For the first time in years, savings accounts are starting to offer decent interest rates. The Fed’s interest rate hikes to counter inflation are filtering down to consumer accounts — and many retail and online banks have gradually started increasing their annual percentage yields (or APYs) on their highest-performing savings accounts.
While the average savings account offered around 0.06% APY for most of 2022, this number ticked up to 0.07% in May and 0.08% in June. And that’s just the national average. APYs have surpassed 1.00% at several banks, and more banks are creeping closer with APYs of 0.85% or 0.90%. Many savings account APYS have increased multiple times in the past few months.
Most of the savings rate increases can be found at online-only banks, which can typically offer higher interest rates since the banks are not managing the overhead costs of maintaining physical branches. The country’s biggest banks, Chase, Bank of America and Wells Fargo, which all have bank branches you can walk into, are offering relatively low APYs for savings accounts, far below the 0.08% average. If earning higher interest is important to you, the tradeoff is forgoing easy access to physical branches.
The best savings accounts on our list offer APYs at 0.85% or higher, while charging no fees for monthly maintenance fees or minimum deposits. Read on to discover our picks for best savings accounts.
Best savings accounts
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Bask Bank, an online subsidiary of Texas Capital Bank, offers two different types of savings accounts. Its Mileage Savings Account gives American Airlines mileage back for every dollar saved annually, while its Interest Savings Account provides an APY of 1.61% that’s at or near the top of the current bank savings account rates for mid-May.
Bask Bank doesn’t offer any checking accounts, nor other traditional savings options like money market accounts or CDs. There are no monthly maintenance fees nor any required minimum balance. Bask Bank’s only significant fee is a $35 charge for outgoing wire transfers. ACH electronic transfers are free, but take one to three days to process, a standard practice for online banks.
There is no minimum deposit to open a savings account at Bask Bank, though there is a monthly deposit limit of $100,000.
It’s worth noting that Bask Bank’s variable savings account rate of 1.61% could change at any time. For now, however, it’s the best straight-up savings rate we could find. The biggest limitation for Bask Bank savings is that the bank does not allow joint ownership of accounts.
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Savings accounts and checking accounts are meant to complement each other, so why not combine them into one account that provides both services? That’s exactly what the SoFi Checking and Savings Account does, while offering a sizable APY on your balance.
In order to get the sweet 1.25% APY with SoFi, you’ll need to set up a direct deposit from an employer, payroll or benefits provider, although there’s no minimum deposit requirement. If you don’t have direct deposit, the account earns 0.70% APY, which is still quite high.
There are no monthly maintenance fees or balance requirements with SoFi Checking and Savings, and no fees for using the roughly 55,000 ATMs supported by the Allpoint network. It does not provide any reimbursement for non-network ATM fees from other banks. SoFI also provides paper checks at no cost.
So what makes SoFI a savings account? Its “vaults,” which are extensions of your account that let you save money for an emergency fund or targeted spending goal like a vacation or housing down payment. You can create up to 20 vaults, and if you want to spend any money from them, you’ll need to transfer it to your main “spending balance.”
Currently, SoFi is offering bonuses of $50 to $300 for new accounts with qualified direct deposits. Direct deposits of $1,000 to $1,999 will earn $50; direct deposits of $2,000 to $4,999 will get $100; and direct deposits of $5,000 and up will earn $300. The qualifying period for these bonuses lasts 30 days from the date of your first direct deposit.
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Capital One may not have the sheer number of physical branches as big bank competitors Wells Fargo or Chase, but its robust 1.00% APY is far higher than the 0.01% to 0.03% return on your savings that you’ll get at those major banks.
There are no monthly maintenance fees for Capital One 360 Performance Savings, nor minimum balance requirements. Because there are no ATM cards or checks, Capital One 360 Performance Savings works best with a complementary checking account.
The Capital One mobile app makes it easy to snap pictures of checks to deposit them. Sending money to another bank account with ACH transfers is free, but the process may take one to three days. Outgoing wire transfers incur a $30 fee, and cashier’s checks purchased at physical locations cost $10.
Along with more than 700 full branches mostly located in New York, New Jersey, Connecticut, Delaware, Maryland, Texas, Louisiana, Virginia and the District of Columbia, Capital One also provides more than 30 cafe-style locations across the country that the company acquired when it purchased ING.
These cafes don’t include full banking services, but they do provide 24/7 ATMs and representatives who can answer questions and help customers manage their accounts. Capital One members also receive a 50% food discount at these cafes.
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Withdrawing money quickly can be one of the big challenges of holding an online-only savings account. Unlike checking accounts, savings accounts are generally limited to six withdrawals per month by law, and if your bank is online-only, withdrawing money usually requires an electronic or wire transfer. That’s why having ATM access can be crucial.
A few online savings accounts do offer ATM access, and Synchrony tops our list. Synchrony Bank is a subsidiary of Synchrony Financial, the largest provider of private-label credit cards in the US that was spun off from GE Capital Retail Bank in 2014.
Synchrony High-Yield Savings includes no monthly maintenance fees or minimum balance requirements and offers a very competitive APY of 1.10%. Outgoing wire transfers cost $25. There’s no option of a complementary checking account at Synchrony, though ATM access lessens that blow.
Synchrony customers can withdraw money fee-free from thousands of ATMs featuring the Visa Plus or Accel logos. Synchrony doesn’t charge to use non-network ATMS and will provide $5 per month to reimburse other bank’s ATM fees.
However, Synchrony users are still limited to six withdrawals per month. There are no listed fees for surpassing that limit, but the bank retains the right to close your account if the maximum number of withdrawals is repeatedly broken.
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Tiered APY systems allow you to earn different levels of interest depending on your account balance. The Varo Online Savings Account works on a tiered APY scale, earning you 5% APY for balances between $0 and $5,000 — as long as you follow a few requirements. To earn 5% APY, you must have direct deposits coming in each month for a total of at least $1,000 and maintain a balance between $0 and $5,000. If you exceed the $5,000 balance limit, Varo will drop your APY for the month down to the still very competitive rate of 1.20%.
Varo Online Savings includes no monthly maintenance fees nor minimum balance requirements. If your account balance remains at zero for nine months, Varo reserves the right to shut down your account.
Compare best savings accounts
| Best savings account for APY | Best checking and savings combination | Best for in-person banking | Best savings account with an ATM card | Best savings account for low balances | |
|---|---|---|---|---|---|
| Bank/institution | Bask Interest Savings | SoFi Checking and Savings | Capital One 360 Performance Savings | Synchrony High-Yield Savings | Varo Online Savings |
| APY | 1.61% | 1.25% | 1.00% | 1.10% | 1.20-5.0% |
| Minimum deposit | $0 | $0 | $0 | $0 | $0 |
| Estimated annual earnings on $1,000 deposit | $15 | $12.50 | $9 | $8.50 | $50 |
| Estimated annual earnings on $10,000 deposit | $150 | $125 | $90 | $85 | $120 |
| Branch access | No | No | Yes | No | No |
| Monthly fee | $0 | $0 | $0 | $0 | $0 |
FAQs
What is a savings account?
A savings account is a safe place to keep money you don’t intend to spend right away. It’s a bank account that generally provides a higher rate of interest on your balance, while limiting the number of withdrawals you can make per month. Most savings accounts will restrict you to six withdrawals per month (the federal limit).
Savings accounts are generally insured by the Federal Deposit Insurance Corporation for up to $250,000. Saving accounts can be used to build an emergency fund or save money for a specific financial goal like a vacation, new car or down payment on a home.
How do savings accounts work?
Savings accounts work similarly to most banking accounts — you can deposit and withdraw money, and you’ll earn compound interest on the balance in your account. You’ll need to fund your savings account in order to earn any interest, and most savings accounts will provide different interest rates based on your balance.
Some savings accounts will charge monthly maintenance fees, though they can usually be waived by maintaining a minimum balance or reaching a minimum threshold of direct deposits per month.
Your withdrawals from savings accounts are usually limited to six per month by federal law. If you break that rule you may face a fee or a conversion of the account into a checking account.
What are the different types of savings accounts?
The potential number of savings accounts is as many as banks want to create — students, seniors, veterans and other categories of banking customers have unique savings accounts available to them.
In general, however, there are three different kinds of savings accounts.
Standard deposit account: Our list of best savings accounts consists of these banking accounts. They provide a standard rate of interest for your balance that is usually higher than checking accounts while limiting your access to the money. They generally limit you to six withdrawals per month, although ATM withdrawals can sometimes be excluded from that restriction.
Money market account: Money market accounts can often bridge the gap between checking and savings accounts. While they will usually require higher balances and base their rates on the money market, they do let you write checks. The same six-withdrawal limit applies to money market accounts. Money market accounts are not stock investments in money-market funds.
Certificates of deposit: Certificates of deposit, or CDs, generally provide extra interest for committing your money to a specific term when it cannot be withdrawn. CD terms start at three months or so and can run up to five or 10 years. CDs can be “laddered,” so that a one-year CD can be rolled over into a two-year CD, and then a three-year CD and so on.
What are the major differences between checking and savings accounts?
Most checking accounts are designed to facilitate transactions and payments, whether via a debit card, a mobile app such as Apple Pay or a paper check. Most checking accounts don’t offer interest; those that do usually provide a very low rate of 0.1% or less.
Savings accounts offer significantly higher interest rates and online-only banks typically offer the highest yields. These accounts provide a safe place to store money while keeping it accessible. Until recently, savings account holders were generally limited to making six transactions per month.
How many withdrawals can I make from a savings account?
In normal times, the Federal Reserve limits account holders to six withdrawals a month (to preserve liquidity for financial institutions). In response to the pandemic, the Federal Reserve made a rule change to Regulation D allowing unlimited money withdrawals without a monthly fee penalty.
What is a high-yield savings account?
A high-yield savings account offers a higher interest rate than a traditional savings account. These accounts may have certain deposit requirements, monthly fees or be available only to customers in certain states.
Traditional savings accounts at a bank will have interest rates ranging from 0.05% to 0.1% while high-yield savings can go as high as 1%.
Why are interest rates so low right now?
Interest rates in the US and around the world have been low for a long period, mostly since the economic crisis of 2008-2009. Interest rates are generally set low during times of economic downtown or uncertainty in order to spur investment and spending. Low interest rates tend to reward borrowers rather than lenders.
In the US, the Federal Reserve sets a target rate range, which influences the specific interest rates set by individual banks. Since 2009, the Fed has consistently kept rates low, which has led to low interest rates for savings accounts. As of June 21, the average interest rate for savings accounts is 0.08%.
That noted, many banks will offer a higher savings rate to attract new customers. The market for high-yield savings accounts is competitive, with some banks offering particularly high rates for an introductory period of time. Because of this, interest rates at financial institutions may change regularly.
Do you have to pay taxes on the interest earned from a savings account?
Yes. Your bank will send you a 1099-INT form each year when your savings account earns more than $10 in interest.
Methodology
CNET reviews savings accounts by comparing them across set criteria, including annual percentage yield, monthly fees, minimum deposits or balances and access to physical branches. Because APYs at individual accounts can vary, we look at the estimated annual interest on $1,000 and $10,000 levels of savings.
We reviewed more than two dozen leading traditional banks and online financial offerings to determine our best savings accounts. Along with the aforementioned criteria, we also considered sign-up bonuses and other rewards. All savings accounts must also be insured by the FDIC.
Savings accounts researched
- Affirm Savings
- Ally Online Savings Account
- American Express High Yield Savings Account
- Axos High Yield Savings
- Bank of America Advantage Savings
- Barclays Online Savings
- BrioDirect High-Yield Savings
- Capital One 360 Performance Savings
- Chime Savings Account
- Citi Accelerate
- Citizens Online Savings Account
- Consumers Credit Union Savings
- Discover Online Savings Account
- Lending Club High-Yield Savings
- Marcus High Yield Savings
- Nationwide My Savings
- PenFed Credit Union Premium Online Savings Account
- PNC High Yield Savings
- Popular Direct Select Savings
- Sallie Mae SmartyPig
- Synchrony High Yield Savings
- Schwab Bank High Yield Investor Savings
- Synchrony High Yield Savings
- Vio Bank High Yield Online Savings Account
- Wells Fargo Platinum Savings
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