Online savings accounts typically offer higher savings rates than traditional banks to attract new customers.
But there's another reason online savings accounts can offer higher savings rates and that's due to cheaper operating costs than brick-in-mortar banks.
Online banks don't have to worry about operating costs related to multiple branch locations. The costs can be passed to customers in the form of high-yield online savings accounts.
The current national savings rate hovers around 0.06% APY but it doesn’t mean your savings goals should be on pause. If you bank at the larger financial institutions like Chase or Bank of America, you'll likely earn a measly 0.01% APY.
Grow your money faster with a high-yield savings account through the magic of compound interest. The higher your account balance, the more money you'll earn in compound interest.
We’ll review online savings accounts that offer higher interest rates as well as alternatives to savings accounts that earn higher rates.
Top 5 Online Savings Accounts that Earn More than the National Average
1. SoFi Bank – Earn up to 1.25% APY
SoFi is an online-only bank recently formed in early 2022. It's the banking subsidiary of Social Technologies, Inc. The SoFi Checking and Savings account is a combo deal that earns up to 1.25% APY. You can’t open a standalone checking or savings account with SoFi Bank.
Checking and Savings Account Offered: SoFi Checking and Savings customers can earn up to 1.25% APY on all balances but you need to set up monthly direct deposits of any amount. Customers who don’t make direct deposits will earn 0.70% APY on account balances.
SoFi Checking and Savings Account Features:
- Account holders get a debit card that’s tied to the checking account.
- You can access your money at more than 55,000 fee-free Allpoint ATMs worldwide.
- Automatic saving features that help you organize your money, set savings goals, and save your change with Vaults and Roundups.
- Paper checks are available at no cost.
- Earn up to 15% cashback on local retailers when you use a SoFi debit card.
- Access your direct deposit paycheck up to two days before the scheduled deposit date.
- There’s no minimum balance requirement or monthly maintenance fee.
- No fees on overdrafts, and members with $1,000 or more in monthly direct deposits get no-fee overdraft protection.
- Earn up to 15% cashback at select local retailers.
- Welcome Bonus up to $325 for a limited time. Get $25 when you sign up for a SoFi Checking & Savings account and deposit at least $10. Get an additional $300 and earn up to 1.25% APY with qualifying deposits.
2. Quontic Bank – earn 0.75% APY
Quontic Bank is a digital bank, headquartered in New York, that offers checking, savings, money market and certificate of deposit (CD) accounts. The bank operates online in all 50 states with a single brick-and-mortar branch in Astoria, New York.
Quontic Bank High-Yield Savings. Earn 0.75% APY with the Quontic High Yield Savings account. To open the account, you’ll need to deposit a minimum of $100. There are no monthly service fees, and customers have access to more than 90,000 surcharge-free ATMs. Interest is compounded on a daily basis and credited on a monthly basis.
Quontic Bank High-Yield Savings Features:
- The minimum opening deposit is $100.
- No Monthly Service or Overdraft Fees.
- 90,000 ATMs across the nation.
- Fully Mobile & Online Banking.
- Mobile Check Deposit.
- Our US-based Customer Service is available by phone or email.
3. CIT Bank – earn 0.90% APY
Savings Connect Account. Earn 0.90% APY with the Savings Connect Account that is linked to the eChecking Account. Both accounts must be opened together.
Saving your money with a bank that doesn’t offer a checking account means you would have to transfer your money between banks, which could take a couple of days. CIT Bank's Savings Connect Account offers a higher rate along with a checking account that comes with a debit card, giving you easy access to your savings.
Savings Connect Combo Account Features:
- The minimum to open a Savings Connect account is $100.
- Easy access to your eChecking account through Zelle, Bill Pay, and your CIT Debit card.
- CIT Bank doesn’t charge ATM fees and reimburses up to $30 in other U.S. bank’s ATM fees on eChecking accounts.
- No monthly service fees.
- Deposit checks remotely and make transfers easily with the CIT Bank mobile app.
4. Chime High Yield Savings – earn 0.50% APY
Chime is an online-only banking services app that offers an alternative to traditional banking. Chime serves an estimated 12 million customers with checking, savings, and credit card services.
Savings Account Offered:
- Chime Savings Account earns 0.50% APY – You must open a free Chime Spending account in order to open the Chime Savings account and make at least $200 per month in direct deposits to the linked Chime Spending account to earn a competitive 0.50% APY. The linked Chime Spending account gives you easy access to your funds through a debit card and free nationwide ATM withdrawals.
- Chime Savings Round-Ups – Every time you use your debit card to make a purchase, Chime will automatically round up the change (to the nearest $1). Then, it will deposit that change into your Chime savings account.
- Minimum deposit to open: $0
- Balance to earn APY: $0
- Monthly fee: $0
We like the Chime Savings Account because it does not require a minimum balance to earn the competitive 0.50% APY plus, the rate earned is 10x the national average. Customers have the option to automatically transfer a portion of their paycheck into their Chime savings account.Learn More
5. Axos Bank — earn 0.61% APY
Axos Bank was founded in 2000 as one of the first digital banks offering a broad range of financial products and services, including checking, savings, CDs, money market, lending, retirement, and a self-directed investment platform.
Savings Account Offered:
- Axos Bank High Yield Savings earns 0.61% APY – Earn nearly 20x higher than the national average with this top-paying savings account. It requires a minimum of $250 to open. There are no monthly service fees, and customers have access to a free ATM card upon request.
- Minimum deposit to open: $250
- Balance to earn APY: Up to $24,999.99
- Monthly fee: $0
We like the Axos High-Yield Savings Account because there’s no minimum balance requirement to earn its competitive rate. All balances up to $24,999 will earn 0.61% APY.Learn More
How online savings accounts work
1. Open a savings account online.
An online savings account works by opening an account online and funding the required opening deposit amount. It's really that simple
2. The financial institution pays you interest.
Banks make money by using your money to make loans to other customers. In return, the bank pays you interest on your savings deposits. That's one reason savings account rates are so low. Banks profit when the rate on the money they lend out is higher than the rate they pay customers who deposit money into savings accounts.
3. Your money is protected.
The Federal Deposit Insurance Corporation or FDIC helps protect insured deposits in the unlikely event, an FDIC-insured financial institution fails. The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
4. Limited withdrawals with Regulation D
Online savings accounts offer some of the highest APYs, but by law, the number of times you can access your cash each month is limited. As with traditional savings accounts, online high-yield savings account holders can only withdraw or transfer money (including electronic transfers, checks, and wire transfers) out of their account up to six times per month.
A penalty fee will be imposed or your account may be subject to closure if you go over the six times withdrawal limit.
The limit is actually a federal law, known as Regulation D. During the COVID-19 pandemic, Regulation D has been temporarily lifted. At this time, customers can “make an unlimited number of convenient transfers and withdrawals from their savings deposits,” according to a statement by the Federal Reserve Board.
Consider bank sign-up bonus offers
Some banks offer sign-up bonus offers to new customers who open an account and meet certain conditions. Bank bonus offers typically range from $25 up to $500 or more.
There can be requirements to earn a checking account bonus like signing up for direct deposit or making a certain number of debit card purchases or maintaining a minimum balance.
There are a few bank bonus offers that don't require a direct deposit but that can be rare to find.
Bank sign-up bonus offers can be a lucrative alternative to earning savings account interest.
Interest rates on bank accounts are at historic lows, but if you find the best rates possible and avoid high fees along with getting a sign-up bonus, you will give your savings balance a quick boost.
Common online savings account terms
- Balance: Your balance is the amount of money you have in your savings account. It will change depending on if you withdraw cash, make additional contributions or accrue interest on what’s in the account.
- Annual Percentage Yield (APY): The amount of interest an account earns in a year.
- Compound Interest: Compound interest essentially means “interest on the interest.” It's the money your bank pays you on your balance plus the money your interest earns over time, helping your savings grow more quickly. Even with today's low-interest earnings, compound interest over the long term can cause your interest earnings to snowball very quickly to help you build wealth.
- ACH transfer: When you want to make small and frequent payments electronically (direct deposit, automated bill payments, etc.); typically always free but usually takes at least one business day to complete the transfer.
- Wire transfer: When you want to move funds from one bank account to another and have the money be available for use on the same business day.
- Mobile deposit: Using your mobile banking app to scan a photo of the check to have the funds immediately deposited into your account.
- ATM networks: ATMs can either be in-service or out-of-network, depending on which bank you have. When you make a transaction at an ATM that is outside your bank’s network, then a fee will most likely be applied by both the ATM operator and your bank. Many online banks offer unlimited ATM fee reimbursement.
Online savings accounts can be a great way to put your savings goals on automatic and not think about it. Having limited access to your savings can help prevent you from frequently driving to your local bank branch and dipping into your savings.
Simply plant your money into an online high-yield savings account and watch it grow through the magic of compound interest. The higher your account balance is, the more money you will earn in compound interest over time.