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-and-mortar banks.

Top Online Savings Accounts Nationwide

1. CIT Bank Savings Connect – earn 4.05% 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. CIT Bank's Savings Connect Account offers a much higher savings rate than the national average.

Plus, you can open the eChecking account that comes with a debit card that gives you easy access to your savings when needed. 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.

Savings Connect Account Features:

• The minimum to open a Savings Connect account is $100.
• Easy access to your Savings Connect with 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.

» Find out how much your money will grow over time with our APY Calculator

2. Upgrade Premier Savings Account – 4.13% APY

The Upgrade Premier Savings account offers a market-leading interest rate. What's unique about this account is that you have the ability to access money in your savings account without monthly account fees or transfer fees.

Upgrade Premier Savings Account Offered:

• Earn 4.13% APY, on $1,000 or more.
• No account fees, overdraft fees, or transfer fees.
• FDIC- Insured through Cross River Bank.

We like the Upgrade Premier Savings Account because it does not charge monthly maintenance fees.

3. UFB Preferred Savings – 4.55% APY on all balances

UFB Direct Savings offers one of the highest interest rates available for a savings account. Bank products and services are offered by Axos Bank^® with deposits FDIC-insured up to $250,000.

With a UFB Direct Savings account, you get an ATM card included in your account. This allows you to make cash withdrawals from 91,000 ATMs without any fees or charges! Enjoy easy access to your money no matter where you are.

UFB Direct Savings Features:

• Suggested minimum opening deposit $10 or more.
• No monthly fees.
• Free ATM card.
• 91,000 Fee-Free ATMs.
• Mobile Check Deposit.
• Free transfers between direct deposit accounts.

4. Quontic Bank – Earn 3.70% 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 3.70% 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.

5. Chime High Yield Savings – earn 2.00% 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 2.00% APY – You must open a free Chime Spending account in order to open the Chime Savings account. 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 2.00% 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.

How online savings accounts work

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 0.35% APY but it doesn’t mean your savings goals should be on pause. If you bank at larger financial institutions like Chase or Bank of America, you'll likely earn a measly 0.01% APY.

Here's how it works:

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.

Final thoughts

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.

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.

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.