How can a bank that offers no physical branches, no ATMs, and no checking account gain footing in the American banking market?
By offering low fees and some of the best rates on money market savings accounts.
That’s the recipe Barclays Bank, a British bank with a history stretching back into the 17th century, has employed to grow its business since expanding into the U.S. market.
And, if you want to save money for the long term without accessing your account regularly, Barclays may be a great fit for you. Check out our Barclays Bank ratings, and our Barclays Bank review for more reasons why Barclays Bank is a worthwhile option for your savings account.
Barclays Bank Review
- Products & Services
- Interest Rates
- Fees & Charges
- Website / App
- Customer Service
Barclays Bank does one thing well – high interest online savings. You can link multiple accounts and deposit checks online through their web app. They have no account minimums and no monthly fees. Downsides: no checking account, and no ATM network. This account is best for those who only want or need a high interest online savings account.
Barclays: A Long History
Based in London, Barclays Bank offers financial services to almost 50 million people around the world. The bank traces its history to 1690.
The world was a much different place then. The United States didn’t yet exist. The Industrial Revolution hadn’t begun. Capitalism itself was in its infancy.
Barclays Bank has, of course, changed with the times. It first expanded beyond the shores of Great Britain in 1836, during the height of the British Empire.
Despite its long history in global finance, Barclays Bank arrived in America recently, in 2001. Barclays operates its United States banking division from Delaware, where it holds $21 billion in assets from American customers.
Financial ratings agencies such as Moody’s and Standard & Poor’s currently give Barclay’s stable and positive reviews, and even though it is based in Britain, Americans’ deposits up to $250,000 are protected by the FDIC just like at any other member bank.
Barclay Bank Features
|Banking Account Types||Savings Accounts, CDs|
|Other Account Types||Credit Cards, Personal Loans|
|Minimum Required Deposit to Open Account||$1|
|Number of Branches||Internet Only|
|ATM Network Size||No ATM Network; Reduced ATM Fees with Bank of America|
|App Availability||iOS, Android, and Mobile Optimized Website|
|Customer Service Types||Phone, Chat, Email|
|Customer Service Hours||Phone: 7 Days a Week; 8 AM to 8 PM ET|
|Member FDIC||FDIC Certificate #57203|
|Routing Number / ABA Number||31101321|
Barclays High-Yield Savings Rates
Although the bank offers diverse financial products in global markets, it offers only a simple approach to American customers: high-yield, online-only savings accounts with no fees.
At the time of this writing, Barclays’ current annual savings rate is about 21 times higher than the national average.
How can Barclays afford to pay such a high rate on savings accounts?
By offering a no-frills approach for its customers. You won’t find a Barclays Bank branch or ATM in your neighborhood, or anywhere else in the United States.
Instead, customers can access their savings online through electronic transfers between Barclays and other banks.
For example, let’s say you have $25,000 you want to deposit into a Barclays Bank savings account. You’d first need to deposit the money in another bank, then transfer from there into your Barclays Bank account.
Or, you can now take a picture of the check and deposit it directly into a Barclays account, which can be more convenient.
That may seem like a lot of extra trouble when you could just put the money in a savings account at your bank that has a branch down on the corner.
But if your local bank offers 0.01 percent annual interest on your $25,000, the extra steps will pay off.
In fact, at a rate of 0.01 percent, you’d earn $2.50 in a year compared to earning $375 a year at 1.5 percent.
Of course, the longer you leave the money in your account, the more money it will earn.
So if you planned to withdraw the $25,000 next week to pay for the trip to Europe you’d always wanted to take, opening a high-yield interest savings account through Barclays isn’t worth the extra trouble because you wouldn’t be giving it enough time to work for you.
But if you can leave the money alone for a few years, it’ll grow and grow, turning into a source of passive income that you can use any way you see fit.
CDs: An Even Higher Yield
Let’s say you’re in great shape financially. Your student loans are almost paid off. You have an affordable mortgage. You pay your credit card off every month.
Unless something catastrophic happens, like you lose your job, you won’t need to access your $25,000 in the near future.
Is there a way to earn an interest rate that’s even higher than Barclays’ interest rate on your $25,000? You can shop around for a higher savings rate, of course, and that’s always a good idea.
You may be able to find a slightly higher interest rate. (We’ll compare rates later.)
But here’s another approach that will yield a lot more than a fraction of a percentage point:
You could buy a certificate of deposit, or CD, from Barclays, whose American bank offers some of the highest rates out there for long-term certificates of deposit.
What is a CD?
A CD is money in the bank, just like a savings account, but you agree that you won’t withdraw from the funds for a specific period of time, usually ranging from three months up to five years.
If you withdraw your funds early, you’ll incur a penalty.
In exchange for leaving your money alone, the bank offers a higher interest rate.
At Barclays Bank, a five-year CD currently earns at an annual interest rate which is almost double the bank’s regular savings rate (which is already higher than most competitors).
For example, let’s say the five-year CD earns an annual rate of 2.75 percent. After five years, you can withdraw your deposit along with an extra $3,632 that you earned along the way.
Or, you can use that money to buy another CD which will yield even more money when it matures.
Some customers maintain an elaborate schedule of CD maturity dates so that every six months, or every year, they have a CD that matures, providing passive income or an opportunity to renew and set the clock rolling on another payout.
Barclays can help with this approach through its CD laddering program.
Generally, CDs earn a higher rate of return if they take longer to mature. A 3-month CD, for example, may earn only 0.35 percent interest while a 5-year CD may earn something like 2.75 percent. (These are sample rates)
It pays off if you can keep your hands off your money for a while.
Barclays Bank: An Apples-to-Apples Comparison
Of course, Barclays isn’t the only place to save money or to get a certificate of deposit to save even more by earning at higher rates.
As you’ve gathered, the bank’s U.S. strategy focuses on offering high-yield savings opportunities. But there are several similar products on the market.
How does Barclays Bank rate against other great banks?
To answer that, let’s be sure we’re making a fair comparison.
Some banks offer high rates for savings accounts but also charge monthly fees or require account holders to maintain a sizeable balance.
Barclays requires neither a minimum balance nor a monthly fee. So let’s limit our comparisons, for now, to banks that also offer those features or at least require very little in that vein.
Barclays Bank vs. Ally Bank
Ally Bank offers similar interest rates on savings accounts while also offering an array of banking products such as auto loans, home loans, credit cards, checking accounts, CDs, and a brokerage account – Ally Invest.
When would you choose Ally Bank over Barclays Bank? If you wanted a full-service bank that offers loans, credit cards, and checking accounts, as well as a higher-yield savings rate.
Also, if you were buying a CD for a shorter term, such as 3 months, you’d earn more interest since Ally’s rates on such CDs are higher.
When would you choose Barclays Bank over Ally Bank? If you’re buying a five-year CD, for example, you’d earn a higher rate at Barclays.
In summary: If you want to earn passive income and do not plan to regularly access your funds, Barclays should pay off for you. If you want to move your money around more, consider Ally Bank instead.
Barclays Bank vs. Synchrony Bank
Synchrony Bank also offers a similar interest rate on its high-yield savings accounts, and like Barclays, Synchrony doesn’t offer a checking account.
However, with Synchrony Bank, you can access your savings via ATM machines with your Synchrony-issued ATM card.
While you will have to pay fees to use other banks’ ATMs, Synchrony offers up to $5 a month to reimburse this expense.
When would you choose Synchrony Bank over Barclays Bank? If you want a high-yield savings account but also want quick access to your money in case of an emergency, you would prefer Synchrony because of its ATM access.
- Note: rules limit you to 6 withdrawals per month from a savings account, so you would most likely make most withdrawals from a checking account.
Keep in mind that Synchrony Bank’s money market savings accounts are currently slightly lower than the savings account interest rates. So be sure you’re going with the regular savings account.
When would you choose Barclays Bank over Synchrony Bank? If you don’t foresee needing to access your savings quickly and feel like having an ATM card might put your money at unnecessary risk — say, if your purse gets stolen — then you’ll be fine with a Barclays account.
In summary: There’s not a huge difference here. Both banks allow you to avoid monthly fees and both offer a nice savings rate. The main difference is ATM access.
Barclays Bank vs. American Express Personal Savings
You’ve probably seen American Express’ credit card commercials all your life.
The financial institution also offers high yield savings accounts and CDs that are similar to the products Barclays Bank offers.
American Express’s current rate is slightly higher on its high yield savings accounts, meaning you’d earn at a slightly faster rate if you opened an account there.
When would you choose American Express over Barclays Bank? American Express and Barclays offer just about the same services, with American Express currently having a slightly higher interest rate on savings accounts.
If you plan to save money long-term, that might make you lean more toward American Express, although the interest rates will change with the market.
If you plan to buy 5-year CDs and want to use the same bank that holds your savings accounts, go with Barclays since its 5-year CD rate is currently higher than those offered by American Express.
In summary: Sometimes it just comes down to personal preference. If you’re choosing between these two options, spend a little time on each bank’s Web site and read the fine print to see if any nuances matter in your individual situation.
Unlock Higher Savings Rates With Minimum Balance Accounts
If all the talk about passive income has you calculating interest in your head, you may have caught the fever of maximizing your money’s ability to work for you. There’s nothing wrong with that.
But if you want to unlock savings rates that are even higher than the interest rates offered by Barclays and its competitors, you may be ready for an account that requires a minimum balance.
Minimum balances range from $1 to $25,000.
CIT Bank, for example, requires only $100 as a minimum balance but offers a savings rate of 1.75 percent. EBSB Direct offers 1.8 percent but requires a $10,000 minimum.
If you know you’ll never fall below the minimum, there’s no reason to worry so much about these balances, and you may as well enjoy a higher interest rate.
If, however, there’s a chance that your account will fall below the minimum, you stand to lose money, as your bank will decrease your interest rate for dropping below the minimum balance.
If your account doesn’t meet the minimum balance, you will not earn any interest that month at most institutions, and you would have been much better off earning interest in an account without a minimum balance requirement.
Barclays Bank Advantages & Disadvantages
- Among Highest Interest Rates in Nation
- No Minimum Balance Requirements or Monthly Account Fees
- Insufficient Funds Fee only $5; many banks charge $25 or more.
- Online Only
- No Dedicated ATM Network
- Savings and CD’s only; no checking account.
One Rule About Savings Accounts: Rates Will Change
Saving money is a great way to take control of your personal finances. Instead of paying high interest rates on credit accounts, you can be earning interest on your own capital.
But, as you already know, interest rates are not set in stone.
We’ve mentioned several interest rates above. Keep in mind those are examples and interest rates fluctuate with the market. Unless you lock in a rate with a CD, your savings account rate will be variable.
Still, a high-yield savings account such as Barclays’ online banking account should continue to offer a higher rate of return than a traditional savings account or local credit union.
Barclays is great at what it does. If you need a simple savings account or longer-term CD and not much else, go for it.
If you want ATM access and the ability to do all your banking in one place, then you may be better off using another savings account.
Learn More About Barclays Bank
You can visit the Barclays Bank website to learn more about their products and services, or to open an account.