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 traditional brick-in-mortar banks.
Online banks don't have to worry about operating multiple branch locations. The costs of operating local branches 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 high-yield savings account and 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.
5 Online Savings Accounts that Earn More than the National Average
1. Quontic Bank – earn 0.55% APY
Quontic Bank was founded in 2009 and based in New York, NY. The Quontic Bank High Yield Savings is available in 50 states (and Washington, DC).
Savings Account Offered:
- Quontic Bank High Yield Savings earns 0.55% APY – Earn nearly 15x higher than the national average with this top paying savings account. It requires a minimum of $100 to open. There are no monthly service fees, and customers have access to more than 90,000 surcharge-free ATMs.
- Minimum deposit to open: $100
- Balance to earn APY: up to $1 million
- Monthly fee: $0
We like the Quontic High-Yield Savings Account because it pays nearly 15x the national average plus customers can access tens of thousands of free participating AllPoint, MoneyPass, SUM or Citibank ATMs nationwide.
2. CIT Bank – earn 0.50%, 0.45% or 0.40% APY
CIT Bank is a nationwide direct bank offering higher rates than brick-and-mortar banks and refunds up to $30 per month in ATM fees.
Savings Accounts Offered:
- CIT Bank Savings Connect Account earns 0.50% APY – You must open a free CIT Bank eChecking account and make at least $200 per month in direct deposits to the linked eChecking account to earn a competitive 0.50% APY. The linked eChecking account gives you easy access to your funds through a debit card and free ATM withdrawals.
- CIT Bank Money Market Account earns 0.45% APY – You'll need $100 to open an account that offers a competitive rate of 0.45% APY.
- CIT Bank Savings Builder Account earns 0.40% APY – Open with at least $100 deposit plus make at least $100 in monthly deposits to earn a competitive 0.40% APY; OR, maintain a $25,000.account balance.
Out of the three savings vehicles offered by CIT Bank, we like the CIT Savings Connect Account best because it encourages you to begin saving more money each month by making the $200 per month qualifying deposits plus, the rate earned is ten times the national average.
Plus, not all online banks also offer a checking account option. 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 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.
3. Chime High Yield Savings – earn 0.50% APY
Chime is an online-only banking services app that offers you 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 the change up (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 rate of 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.
4. 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.
5. Aspiration — earn 1.00% APY
Aspiration is a digital bank that offers an alternative to online savings accounts. When customers use an Aspiration debit, you’ll be able to plant a planet-saving tree with every purchase you make simply by rounding up to the nearest dollar. Plus, Aspiration will donate 10% of every dollar customers choose to pay in monthly fees to charities that help struggling Americans build a better life.
Spend Account Details:
- Earn a $200 welcome bonus with Aspiration Plus.
- Aspiration Spend & Save Plus account – Earn up to 1.00% APY for account balances up to $10,000.
- To earn 1.00% APY interest on Aspiration Save Account balances up to and including $10,000.00 in any calendar month, customer must be enrolled in Aspiration Plus and spend $1,000 or more, monthly, with their Aspiration debit card.
- Minimum deposit required to open an Aspiration Save Account is $10.00.
- Monthly fee: $5.99
We like the Aspiration Spend & Save Plus Account because customer deposits will not fund fossil fuel exploration or production.
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.
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.
In simpler terms, banks make money from interest when they loan money to other customers. That's one reason savings account rates are so low because 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 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 in 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.