Best High Yield Savings Accounts
One of the most important things about managing your finances is to make sure that your money is always working for you. If your money is in a checking account earning next to no interest, then you have to understand there is an opportunity cost — the loss of potential gain from other alternatives when you choose something else. If you don’t mind having your money do nothing for you, then why not just stuff it under the mattress!
Keeping Up with Technology
Technology has increasingly changed the world around us, including how we bank and what banking means to us. Consumers today are more comfortable with online and mobile banking; various transactions are completed daily online. Financial institutions have also embraced technology in order to offer competitive products to their customers.
One of the benefits of technology has been the increasing popularity of high yield savings accounts offered on the sites of some financial institutions. Traditional banks like Chase, Bank of America or Wells Fargo, have a large network of physical branches that is very costly to build and operate. So it’s not a surprise that they don’t always offer the highest interest rates for savings accounts.
High Yield Savings Account
There are many online savings accounts that offer attractive interest rates. We have listed below our top 5 favorite websites offering high yield savings accounts. Each of these products are backed by solid financial institutions. Since these banks are all members of the FDIC, your deposit accounts are insured up to $250,000 per depositor, for each ownership category.
These accounts offer interest rates that are comparable to a Certificate of Deposit (CD). The interest rate on these accounts will adjust over time due to general fluctuations in market interest rates (for example, interest rates have been gradually declining in the second half of 2019 as Federal Reserve lowered the Federal Funds rate).
Opening a High Yield Savings Account
If you’re not sure how much to put in a high yield savings account, I recommend first figuring out your monthly cash expenses and then keeping only 3-4 months of your monthly expenses in your checking account. Any excess cash can then be either invested in the stock market or kept in a high yield savings account.
Before opening an account, make sure that the advertised rate is not only valid for a short promotional period before declining to a much less desirable rate. It is also important to read the fine print to see if there is a limit on how much principal you can deposit (like a maximum of $10,000 or $15,000) that can receive a high interest rate.
Top 5 High Yield Savings Accounts
With over $116 billion in total deposits, Ally Bank is part of Ally Financial (NYSE: ALLY). The company was formerly known as GMAC and was founded in 1919. Ally is a leading digital financial services company offering financial products for consumers, businesses, automotive dealers and corporate clients. Ally’s online savings account has no monthly maintenance fee or minimum balance required. Ally even offers commission-free trading on stocks and exchange traded funds. Given the wide range of products offered on its web site, Ally is one of the few online banks that can take care of all your banking needs. Ally’s online savings account currently offers an APY of 1.80%.
CIT Bank provides banking and related services to commercial and individual customers. Headquartered in Pasadena, California, CIT Bank is a part of CIT Group Inc. (NYSE: CIT), a financial holding company founded in 1908. CIT’s Savings Builder is an online-only product that requires a minimum balance of $25,000 or $100 monthly deposit. They will evaluate your account every month to see if you meet this criteria. There are no account opening or maintenance fees. You can deposit checks remotely and make transfers with the CIT Bank mobile app. Savings Builder currently has a 2.10% APY.
You have probably heard of Capital One Financial (NYSE: COF) from their “What’s in your wallet?” TV commercials. Founded in 1988, Capital One is a leading issuer of credit cards and provider of consumer and commercial banking services. Capital One offers the 360 Performance Savings account. The account has no monthly fees and no minimums to open or maintain. Capital One has a full suite of products that can take care of all your banking needs. Capital One has an easy to use mobile app and offers many useful digital banking tools. The 360 Performance Savings account currently offers an APY of 1.90%
Marcus (by Goldman Sachs)
Marcus is a relatively new entrant to the world of online consumer banking. Launched by Goldman Sachs (NYSE:GS) in 2016, Marcus offers personal loans and online saving accounts. Goldman Sachs is one of the most dominant and well-recognized investment banks in the world. Despite being a relatively new player, Marcus has already won many industry awards. Marcus offers consumer loans, high-yield savings and CDs. The high yield online savings account has no fees and no minimum deposit requirement. The savings account offers an APY of 1.90%.
Synchrony Bank is part of Synchrony Financial (NYSE: SYF), a Fortune 500 company with more than 80 years in consumer finance. Synchrony Financial is the largest provider of private label credit cards in the United States. Synchrony Bank’s High Yield Savings (HYS) account has no minimum balance requirement and has been popular with investors for a long time. You can access your cash online, by phone or ATM. The web site is particularly user friendly and allows you to easily compare the products they offer. This High Yield Savings account has an APY of 1.90%.