These days, the best way to help your savings grow is by saving it in an online high-yield savings account. With interest rates as low as they are, you simply can’t get anything by putting it in your neighborhood bank. Online banks, with lower overhead, are still the best place to earn a much higher yield with absolutely no risk. After years of managing this list manually, we’re now happy to offer up this table that is updated daily with the highest rates you can find anywhere. The table is powered by Bankrate, an industry leader, and hundreds of banks are surveyed each time to ensure that the highest rates are displayed. Lastly, all of the banks on this list are FDIC insured so you know your money is 100% protected.
State of High Yield Savings
Updated 5/21/2012: A few years ago, high yield savings accounts were popular but they were an also ran. With the stock market flying high and certificates of deposit offering 5%, savings accounts were boring. Now, with the federal funds target rate set to 0.00% – 0.25% and various versions of “quantitative easing” in place, it’s hard to earn any risk-free interest.
The interest rates you can get at your local bank will be abysmal and these days “high yield” means anything close to 1%, but it’s better than zero – right? The reason why online banks can offer these higher rates is because they save money by not having branches, tellers, managers, or even paper statements. Those savings are passed onto you.
Best High Yield Savings Accounts
Everbank’s 1.05% Bonus Rate
In terms of accolades, they have collected several in their years in the business. Kiplinger’s Personal Finance once named them the “Best Checking Account” because their yields were often 10X that of industry averages while Money Magazine named them a “Best of the Breed.” For five years in a row, Forbes.com named them the “Best of the Web.” This isn’t a bank that will pull a bait and switch, they’ve been here for a while and their reputation speaks for itself.
A relatively new entrant into the online savings account world is Ally Bank. Ally Bank is an online bank that’s been FDIC insured since August 2nd, 2004 under FDIC Certificate 57803. They are a unit of GMAC Financial Services and was once known as GMAC Bank before changing their name in May of 2009. The reason I like Ally Bank is because they have no minimums on any of their deposit accounts, they offer plenty of options from an online savings account to no penalty certificates of deposit; all of which are at market competitive rates. They are certainly worth a look.
What discussion of the savings accounts would be complete without a look at the grandfather of online banks – ING Direct? ING Direct hasn’t been the leader in interest rates in recent years but the quality of their website services is bested by almost no other bank. While they were recently sold to Capital One, it’s unclear whether that sale will impact the level and quality of services ING Direct currently provide. Most recently, they rolled out remote check deposit, a service that is a must for any bank without local branches.
Are online banks safe? Yes, they are FDIC insured and you can confirm that with the FDIC’s Bank Find tool. You might be surprised to learn that in the last few years, none of the banks that failed were online banks. The last time an online bank failed was Netbank in 2007, which predating the recent economic crisis.
Do you bank with someone not on the list and want to sing their praises? Let us know in the comments below!