customer service and has a good website and/or app. And of course, you’ll want to make sure that your account choice is federally insured.

It’s also important to understand the withdrawal options and rules before choosing a high-yield savings account.

Federal law used to limit savings account transactions to six per month, excluding ATM and bank teller withdrawals. If you went over that, you were subject to a penalty. But because of economic conditions related to the coronavirus pandemic, the Federal Reserve lifted that restriction in April 2020. It’s now up to each bank to decide whether to charge fees or penalties if you exceed the limit.

Based on the criteria I listed above, I’ve chosen seven online savings banks that make the grade. Later in this article, I’ve provided a table of five other accounts that did not quite crack our list but could be great savings options for specific people.

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Table of Contents


Best Online Savings Accounts

Financial InstitutionAccount NameWhy It Makes Our List
Ally BankOnline Savings AccountSuite of tools includes automatic savings transfers, savings goal allocations.
Capital One360 Performance SavingsYou can view your credit score and allocate with "My Savings Goals." This account also has a highly-rated app.
ChimeSavings AccountOffers"Save When I Get Paid" and round up to the nearest dollar programs as well as a highly-rated app.
Discover BankOnline Savings AccountExtreme about no fees, and this account's "Quick View" lets you see your balance without logging in.
MarcusOnline Savings AccountThis competitive interest, stand-alone savings account is also fee-free.
PenFed Credit UnionPremium Online Savings Account$5 deposit gets you membership at the only credit union on our list.
SimpleProtected Goals AccountThis high-yield checking account offers 1% APY and multiple savings tools.

Ally Bank

Ally Bank's unique "surprise savings" program is one of the benefits of its high-yield online savings account.

Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

0.60%

$0

$0

4.0

4.7

The Details: Ally Bank’s Online Savings Account provides some interesting tools and programs. Perhaps the most interesting is what Ally Bank calls “surprise savings.” The website says “we analyze your linked checking accounts for safe-to-save money, then transfer it to your savings so you don’t have to.”

Ally also offers recurring transfers, and this account lets you organize your savings account funds into “buckets” to help you meet savings goals for specific things like vacations, emergency funds or cars.

Capital One

The Capital One 360 Performance Savings Account is one of Clark.com's favorites.

Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

0.50%

$0

$0

4.6

4.8

The Details: Capital One’s app is tied for the highest average rating (iOS/Android) among the 40+ savings accounts I reviewed. Capital One 360 Performance Savings provides an automatic savings plan and a way to track and allocate money in your account through “My Savings Goals.”

You can also view your credit score for free, get alerts when it changes and get tips on how to improve your score.

Chime

Chime's savings product has several features designed to help you save more money.

Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

1.00%

$0

$0

4.6

4.8

The Details: Chime is one of the rare financial institutions offering a full 1% APY on savings in 2020.

You must have a Chime Spending Account to open a Chime Savings Account.

Its app is tied for the highest average rating (iOS/Android) among the banks I reviewed. Chime lets you access your direct deposit up to two days early. Its “Save When I Get Paid” program automatically transfers 10% of your direct deposits (of at least $500) into your savings account.

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There’s also a program that will round up your debit card purchases to the nearest dollar and automatically put the change into your savings account. (It’s worth noting that money expert Clark Howard advises against making debit card purchases.)

Discover Bank

Discover's savings account is proof that you don't need to pay fees in order to handle your basic banking needs.

Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

0.60%

$0

$0

4.5

4.8

The Details: Discover’s Online Savings Account takes the “no fees” creed to a pleasant extreme.

In addition to no monthly maintenance fees, no minimum deposits and no minimum balance, there are no fees for insufficient funds, excessive withdrawals, returned deposits, stop payment orders or account closures.

If you enable “Quick View,” you can check your savings account balance on your phone, watch or tablet without logging in.

Marcus by Goldman Sachs

The Marcus By Goldman Sachs savings account requires you to deposit via transfer from your bank account.

Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

0.60%

$0

$0

4.4

4.9

The Details: Marcus’ Online Savings Account requires you to link to an outside bank account or accounts for incoming and outgoing transfers.

“If somebody is doing OK financially, and they’ve got money in both savings and checking, I don’t necessarily like for them to do their checking and savings at the same place,” Clark says. “A bank wants you to tie with them, where they try to tie as many services together as they can. But that’s only in their interest. That’s not in yours.”

Your options to deposit money are via a transfer from another account or by mailing your deposit to Marcus. Mobile deposits are not available. Marcus does not charge for those transfers (ACH or wire).

PenFed Credit Union

PenFed Credit Union offers an attractive high-yield savings account.

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Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

0.60%

$0

$5

4.4

4.1

The Details: This is the only credit union on our list. Clark thinks credit unions are a great option for your banking needs.

PenFed requires a $5 minimum deposit, which allows you to become a PenFed credit union member.

You can fund your PenFed Premium Online Savings Account by linking to your bank account and taking advantage of the free transfers. You can set up recurring transfers if you’d like.

Simple

Simple offers a free high-yield online savings account with super competitive interest rates.

Monthly
Fees

APY

Minimum
Balance

Minimum
Deposit

Android
App Rating

iOS
App Rating

$0

Up to 0.60%

$0

$0.01

4.1

4.5

The Details: 

Simple doesn’t allow you to open a stand-alone savings account. In fact, Simple doesn’t allow you to open a savings account at all. But if you have a Simple Account, you can get access to the company’s high-yield checking product.

Aside from the technicalities, Simple’s Protected Goals Account is a savings product for all practical purposes. So I included it in our list of best high-yield online savings accounts.

Simple offers automated savings “with round-up rules,” which adds up to 99 cents to your savings account on every purchase you make by rounding up to the nearest dollar. Simple touts its budgeting tools and includes the ability to set savings goals and allocate funds to them.


Other Savings Account Options

Here are some other savings accounts that stand out for specific reasons.

BankWhy It Stands OutAccount Features
American Express National BankBest for those who like Marcus and do business with Amex• Similar to Marcus account (on main list)
• Convenient for existing Amex customers
Digital Federal Credit UnionBest for saving your first $1,000• 6.17% APY up to $1,000
• 0.25% APY on remaining balance
• $5 minimum balance, $5 minimum deposit
Fitness BankBest for those who want financial incentives for fitness goals• Interest rate tiers based on monthly steps
• 12,500+ steps per month equates to 0.95% APY
• Must maintain $100 balance to earn interest
HMBradleyBest for big savers• Hybrid checking/savings
• Tiered APY based on % of your direct deposits you save
• 3% APY if you save 20%+ of direct deposits
• Highest-rated bank app we reviewed
SmartyPigBest for those who love to chart and share savings goals• 1.05% APY on first $2,499; 0.95% APY on $2,500 to $10,000; 0.75% on $10,000.01 to $50,000
• Cash boosts for using money on "best-in-class" retailers
• Tracking tools for savings allocations
• Must fund via one outside bank account

What You Need in a High-Yield Online Savings Account

Many of Clark’s principles for good savings accounts apply to checking accounts as well.

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The differences between the best savings accounts are even smaller than your choices with checking accounts. For a savings account, other than the interest rate, the main things you want are a good website and/or app and a lack of hidden fees.

High-Yield Online Savings Account Features You Want

  • Good interest rate. If everything else is equal, you want the option that’s going to pay you the most interest.
  • Good website and app. There’s little excuse for a bank to have a clunky website and app in 2020. You should be able to access your account easily. Many bank websites and apps have features like savings goals that allow you to allocate the money in your savings account to things like an emergency fund or a family vacation.
  • Good customer service. You probably will not spend as much time managing your savings account as you will with your checking account. But it’s still important to be able to call, email or chat with someone helpful at your bank whenever you have questions or concerns.

Fees and Requirements to Avoid

  • Lots of fees and service charges. Look for a savings account that doesn’t charge you for things like monthly maintenance or paper statements. A good interest rate won’t help you if your financial institution cancels out all your earnings by slapping you with fees.
  • High minimum balance requirement. This may not be a dealbreaker if you are fortunate enough to have considerable assets. But even then, it’s nice if your bank can offer you peace of mind that it will continue paying you interest and avoid penalizing you even if your account balance gets low.
  • High initial deposit requirement. There are a few banks that offer you very competitive interest rates if you make a big deposit when you open your account. But some banks will pay you a good interest rate without requiring a large deposit.

How Does a High-Yield Savings Account Work?

If you’re new to banking, a high-yield savings account may seem a little like black magic. How can a bank pay you to hold your money in a safe, insured place?

The bank takes all the money it has on deposit and loans it out at a slightly higher interest rate than what it pays you. That’s one way that these institutions make money.

And by doing business only online, these financial institutions can operate with lower overhead costs than if they had to maintain physical locations.

The interest rates that banks offer change depending on market conditions — namely, the rate set by the Federal Reserve. That’s the central bank of the United States. “The Fed,” as it’s often called, helps the U.S. maintain a safe, flexible monetary and financial system and influences interest rates at other banks.

The current Federal Reserve rate is very low, which is limiting the rates at even the best high-yield online savings accounts to pretty low levels.


Good Ways to Use Your High-Yield Savings Account

Clark believes in goal-oriented savings accounts that are as automated as possible. In other words, he likes accounts that help you save for specific expenses like family vacations. And he likes for you to save a set, automated amount every paycheck.

Some of the high-yield online savings accounts that I recommend meet these criteria by letting you allocate funds toward multiple goals within a single account. You can set up automatic transfers that go into each savings “bucket.” If the financial institution you choose doesn’t allow you to split up your savings by goal, you may need more than one savings account. The idea is to keep the money for each savings goal separate.

“People do the best with savings accounts when they have a clear purpose in mind and they contribute to it automatically,” Clark says. “People need to think in terms of every paycheck, putting a certain amount of money in for the different goals. Because otherwise they’re always chasing their tails.”

According to Clark, if you keep your funds for different goals in the same pool of money, it becomes too easy to “borrow” the money from one goal to pay for something else.

If you keep separate pools of money for different savings goals, depleting one still leaves another.

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Some potential goals for savings accounts include:

  • Family vacation
  • Car
  • Furniture
  • Down payment on a house
  • Wedding
  • Rainy day fund

Frequently Asked Questions About Savings Accounts

How Do I Calculate How Much Interest I’ll Get?

The best high-yield online savings accounts offer competitive interest rates, usually expressed as APY.

APY stands for Annual Percentage Yield: the total amount of interest you’ll earn in one year, assuming you don’t add or withdraw funds. Interest can compound daily, monthly or quarterly. It’s important to look at APY because it standardizes the time frame and helps you compare apples to apples.

Here's how you calculate the interest you'll earn from your savings account.

The formula for how much interest you’ll earn is simple. Just multiply the amount of money in your account by the APY, and that’s how much you’ll earn in one year.

For example, if you have $1,000 in savings and your bank offers you 1% APY, you’ll multiply $1,000 by .01, which equals $10. An interest rate of 0.01% APY would yield $1,000 times .001, or $1 per year.

How Often Do Interest Rates Change?

The answer depends on multiple factors, including whether the Federal Reserve is making changes to its interest rate and whether your bank is trying to attract more depositors by offering a limited-time promotional rate.

The Federal Reserve cut interest rates three times in 2019 and made two emergency rate cuts in March 2020 due to the coronavirus pandemic. The second emergency rate cut left the Fed target range between 0% and 0.25%. That marked the largest emergency reduction in the history of the Federal Reserve, which was established in 1913.

As such, the interest rates that most banks are offering right now are quite low.

You don’t want a bank that’s going to secure your business with a high interest rate only to slash it in short order. It’s also important to know that savings account interest rates tend to be variable, so they could change at any time.

Should I Open a Savings Account for My Child?

Teaching your children about finances can give them a great advantage. Opening a “custodial” or joint savings account can be an excellent way to educate them about finances. And making sure that the account comes with low fees and minimum requirements boosts the value of the lesson.

Children who are old enough to actively participate in maintaining a savings account can make regular deposits and watch their balances grow over time. This can instill good habits. Money in a savings account also isn’t as accessible as money in a piggy bank or wallet.

It’s an especially good idea to avoid accounts with minimum balance requirements and fees when you open a savings account for a child, because he or she is likely going to be depositing small amounts at a time. You will need to act as a custodian for the account and have full access. When your child turns 18, you may sign over your custodial rights if you wish.

When Should I Use a Savings Account vs. a CD or Money Market Account?

If you want to earn interest on your money in a safe, low-risk way, you have multiple options.

Money market accounts sometimes offer higher interest rates than savings accounts. But you might have to maintain a higher minimum balance. Traditionally, you get check-writing and debit card privileges with money market accounts, which you usually don’t get with savings accounts.

A CD, or Certificate of Deposit, is akin to a low-risk investment. You agree to leave your money in the CD for a specified period, and in exchange, the bank offers you a fixed interest rate that often is higher than a regular savings account. There are penalties if you withdraw the money early.

If your goal is to get the highest interest rate possible and you know you won’t need to access the money for a certain amount of time, it makes sense to at least shop for CDs to see if you can secure a better rate than a savings or money market account.

Are There Transactions Limits for My Savings Account?

Maybe. Federal Reserve Board Regulation D used to stipulate that you couldn’t make more than six transactions during a single statement cycle. (The rule applies to money market accounts as well.)

It included online transfers, automatic transfers, withdrawals and transfers made with a savings account that act as overdraft protection for a checking account and debit card purchases.

The Federal Reserve amended that rule in April 2020. Banks are now allowed to set their own rules on transaction limits. You’ll want to know those details before opening an account to make sure the bank’s transaction limits work for you.


Final Thoughts

If you have a savings account at a traditional big bank, or you’re earning a paltry interest rate at any kind of financial institution, consider switching to one of the options I’ve recommended in this article.

If you’re looking to open a new high-yield savings account, look for the account with the best APY that still offers low fees and reasonable minimum deposit and balance requirements.

I haven’t listed many credit unions here, because most of them are either limited to local areas and/or base membership on specific criteria. But Clark recommends that you check out the product offerings from your local credit union to see if there’s a savings count there that best fits your needs.


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