I remember opening my first savings account when I was a kid. I felt so grown-up, and for the rest of the day, I flashed my blue bank book at everyone like a medal.
But now you can find high-yield savings accounts that offer much better interest rates than their traditional counterparts.
Why you should consider a high-yield savings account
Because of the aforementioned abysmal interest, you shouldn’t use savings accounts for long-term investments like retirement or your kid’s college fund. Instead, you should invest in mutual funds, which offer a much higher return.
A savings account, on the other hand, might be where you keep your emergency fund or where you sock away money for a down payment. In those cases, you need the stability a savings account offers. And the type of savings account you should use is a high-yield one.
As the name suggests, high-yield savings accounts offer a higher interest rate than traditional savings accounts. Many offer 1.00% to 1.50% APY instead of the 0.01% offered by banks like Chase and Bank of America.
It’s worth noting that some small banks offer an APY of 3.00% or 4.00%, but they have account maximums in the range of $10,000 to $15,000 and require you to jump through hoops. For a full list, including regional banks with high interest rates, visit Doctor of Credit.
For those of you who want a straightforward national bank, here’s how a high-yield savings account would play out over time.
Let’s say you have $10,000 saved for your emergency fund. If you put it into a traditional savings account at an APY of 0.01%, you’d have a measly $10,030 after 30 years. But with a high-yield savings account at an APY of 1.50%, you’d have $15,679.
Although I wouldn’t advocate leaving money in a savings account for 30 years — unless it’s an emergency fund you’re lucky enough not to touch — it’s worth illustrating the difference just one percentage point can make.
5 high-yield savings accounts to try
If you’re intrigued, the banks below are proven players in the game, which means they’re unlikely to pull a bait-and-switch on you by offering a high interest rate to start and then significantly lowering it later. Because banks can lower their interest rates at any time, some disreputable institutions have done so to entice new customers.
They also are free of monthly fees and minimum balance requirements and are FDIC insured.
Synchrony Bank: 1.30% APY
Synchrony Bank has been in business since 1988. Its savings accounts come with a free ATM card, and although the bank doesn’t have its own machines, it refunds up to $5 in foreign ATM fees per statement cycle.
It offers complimentary identity theft resolution services as well as some travel and leisure discounts for customers who have more than $10,000 with the bank for a year.
“My interest rates are high … and that makes me incredibly happy because my local bank was not even near that,” said one reviewer. “Overall I would recommend this bank to anyone looking for an online savings account. It’s been great so far!”
However, some reviewers did note that wait times for phone and email support can be long.
Barclays: 1.30% APY
You’ve probably heard of British bank Barclays, which also comes in at a healthy 1.30% APY.
Its Dream Account offers a 1.20% APY — and extra bonuses for sticking to your savings goals. When you make deposits for six consecutive months, you’ll receive a 2.50% bonus on the prior six months of interest, and when you don’t make any withdrawals for that same period, you’ll get another 2.50% bonus.
“The interface and ease of use is what makes this bank great to use,” said one reviewer. “This is one of the better banks out there compared to others, as they offer better savings opportunities.”
A few reviewers noted that customer service hasn’t been as responsive as they’d like, which makes sense because the bank is open only from 8 a.m. to 8 p.m. EST daily.
Ally: 1.20% APY
Ally, one of the stalwarts of the online banking game, has an easy-to-use interface and modern features like chat support and remote check deposit. Its agents are available 24/7, and it offers an ATM card and up to $10 per month in reimbursements for ATM fees.
Another bonus is the fact that the interest is compounded daily (at many other banks, it’s compounded monthly, which means fewer earnings for you).
“I like to call my Ally savings account my ‘rainy day fund’ because it is easy to maintain and it seems secure and safe,” said one reviewer. “Overall I am impressed with Ally.”
Complaints included the fact that you can’t use cash deposits, which might be a roadblock for people who don’t have a checking account.
GS Bank: 1.30% APY
If you wanna get fancy, try GS Bank, a subsidiary of massive investment company Goldman Sachs. Like Ally, GS offers daily compounded interest.
It doesn’t offer ATM cards or a mobile app, but that fact doesn’t seem to bother users much.
“Crucially for an online-only bank, their website is excellent,” said one reviewer. “It works as well on mobile as it does on my desktop, and I’ve never had an error, problem, 404, outage, anything. If they keep operating this way, I’ll be a loyal customer for a long, long time!”
Most complaints center around customer service: that it’s open only during the week and available only over the phone.
Live Oak Bank: 1.40% APY
Live Oak Bank is based in North Carolina and has been around since 2008. Though it doesn’t offer an ATM network or mobile app, its APY is one of the highest around.
So if you’re simply chasing returns — and don’t care about frills — it might be a good fit for you.
“I will continue to do business (and recommend them to everyone) due to their amazing website, ease of use, helpfulness, and delivery,” said one reviewer. “I can’t say enough good about them!”
Some users complained about the length of time it took to process electronic deposits, but one recent reviewer said that process has improved.
Traditional banks are where your savings go to die. Instead, try one of these high-yield savings accounts to keep your emergency fund safe — and keep it growing.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 5.87%1||Undergrad & Graduate|
|2.47% – 8.03%4||Undergrad & Graduate|
|2.95% – 6.37%2||Undergrad & Graduate|
|2.48% – 6.25%5||Undergrad & Graduate|
|2.72% – 8.32%6||Undergrad & Graduate|