My local bank offers a basic savings account with a 0.04% interest rate with the opportunity for a lot of fees. If you are a high roller and have a minimum of $30,000 to open an account, you can earn 0.75% interest at that bank (the interest rate “skyrockets” to 0.85% if you can bring $5 million to the table). Oh, and it took me a couple minutes to find that information. Where’s the transparency?
If this situation sounds familiar to you, then I recommend looking into an online high yield savings account where you can earn a better return on your money, avoid most fees, and enjoy added functionality. If you still need a brick and mortar bank, then consider keeping your local account and using the online savings account to stash your emergency fund or long term savings.
What to look for in a high yield savings account
All banks are not created equally. There are variations in interest rates, reliability, functionality, and more. When looking for a new bank, consider these features:
- FDIC insurance. The most important feature – if the bank is not FDIC insured, keep looking.
- Interest rates. The higher the better, provided the bank meets your other needs.
- Account minimums. Some banks require you to deposit a large amount of money to receive the best rates or avoid fees.
- Fees. Keep these to a minimum.
- Functionality. Some banks offer great features such as unlimited sub-accounts, high yield checking accounts, Certificates of Deposit, the ability to link to a brokerage account, and more.
- Access to funds. How quickly and easily can you access your money if you need it? Is there a brick and mortar version of the bank, or is it only online?
Top high yield savings accounts
The following banks meet the criteria listed above, and each of them offers something a little different than their competitors. These banks are all covered by the FDIC and are great options if you are searching for a new online bank. Bank rates change often, so please visit the high yield savings account rates page for up to date interest rates.
EverBank. EverBank currently offers some of the highest interest rates among online banks, with features including high yield savings accounts, a money market account, checking accounts, CDs, credit cards, and investment accounts. EverBank offers a 2.51% introductory rate and has a $1,500 minimum balance to open an account and there are no fees with a minimum balance of $5,000. You can find more information or open an EverBank account at https://www.everbank.com.
WTDirect. WTDirect is the online branch of Wilmington Trust, a bank with a long history of stability and high rates. WTDirect has a nice interface and offers users the ability to link their account to an unlimited number of external bank accounts – a nice feature if you need to transfer money to and from multiple accounts. The only downside to WTDirect is the $10,000 minimum for the highest interest rate. You can read more about them in my WTDirect review, or you can sign up for a WTDirect account at https://www.wtdirect.com.
FNBO Direct. FNBO Direct, the online branch of First National Bank of Omaha, was rated the top online bank in 2008 by Kiplinger’s and has a 4 out of 5 star rating from Bankrate’s Safe and Sound Ratings. There are no minimum balance requirements, no extra fees, and you can easily link other bank accounts with FNBO Direct. You can find more information or open an FNBO Direct account at https://www.fnbo.com.
Sallie Mae Bank. Sallie Mae just opened a new consumer banking division and they currently offer some of the highest rates in the nation. Sallie Mae is FDIC insured, has no minimum balance requirements, and no fees. Salllie Mae also has a unique arrangement with Upromise – you can earn a 10% annual match on Upromise earnings. For more information, visit: http://go.salliemae.com/bank/.
ING Direct. ING Direct is probably the most well known online bank and they have many attractive features that set them apart from other banks. Their best features include the ability to create an unlimited number of sub-accounts (which makes targeted savings easy), ability to link to their high yield checking account (Electric Orange Checking), ability to link directly to your ShareBuilder account, a program to refer friends and family to earn bonuses, good CD rates, and more. You can learn more about ING or open an account at http://home.ingdirect.com/.
Ally Bank. Ally Bank is the new name for what was formerly GMAC Bank. They offer high rates, unlimited sub-accounts, and excellent CD rates. Ally Bank is of the few banks to offer a no penalty CD, which you can break at any time without any fees. Ally Bank accounts have no monthly fees and no minimum balance requirement. You can read more in my Ally Bank review, or you can open an FNBO Direct account at http://www.ally.com.
E*Trade. E*Trade is well known for their online brokerage firm, but they are a full service financial institution, offering a high yield savings account, high yield checking, CDs, Roth IRAs, a brokerage firm, and more. E*Trade does not have any fees or minimum balance requirements. You can learn more about E*Trade or open an E*Trade savings account at http://www.etrade.com.
HSBC Advance. HSBC Advance is another large financial firm that offers multiple financial products. Their high yield savings account consistently rates among the best in the nation. You can learn more about HSBC Advance in this HSBC Advance Savings Account Review.
Bank of Internet. The Bank of Internet online savings account features no fees or balance requirements, free online statements, and an available ATM card. They also feature high interest checking accounts, CDs, and mortgages. You can open an account with an initial deposit of $100. To learn more about the Bank of Internet savings account, or to open a Bank of Internet account visit http://www.bankofinternet.com/.
{ 10 comments… read them below or add one }
Does your bank offer a money market account at a higher rate? Citibank does this and pretty sure the set up and everything was free. Same rates as the online accounts.
Craig, Yes, they offer 0.10% interest for standard money market accounts, and bump it up to 0.75% if you can maintain a minimum daily balance of $10,000.
All of the online banks mentioned above have a minimum of 0.95%, up to 2.5%. So they are better options for stashing cash, especially if you don’t have $10,000 at the moment.
I would seriously suggest looking into 5 yr CDs and ladder your money. Every year you earn only 1.5% is like losing 2.5% because you’re not in a 5 yr CD.
Sure, inflation may go up, bringing up rates with it. However, simply then lock in that year’s bonus or cash reserves in a higher yield and repeat.
Citibank was offering 4% for a 5-yr, and they are still offering 3.75%.
It adds up… if you have $500,000 in savings and miss out on 2.5% every year, that’s $12,500!
Financial Samurai, I have a 5 year CD ladder for a good portion of my savings, but it is also nice to (and sometimes necessary) to retain flexibility with some funds. Most of these banks offer very attractive CD Rates, so it is very possible to save in CDs and in a savings account.
Here is more information about How to Build a CD Ladder.
Hey Ryan – Sounds good man. BTW, how on earth do I upload my picture in my profile on your site? I’m a computer dummy.
Go to Gravatar and sign up for a free account. You can upload an avatar which will display on sites based on which e-mail address you use.
You can set up Avatars to display in the WordPress Dashboard under Discussion Settings if your theme is set up for them. Many themes have this capability enabled. I currently use Thesis, which you can read about here: Thesis Premium WordPress Theme Review.
Thanks for the information, as a Canadian moving to the USA the number of banks to choose from were astronomical making a financial institute to choose from to be very difficult. Outside of Credit Unions we only have maybe 10 banks in the whole of the country and for the most part they service nationwide.
For those moving to the USA I would probably recommend HSBC since they are the only international bank on this list which can make it easier moving money in and out of the country.
Has anyone tried the discover high yield savings? They offer 2%…wondering if they are good or bad. I have my savings in ING now but every month they keep lowering my APR.
I wonder why none of these lists ever include Stonebridge Bank (http://www.stonebridgebank.com), I’ve used them for years now and they have always had high rates with low or no fees, here’s some of the current rates, free interest checking @ 0.10% APY (yeah its low but I only keep min in that & just transfer online to MM), and Premier Money Market @ 1.45% APY with “Minimum average daily balance of $1,000 to avoid $10 monthly service charge” (I’m pretty sure I’ve dropped below that amount in the past & have never been charged, but I think it used to be if you were below said amount it was 0% APY with no fee, I can’t remember), the CD’s currently range from 1.40% (6 month) to 2.75% (60 month) APY. My understanding is they are mostly internet based with only 4 B&M locations. So the thing I really wonder about is, are they some hidden gem I should enjoy sharing & keep or is there something I’m missing and I should run far away…anyone???
Steve,
I haven’t heard of them before, but that doesn’t mean they aren’t a good bank. I went to BankRate’s Safe and Sound Ratings and looked up StoneBridge Bank.StoneBridge is a relatively small bank compared to some of the banks mentioned in this article. Because the audience of this website is nationwide, I don’t focus on small or regional banks, or banks with membership requirements. That is because there are so many of them and they aren’t always the best option for people who live across the country, particularly when some of the larger banks have a more extensive ATM network, more B&M locations, and excellent online features.
If you are happy with them, then by all means, enjoy your hidden gem!