Many banks compete for your business but the best high-yield savings accounts for 2020 remain at online banks.
Online banks don’t have to worry about the costs of maintaining branch locations and paying salaries to staff at multiple locations. Due to less overhead, online banks can pass their savings onto you in the form of high-yield savings accounts.
Big banks like Chase pay a measly 0.01% APY. According to the Federal Deposit Insurance Corporation. the national average savings rate is currently 0.06% APY. Online banks are currently paying up to 20 times or more yearly interest (or what’s called APY: annual percentage yield) than a physical bank. This means if you placed $10,000 in savings at Chase paying 0.01% APY you’d earn $1 in interest over a year.
Best high-yield savings accounts for 2020
Online high-yield savings accounts typically offer the best place to save your money. If you’re growing tired of the slow growth and low-interest rates of your traditional savings account, you might consider moving your funds into a high-yield savings account. This kind of account can help you reach your savings goals faster.
Take a look at our picks for the best high-yield savings accounts to determine which product works best for your financial situation.
Our top 5 picks for high-yield savings accounts
1. CIT Bank Savings Builder Account — 0.55 percent
CIT Bank is one of the best online savings accounts offering a stellar interest rate. It only requires a minimum deposit of $100 to open an account. CIT Bank does not charge a monthly fee.
CIT Bank, National Association is an FDIC-insured bank founded in 2009 and currently headquartered in Pasadena, CA. June 2017 regulatory filings state the bank has equity of $5.36 billion on $41.18 billion in assets. According to Bankrate, CIT Bank, National Association exhibits a superior condition, earning a full 5 stars for safety and soundness.
Interest rate: 0.55 percent
Minimum balance: $100 to open
Monthly fee: None
Requirement to earn 0.55 percent: Make at least one single deposit of $100 or more every month or deposit $25,000.
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2. VIO Bank’s high-yield online savings account — 0.83 percent
With an APY of 0.83 percent, VIO Bank, the online division of MidFirst Bank, offers one of the most competitive interest rates, and it only requires a minimum deposit of $100 to open an account. What’s more, VIO charges no monthly fee and allows users six free monthly withdrawals.
Like many online banks, VIO does not offer ATM cards for savings account holders. It’s also unavailable to residents of Hawaii and Alaska.
Interest rate: 0.83 percent
Minimum balance: $100 to open
Monthly fee: None
3. Marcus by Goldman Sachs Online Savings Account — 0.60 percent
Marcus by Goldman Sachs offers an APY of 0.60 percent and requires no minimum balance to open. You start earning that rate of interest if your account has just $1. The account has no monthly fee and, even better, doesn’t charge you for transactions or wire transfers.
Interest rate: 0.60 percent
Minimum balance: None
Monthly fee: None
4. Barclays’ Online Savings Account — 0.60 percent
Barclays’ savings account offers an APY of 0.60 percent without requiring a minimum balance or monthly fee. Barclays also provides a savings assistant feature to help users meet their savings goals.
Interest rate: 0.60 percent
Minimum balance: None
Monthly fee: None
5. American Express® Personal Savings Account — 0.80 percent
American Express personal savings account offers an APY of 0.80 percent without requiring a minimum balance or monthly fee. American Express does not offer mobile check deposits but you won’t have to worry about monthly fees, making a minimum opening deposit or maintaining a certain balance in your account. You can set-up bank transfers or direct deposit or mail a check to make deposits.
Interest rate: 0.80 percent
Minimum balance: $1 to open
Monthly fee: None
Consider a Money Market Account
CIT Bank Money Market Account — 0.60 percent
The money market account from CIT Bank is also a good option for high-yield earnings. Money market accounts are very similar to savings accounts in that they are an interest-bearing account that provides the account holder with limited check-writing ability and a debit card. Account-holders get the benefits of both savings and checking accounts.
Interest rate: 0.60 percent
Minimum balance: $100 to open
Monthly fee: None
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Final thoughts on high-yield savings accounts
Consistent investing in a savings account over a long period of time can be an effective strategy to accumulate wealth. Even small deposits to a high-yield savings account can add up over time.
Start your snowball now by earning compound interest in a high-yield savings account today. You’ll never regret it.
Once your high-yield savings account grows, the next step is to consider higher-risk investments. Savings accounts are best for:
- Emergency funds.
- Saving for a downpayment for home or car.
- Unexpected expenses.
- Quick access to money when life throws you a curveball.
Consider CDs for high-yield savings
Saving money can take time to yield decent returns but it’s one of the safest ways to grow your money. There are more effective ways to build wealth, however, your money will not be as liquid as a savings account.
A certificate of deposit or CD can help you meet savings goals. CDs are a long-term savings instrument that have a fixed interest rate and fixed date of withdrawal. CDs are issued by banks and insured by the FDIC up to $250,000 per depositor. You can expect a higher rate but cashing out before the fixed date of withdrawal (maturity date) can cost you.
The only way to get past the penalty of early withdrawal is with a No-Penalty Certificate of Deposit.
CIT 11-Month No Penalty CD — 0.35 percent
CIT Bank’s 11-month No-Penalty CD offers one of the highest CD Rates for a short-term CD. Plus you can withdraw your money with no penalty. Penalties can be substantial so this is a good deal.
- Minimum Deposit Required: $1,000
- Automatic Rollover: Yes
- Monthly Fee: None