Storing your cash in a duffel bag under the bed has its perks — immediate access when you need it and the feeling of completely controlling your own finances.
But hoarding hard-earned money in your own home puts it at risk of theft or loss to natural disasters, and it’s doing you no favors in terms of interest.
Savings accounts at an FDIC-insured bank, on the other hand, keep your money secure and can earn you more money in the process.
Nowadays, the best savings accounts are typically with online banks due to higher interest rates, but brick-and-mortar banks still have some (though not many) benefits.
So which savings account should you choose? We’ve ranked the very best savings accounts available today to get you started.
What is a Savings Account?
A savings account is a bank account where you store your money until you need it. To see a detailed explanation to how it differs from a traditional checking account, visit our checking vs savings account comparison.
The best savings accounts are secured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. That means that if you store your money with a bank and it goes under, you won’t lose your money.
Savings accounts are perfect for achieving your savings goals — for a car, a house, a wedding, vacations, you name it. More importantly, they are the best tool to build your emergency fund.
Most experts agree your emergency savings should total six months’ worth of necessary expenses in the case of job loss or another unpredictable emergency. Necessary expenses might include rent/mortgage, car payments, insurance, medical bills, utilities and groceries.
Don’t sweat it if you don’t have six months’ worth saved up. It takes time to build up your savings. Even if you can deposit $50 a month, you will eventually reach your goal.
One thing a savings account is not is an investment account. Savings accounts have historically low interest rates (or APY — annual percentage yield), but they are inherently low risk.
After you have padded your savings account with enough cash to cover emergency expenses and your other savings goals, you'd be better off opening an IRA or 401(k) or investing in stocks.
Common alternatives to savings accounts include certificates of deposit (CDs), where you store your money for a fixed term for a slightly higher interest rate, and money market accounts, which typically offer a higher APY but have significantly higher minimum balance requirements.
So just how much interest will you earn in a savings account? That depends on the amount you’ve saved and your APY.
Online Banks vs. Brick-and-Mortar Banks
Before the advent of the internet, brick-and-mortar banks (and credit unions) were the only place to store your money, if not in your duffel bag.
But over the last couple decades, online banks have transformed the way we think of safely storing our money, and because of their low overhead (fewer staff and few or no physical locations), they can offer much better interest rates on savings accounts.
Pros of Online Savings Accounts
When online savings accounts first surfaced, bank customers were hesitant to store their money with companies they had never heard of and were fearful of internet security issues.
Today, many of these same customers now see far more pros to online savings accounts than their traditional physical banks.
Higher Interest Rates
This is easily the most important distinction between brick-and-mortar banks and online banks. The national average APY for a savings account is 0.70%, but many brick-and-mortar banks offer just 0.01% interest rates on their savings accounts.
Online banks, on the other hand, tend to offer savings rates that are better — sometimes a lot better
Availability
Online banks are always open. The most competitive online banks offer around-the-clock service over the phone or online, and typically have more user-friendly apps and websites.
Some national banks and credit unions may offer 24/7 service, but their physical locations are typically limited to the 9-to-5 business hours.
Pros of Brick-and-Mortar Savings Accounts
There are advantages to brick-and-mortar banks. However, if these benefits do not hold massive weight for you, we highly recommend an online savings account.
Easy Access to Account Funds
Emergencies wait for no one. If you have an unexpected need for $10,000, it would be nice to be able to immediately access that.
Many online savings accounts take several days to get you your funds via ACH deposit or a written check, though wait times for ACH deposits have dramatically decreased in recent years.
(You can also speed up the process by opening a checking account with your online bank or choosing an online savings account with ATM benefits. Prioritize online banks that offer free checking accounts or ATM convenience cards.)
Brick-and-mortar banks, however, can allow major withdrawals at any of their locations. No waiting necessary.
In-Person Support
Some people prefer to resolve their issues over the phone or online, but many others find comfort in face-to-face communication. By opening a savings account with a bank that offers physical locations, you’ll be able to get in-person help from financial experts during regular business hours.
… And a Toss-Up
When it comes to access to ATMs, there is no clear winner. Obviously, brick-and-mortar banks and credit unions offer ATMs at all their locations, where you can easily withdraw your money.
Many online banks, however, offer fee-free withdrawals at select ATMs, and the best online banks will reimburse you for fees incurred out of network.
Best Savings Accounts of May 2021, Ranked
So what are the best savings accounts of May 2021? That depends on what you value most.
In determining our top nine, we reviewed more than 20 popular savings accounts and considered what elements seem to be most universally important:
- Best savings rates
- Stellar mobile app and/or web experience
- Convenience of transfers (easy access to funds)
We considered only savings accounts that were FDIC-insured or NCUA-insured and had no monthly fees.
Because physical branch access is becoming increasingly less important, all accounts on our list are online or hybrid (online with some brick-and-mortar bank locations).
So what didn’t we consider when making our list that you might also want to look for?
Bonuses: Because banks regularly add, remove or replace their bonuses, we did not include them in our criteria. If you’re stuck between two or three comparable savings accounts, see which one offers the best sign-on bonus. We highly recommend checking out our current bank promotions list to help earn bonus cash or incentives when signing up for a new savings account.
Customer service: Quality of customer service is subjective. Read reviews and ask friends and family about their experiences when considering banks.
To truly determine how you feel about the level and quality of customer service, give the bank a call and ask some questions about the account. From that interaction, you should be able to feel out how much each bank values customers and prospects.
1. Synchrony Bank High-Yield Savings Account
We ranked Synchrony’s account as the very best savings account of May 2021 because it has the perfect combination of the most important elements of a bank.
APY: 0.40%.
Monthly fees: None.
Minimum balance requirement: None.
Additional fee for withdrawals: None.
ATM card: No fee for in-network ATMs, $5 monthly reimbursement for out-of-network ATM fees
Access to funds: ATM, electronic transfer to an external account, wire transfer or a paper check in the mail.
Mobile app: Yes. At the time of this writing, the app has a 4.5 rating on the App Store and 3.7 on Google Play.
Details: Synchrony Bank High-Yield Savings account.
2. CIT Savings Builder Account
CIT Savings Builder is another solid account option, but you have to meet certain conditions to earn it:
APY: To earn up to 0.40% APY, either your account needs $25,000 in it, or you must make a monthly minimum deposit of $100 to the account. The latter option should be more feasible and is a good incentive to save each month.
Minimum balance requirement: $100.
Additional fee for withdrawals: None.
ATM card: None.
Access to funds: Electronic transfer, wire transfer (free if you have $25,000 or more in the account) or paper check.
Mobile app: Yes. At the time of writing, the app has a 4.6 rating on the App Store and 4.2 on Google Play.
Details: CIT Savings Builder.
3. Ally Online Savings Account
Though savings accounts are different from checking accounts — and thus should not be thought of as a place to quickly and easily get money — Ally does make it easier than most to access your funds when you need them. Just open a free checking account (ranked 5th in the best online checking accounts of 2020), and you can easily transfer your money over.
APY: 0.50%.
Minimum balance requirement: None.
Additional fee for withdrawals: After the six permitted withdrawals a month, you’ll pay $10 per transfer with Ally.
ATM card: None.
Access to funds: You can transfer money via direct deposit, electronic transfer, wire transfer or paper check.
Mobile app: Ally’s mobile app is highly rated at 4.7 stars on the App Store and 3.7 on Google Play.
Details: Ally Online Savings account.
4. Alliant High-Rate Savings Account
The Alliant High-Rate Savings account is offered via the Alliant Credit Union, so instead of FDIC insurance, it carries insurance through the National Credit Union Administration, but the benefits are the same.
Because it is a credit union, joining Alliant can be a little more challenging. You need to fulfill one of these four requirements:
- Be a current or retired employee of a business that is partnered with Alliant.
- Have an immediate family member or domestic partner who banks with Alliant.
- Be a member of an Alliant-related organization/association.
- Become a member of Foster Care to Success, Alliant’s partner charity.
- Live in one of the communities near the Alliant headquarters in Chicago, Illinois.
APY: 0.55%. You need an average daily balance of $100 for the APY to kick in.
Minimum balance requirement: $5.
Additional fee for withdrawals: Hard limit on six federally regulated withdrawals.
ATM card: Money access is super convenient with a free ATM convenience card that qualifies at more than 80,000 ATMs nationwide.
Access to funds: If you live in the Chicago area, you’ll even have access to brick-and-mortar locations.
Mobile app: It’s got a solid app (4.7 on the App Store and 4.6 on Google Play)
Details: Alliant High-Rate Savings account
5. Discover Savings Account
The Discover Savings account offers a substantial APY and easy access to funds via a rewards checking account.
APY: 0.40%.
Minimum balance requirement: None.
Additional fee for withdrawals: The bank may refuse to pay transactions that exceed the six monthly permitted withdrawals.
ATM card: While Discover doesn’t offer an ATM card for its FDIC-insured savings account, you can sign up for the Discover Cashback Debit (it’s free!), which earns up to 1% cash back on up to $3,000 a month.
Access to funds: The linked debit account provides an easy way to transfer funds; otherwise, you can rely on electronic transfers, wire transfers and paper checks.
Mobile app: Discover’s app has a 4.8 rating on the App Store and a 4.5 rating on Google Play.
Details: Discover Savings account
Learn more: Discover Bank review
6. Capital One 360 Savings Account
While it’s certainly not the savings account with the best interest rate, it makes up for it with no monthly fees, easy integration with other Capital One 360 accounts (including a checking account for easy funds transfer) and a killer app.
APY: 0.40%.
Minimum balance requirement: None.
Additional fee for withdrawals: Hard limit on six federally regulated withdrawals.
ATM card: None.
Access to funds: If you don’t open a linked checking account for the easy ATM access, you can still access your funds via the traditional (but slower) means.
Mobile app: In 2018, the Capital One 360 mobile app was ranked No. 1 in customer satisfaction in the banking category for the second year in a row in J.D. Power’s U.S. Banking App Satisfaction Study.
The app has a 4.8 rating on the App Store and a 4.7 rating on Google Play.
Details: Capital One 360 Savings account
7. Barclays Online Savings Account
Barclays has its cons, like challenging access to funds, but its high APY and strong mobile app earned it a spot on this list.
APY: Barclays is one of three banks on this list to offer the competitive 0.40% APY.
Minimum balance requirement: None.
Additional fee for withdrawals: Withdrawals that exceed the monthly limit will result in a fee.
ATM card: None.
Access to funds: You can deposit and withdraw funds in a number of ways, through direct deposit, an electronic transfer, paper check and more.
Mobile app: Yes, but the Barclays US Online Savings mobile app is not the most user-friendly based on its ratings: a 3.7 on the App Store and a 2.4 on Google Play.
Details: Barclays Online Savings account
Learn more: Barclay’s Bank review
8. American Express Personal Savings Account
You might rely on American Express for your credit card, but the bank offers an online savings account worth your consideration as well.
APY: 0.40%.
Minimum balance requirement: $1.
Additional fee for withdrawals: Hard limit on nine withdrawals, though this is more than most of its competitors.
ATM card: A major drawback of the American Express account is the lack of ATM card.
Access to funds: Electronic transfer, wire transfer and paper check are the only ways to access your money.
Mobile app: It currently has a 4.9 rating on the App Store and a 4.2 rating on Google Play.
Details: American Express Personal savings account
9. Marcus Online Savings Account by Goldman Sachs Account
Our final online savings account is by Goldman Sachs. It offers a competitive APY and fairly new mobile app.
APY: 0.50%.
Minimum balance requirement: None.
Additional fee for withdrawals: Due to a change in federal law, Goldman Sachs currently doesn’t impose a limit on withdrawals.
ATM card: None.
Access to funds: Withdrawals are limited to electronic transfer and wire transfer (you also cannot deposit checks via the app).
Mobile app: Yes. It has a 4.9 rating on the App Store and a 3.9 rating on Google Play.
Details: Marcus Online Savings Account
6 Tips for Choosing a Savings Account
You should be aware that banks can change interest rates, develop better apps and update their bonuses, so it is important to understand how to determine the best savings account for yourself.
Here are a few tips:
1. Consider Your Needs
We prioritized high savings rates, ease of funds transfer and mobile apps in our rankings, but maybe for you, two-factor authentication and customer service are top considerations.
Build your own ranking system based on your top two or three criteria. You won’t find a perfect bank that offers everything, but at the very least, you’ll find banks that can meet all of your top needs.
2. Stick With Online
Put your money in an online savings account, unless you have a good reason not to, such as a high interest savings account at a brick-and-mortar credit union or a regular need to get in-person help.
3. Save Only With Insured Banks
Do not put your money into any bank that is not insured by the FDIC. Or, if you go the credit union route, make sure it is insured by the NCUA. We did not include any banks on our list that were not insured.
4. Don’t Be Tempted by Sign-on Bonuses Alone
Earning cash for starting an account with a bank feels awesome, but don’t let the appeal of $100 now prevent you from putting your savings into an account that will earn you $500 over a couple years.
5. Find a No-fee Account
Be wary of accounts with monthly maintenance fees, statement fees or any other miscellaneous charges. You’re more likely to find these fees with a brick-and-mortar bank.
Ideally, find a bank that has an associated free checking account for easy and fast funds transfers.
6. Read the Fine Print
Know what you are signing before you sign it.
If an APY sounds too good to be true, it’s possible there are strings attached — or that the rate is only temporary.
Ask questions and do research when you are confused by any of the terms and conditions, and don’t deposit your savings until you are satisfied with the agreement.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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