No matter what stage you are in your life right now, if you wish to have a stable financial status, having savings is a must — more so, having a high yield online savings account? Thus, it is only necessary that you keep track of rather know your options.
Let’s face it, nothing compares to the feeling of knowing you have money set aside in case of emergency or in case you need one for a particular expense. It gives you a certain feeling of financial stability and security.
In an article published by CNBC, back in June 2018, the average American household has $175,510 in savings.
While you may find the numbers as huge, the reality is, an average can’t really tell the whole story. After all, millions of American families have actually nothing set aside at all, while others manage to save a couple of bucks. No wonder why the median American household has only $11,700 savings.
These numbers were, by the way, wherefrom Federal Reserve and the Federal Deposit Insurance Corp. (FDIC).
Furthermore, in the report, it says that while the American family saved around $175,000 in different types of savings account, only a few of them — roughly top 10 to 20 percent of earners — are likely to have savings that have set aside money either approaching or exceeding that amount. Unfortunately, it has been found that 29 percent of households have actually less than $1,000 in terms of savings.
To be honest, there are a couple of studies that show how struggling most Americans are when it comes to personal finance management – which basically includes saving or setting aside money for future use.
But this does not mean there is no hope. In fact, there is so much hope! With the young generation being smarter when it comes to handling money, we won’t be surprised if one day, we become a country of savers! That sounds cool, right?
Anyway, saving money can do so much. In times of need, it is like your life-saver. Having savings give you a certain peace of mind knowing you do not have to worry about running out of money because you have some set aside in case of rainy days.
Now, when it comes to saving money though, you have to be wise. You should know where to put your money.
Surely, there are so many banks out there. In fact, the trend today is online banking — particularly, online savings account. But the question is, which one offers a high yield online savings account?
You know, the best online savings accounts are the ones that offer the highest interest rates, at the same time, being a safe place to place or park your money until such time you need it.
Unlike traditional banks, online banks can offer high yield online savings account because they do not have the expense to maintain a branch. It’s all online after all.
So, having said that, we are going to share with you in a little while some of the best online banks that offer high yield online savings account. This, hopefully, helps you gauge your options, and eventually decide on what best based on your personal preference.
Meanwhile, allow us to share with you a couple of very important information first, which we find very important especially if you are new to online banking.
WHAT IS AN ONLINE BANK? HOW DOES IT WORK?
Let’s be clear first — there is a difference between online banking and an online bank.
As the name suggests, online banking is literally doing banking tasks online. It involves managing your bank accounts using a laptop or desktop computer, or your mobile device. Accounts management includes depositing checks, transferring funds, as well as paying bills.
In today’s generation, most banks, as well as credit unions, even those with branches all over the country, offer online banking. This allows their customers to access their bank accounts through the internet.
Meanwhile, the term online bank refers to a virtual bank, which you can access only through the internet. Basically, you can do all banking activities just like traditional banks offer through online banking.
Just like traditional banks, online banks are also guaranteed by the Federal Deposit Insurance Corporation (FDIC).
WHAT ARE THE PROS AND CONS OF AN ONLINE BANK?
Just like any other financial institution, online banks do have their share of advantages and disadvantages as well. So, to help you decide even more if online bank is for you, regardless of the high yield online savings account they offer, check our list of pros and cons below.
Accessing your bank accounts as well as taking advantage of bank services wherever there is an internet connection is really very convenient. Needless to say, you can do it 24/7.
– Free ATM access
Normally, a good online bank is part of an ATM network such as Allpoint and MoneyPass, which means you can access your money anywhere without having to pay for a fee.
– Low Fees and Higher Interest Rates
Online banks do not spend money on branch maintenance or overhead cost, thus, they tend to have lower or no fees at all, at the same time, they get to offer higher interest rates (such as high yield online savings account). Generally speaking, the best online savings accounts are the ones with APYs upward of 2%. Just so you know, traditional banks usually offer 0.01% APY only. See the difference?
Online banks follow up-to-standard security measures just like any other traditional banks. They do have features like encryption and fraud monitoring also to ensure that your account is safe from harm. To be safe, make sure to look for these features and also to ensure that the online bank is insured by the Federal Deposit Insurance Corp. before opening up an account.
– Very Limited Checking Options
Unfortunately, there are only very few online banks with the highest APYs on savings accounts that offer checking options. Most of them do not offer to check options at all.
– No Person-to-Person Assistance
Everything is done online, thus, unlike traditional banks, you do not have the chance to talk to anyone in-person in case you have inquiries or you encounter problems with your account. Some online banks, however, do have a handful of branches that are mostly found in cities.
– Cash Deposits Can Be Challenging
Unfortunately, some online banks have cumbersome processes when it comes to cash deposits. Mostly, options are either you use a deposit-accepting ATM or put cash into a traditional bank account and then just transfer the money to your online account. Another option is converting your cash into a money order, which allows you to deposit electronically using your online bank’s mobile app.
WHAT IS A HIGH YIELD ONLINE SAVINGS ACCOUNT?
We kept talking about high yield online savings account, but what it is really?
According to Investopedia, a high yield online savings account is a form of savings accounts that usually “pays 20 to 25 times the national average of a standard savings account”.
Furthermore, traditionally, people hold a savings account on the same bank where they also hold a checking account, which makes transfers between the two accounts fast and easy. However, with the advent of online banks, plus those traditional banks that have also innovated by allowing customers to open accounts online, the competition on savings rates have increased rapidly, which led to the creation of a new category called, “high yield online savings account”.
Comparing the high yield online savings account to the national average, the high earnings is very significant with high yield online savings account.
An example made by Investopedia is that if you have $5,000 in savings, with the national average, you earn 0.10% APY, but with a high yield online savings account, you can earn up to 2% APY. In numbers, that’s $5 a year versus $100 a year with a high yield online savings account.
Before moving on to our list of banks that offer high yield online savings account, you may want to check out below video by Nate O’Brien, who is an expert on personal finance, investing and entrepreneurship, wherein he shares his own list of highest paying savings account particularly for the year 2019. Hit the play button to watch the whole thing.
WHAT ARE THE BEST ONLINE BANKS THAT OFFER HIGH YIELD ONLINE SAVINGS ACCOUNT?
So, now that you already know some important information about online banks, let’s proceed with our list of online banks that offer high yield online savings account. These are what we found some of the bests in the online banking industry.
Before we move on discussing each bank, here’s table you can check for comparison purposes:
|BANK||INTEREST RATES||MIN. BALANCE REQUIREMENT||MONTHLY FEES||FDIC INSURED||MOBILE APP RATING|
|CIT Bank Savings Builder||up to 1.80% APY (balances of $25,000; If you make a regular $100 monthly deposit); 1.16% APY on balances under $25,000||$25,000 or $100 monthly deposit||$0||Yes (up to $250,000)||App Store – 4.6 stars; Google Play – 4.3 stars|
|Marcus by Goldman Sachs Online Savings Account||1.70% APY||$0||$0||Yes||None|
|HSBC Direct Savings||2.05 APY||$1||$0||Yes||App Store – 1.4 stars; Google Play – 2.7 stars|
|Discover Online Savings||1.70% APY||$0||$0||Yes (up to $250,000)||App Store – 4.7 stars; Google Play – 4.7 stars|
|UFB Direct High Yield Savings Account||1.90% APY||$10,000||$0||Yes||App Store – 3.3 stars; Google Play – 3.4 stars|
|Vio Bank High Yield Online Savings Account||2.02% APY||$100||$0||Yes (up to $250,000)||App Store – 4.4 stars; Google Play – 2.9 stars|
|CIBC Bank USA Agility Savings||2.20% APY||$1,000 (opening balance)||$0||Yes||App Store – 3.8 stars; Google Play – 4.2 stars|
1. CIT Bank Savings Builder
CIT Bank Savings Builder is one of the most unique savings accounts there is. It offers a high APY that could go as high as 1.8%.
To qualify, you have to have at least a $25,000 balance in your account or at least be committed to making a $100 deposit every month.
Failure to hit the balance requirement or to fulfill the commitment to grow your savings, your APY will be 1.16%, which is not ideal for online banks but still way higher compared to traditional banking. The downside is that you won’t be able to make the most of the bank’s excellent rate.
Currently, the bank is offering up to $200 in welcome bonuses, which depends on your funding amount.
2. Marcus by Goldman Sachs Online Savings Account
Marcus by Goldman Sachs Online Savings Account is relatively new in the online savings account market. However, regardless of its “newbie” status, the bank has garnered a lot of attention, because it has been really competitive by delivering an interest rate that is ranked among the highest at 1.70% APY. Needless to say, the bank has no fees as well as no required minimum balance.
This account by Marcus by Goldman Sachs is somewhere between a savings account and a money market account because it offers features that are existing in both.
The only downside we see so far is the lack of a mobile app, which means your account is only accessible through phone or online via their website. But this should not be a big problem. Who knows, in just a little time, they will eventually launch their mobile app, right?
3. HSBC Direct Savings
HSBC Direct Savings is one of the best options when it comes to online banks. Also, it is a great choice for those who want to tackle common fees head-on. Saving your money through HSBC Direct Savings can make you earn as much as 2.05% APY. Definitely, one of the highest in the market.
We like the fact also that you do not have to worry about fees and minimums.
More so, HSBC Direct Savings comes with some useful money management tools. These tools you can use in organizing your finances, as well as in tracking your spending and setting future goals.
While it seems HSBC Direct Savings have so many wonderful things to offer savings-wise, their downside is with their mobile app. It, unfortunately, is rated really low by consumers.
4. Discover Online Savings
Discover Online Savings’ high yield online savings account comes with so many valuable perks. They offer a combination of high APY, a bonus, now fees at all, and also the ease of use. All of these make them one of the best online savings accounts in the market today.
Discover’s account holders can earn a solid 1.70% APY on all balances. By the way, make sure to check out the bank’s bonuses as you can earn from there, too!
With Discover, you don’t have to worry about keeping a required balance as there is no minimum balance at all. More so, you can easily do online banking wherever you are, and at any time of the day with Discover’s top-rated mobile app called Discover Mobile.
5. UFB Direct High Yield Savings Account
The UFB Direct High Yield Savings Account offers one of the best rates among all the other online banks. However, to qualify for their 1.90% APY, you have to meet the bank’s minimum balance required amounting to $10,000.
Failure to meet the minimum balance required means your money won’t earn anything at all — which, honestly, we find really shameful. Thus, if you are someone who wants to start small in saving in an online bank, UFB Direct is definitely not the best place to go.
6. Vio Bank High Yield Online Savings Account
Vio Bank High Yield Online Savings Account is also one of the highest APYs in the market. Vio Bank offers up to 2.02% APY, which is obviously one of the most competitive rates available on the market). In addition, the bank does not charge monthly maintenance fees, which is something that is hard to pass up.
Vio Bank is ideal for those who are just starting to think about building their savings. To be able to open an account, the bank only requires a $100 minimum opening balance, which is very low as compared to other online banks.
Vio Bank is an online division of MidFirst Bank.
7. CIBC Bank USA Agility Savings
What we like about CIBC Bank USA Agility Savings is the fact that the bank offers attractive interest rates without the monthly cost. These facts alone only show that CIBC Bank USA Agility Savings is one of being the best options when it comes to high yield online savings account.
CIBC Bank USA Agility Savings offers a 2.20% APY, one of the highest we found on the market today. All the more, you can earn it on all balances. Amazing, right?
The downside though is that you will need $1,000 to open a savings account with CIBC Bank USA Agility Savings. However, even if your balance dips below $1,000, the APR won’t be affected at all, which is a pretty good deal – no doubt.
FINAL THOUGHTS ON HIGH YIELD ONLINE SAVINGS ACCOUNT
Having savings is a must. It gives you peace of mind, at the same time, it gives you a certain feeling of security and stability knowing that in case of emergency or if there is a need to purchase something, you have money to spend.
While you can save money anywhere you want, it’s always best to check your options. While traditional banks are a good choice, opening a high yield online savings account on online banks is also a great choice. It allows your money to earn or to grow higher as compared to traditional banks.