Best Online Savings Accounts in January 2020

Online banks — especially online savings accounts —  have become increasingly popular over the past few years.

According to a recent Statista report, the number of online banking customers in the U.S. rose by nearly 24 million from 2014 to 2018. That number is projected to increase even more in the coming years.

So, what is it about online banks that have customers signing up in droves? Great benefits and high interest rates.

» Jump straight to our savings account ratings.

Benefits of Online Banking

1. Higher interest rates: Online banks have lower overhead (since they have no physical branches, bank tellers, etc.). Having fewer expenses typically means that online banks are able to offer significantly higher APYs to customers than traditional brick-and-mortar banks.

2. Lower fees: Another perk of lower overhead is that online banks aren’t forced to nickel and dime their customers by hitting them with extraneous fees.

3. Convenience: Driving around town to find a branch location for your bank, only to find that they close at 5 o’clock and aren’t open on weekends, is a pain. Many online banks are open 24/7, and you can access everything you need from your smartphone or computer.

High-Yield Online Savings Accounts in January

DollarSprout Reviews: Banks with the Best Savings Accounts

While a high interest rate is great, it’s not the only variable we take into consideration when determining who has the best online savings accounts. Fees, customer service, locations, and more, can all impact your banking experience, and potentially even lower returns. If you’re stuck between two banks with seemingly good savings accounts, check out our bank and credit union reviews. We look at dozens of variables to help you determine which bank best fits your needs. Here’s our methodology.

CIT Bank 1.80% APY (tiered) – By rewarding people who actively add to their savings, the CIT Bank Savings Builder Account helps people build their savings account’s balance while building good saving habits, giving it a strong leg up on the competition.

»Read DollarSprout’s CIT Bank review

Discover Bank 1.70% APY – If you’re not sure about online banking, using a reputable, established company like Discover Bank should offer some peace of mind. Zero-fee savings, checking and money market products, along with industry leading interest rates, make Discover Bank a great option for online banking.

»Read DollarSprout’s Discover Bank review

Synchrony Bank 1.80% APY – Similar to other banks on this list, Synchrony Bank offers an annual percentage yield that is significantly higher than the national average. If you are looking for a high yield account to grow your savings, but also want ATM access to your funds, Synchrony is worth looking into.

»Read DollarSprout’s Synchrony Bank review

Ally Bank 1.60% APY Ally offers high rates, low fees, an easy-to-use app, and great customer service. $10 in ATM fee waivers each statement makes it easy to use any ATM you want, and their 24/7 customer support more than compensates for the lack of physical branches.

»Read DollarSprout’s Ally Bank review

Barclays Bank – 1.70% APY – Barclays has no physical branches in the United States, but makes up for it with a very competitive annual percentage yield. There are no monthly fees and no minimum balance you must maintain.

»Read DollarSprout’s Barclays Bank review

Other Banks with Top Rates:

  • MySavingsDirect – 1.90% APY
  • CIBC Bank USA – 1.85% APY
  • Citizens Access – 1.85% APY
  • PurePoint – 1.80% APY
  • Marcus by Goldman Sachs – 1.70% APY
  • American Express National Bank – 1.70% APY

How to Open a New Online Savings Account

1. Get Your Documents Together

In particular, you may need these documents:

  • Social Security Number or Social Security Card
  • Driver’s License Number or Driver’s License (or other state-issued ID)

If you’re not a U.S. citizen, you may also need to scan and send in your immigration papers.

2. Research and Choose an Online Bank

You can’t go wrong with any of the banks featured on this page. They are all FDIC insured and they all offer great Annual Percentage Yields (APYs), so find one that suits you and move forward.

3. Complete Your Application

You’ll need to provide the documentation you gathered earlier in this step as well as details about yourself such as your name, address, and phone number. If you’re applying with a credit union, you’ll need to provide proof that you meet the membership criteria.

Some banks require you to mail in a page with your signature on it so they know what it looks like. You may have to print out and mail in a form or wait for them to send you a form with a stamped envelope to mail back. This can take a few days to process, so keep this in mind if you’re looking for a bank account you can open and start using quickly.

4. Fund Your Account

The last step is to make an opening deposit. The easiest way to do this is by linking your current bank account by providing your new bank with the necessary routing and account numbers.

Some banks will make a small test deposit of $1.00 or less into your account to verify that you actually do own the account. If this happens, you’ll then need to go back to your new bank and report the exact amount of the deposits to confirm the link between the two accounts.

From there, you can deposit as little or as much as you want into the new account and close your old one if you wish.

Online Savings Account FAQs

How Do Savings Accounts Work?

If you need a safe, reliable place to store and save your money, an online savings account might be a perfect solution. A savings account acts as a secure way to store your hard-earned cash while you gain interest on the deposit that you place into the savings account. The best savings accounts are those with high minimum deposits and higher interest rates so that the returned earnings are higher. Traditionally, savings accounts are some of the safest ways to earn income, though the saving accounts that your parents may have signed you up for are probably not the best high-yield savings if you are looking to build wealth.

You store your money and earn a little interest as time goes on. And by little, we do mean little. Don’t expect anything more than .01-1% annual returns at most major banks. Online banks allow for higher returns, around 2% or a little more, but the intent here is to have a fund of money that you intend to keep for safeguarding and not use as a central place for your investments. It’s simple and secure, and you can easily track your savings as you continue to make deposits and build up your wealth.

However, unlike a checking account, a savings account isn’t something that interacts with your daily cash flow and balances. The comparison between a checking vs savings account is simple, one is for daily use and the other is not. In the same way, you would not give and take from a piggy bank. You are not allowed – or supposed to – have daily interaction with your savings account. Instead, you store it away to accrue wealth, save for something, or establish some sort of savings fund.

Are There Drawbacks to Online Savings Accounts?

As you might expect, banking entirely online isn’t without some limitations. Here are the most common:

1. Getting cash can be difficult: If you regularly deposit and withdraw cash from your bank account, you might find online banking inconvenient. Because there are no physical branches, it’s not possible to walk into the bank and deposit cash. Some online banks belong to ATM networks, but these ATMs may be harder to find than major banks’ ATMs.

2. Less personal service: Of course, online banks typically have a customer service hotline or online chat service. But with online banks, you don’t have the option of walking into a branch and sitting down face-to-face with a banker.

You can read more about the pros and cons of online banking here.

Choose the Account That Fits Your Needs

Finding the best online savings account doesn’t do much good if you aren’t committed to making saving money a habit.

If you aren’t ready to fully commit to online banking, you may want to consider a hybrid approach.

For example, you can use an online bank for most of your everyday banking needs but still keep a small savings or checking account at a local bank or credit union for when you need access to cash or in-person banking services.

The good news is that no matter what your preferences are, there’s a banking style out there that’s right for you.

How DollarSprout Rates Online Savings Accounts

The Editorial Team at DollarSprout looks at multiple factors when determining a 1-5 star rating for online savings accounts. Here are the most important factors that weigh into our ratings:

  • Annual Percentage Yield (APY)
  • Fees, and the likelihood that a user will incur them
  • Account balance requirements
  • Customer service
  • Mobile app reviews

For savings accounts in particular, APY and fees play a heavier role in our ratings than other factors because they directly affect your bottom line. For other product categories (such as checking accounts, for instance), we may place an emphasis on other factors when determining a rating.

The star ratings are broken down into half-star increments, with 1 star being poor and 5 stars being excellent.

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How to Get a Personal Loan and Where to Find One

If you need to buy a car, you take out an auto loan. If you want to buy a house, you get a mortgage.

But what if you need something more specific, like money for your wedding or for a home repair? You can take out a personal loan.

Personal loans can help take care of an unexpected expense like a car repair, pay for a home improvement project, or an outstanding medical bill.

If you have multiple outstanding credit card balances, you can also use a personal loan to consolidate them into one affordable payment. With a personal loan, you can pay for essentially anything.

A personal loan lets you borrow money in a lump sum at a fixed rate. You repay the money in installments over a period of time, usually between two and five years. Taking out a personal loan is usually cheaper than using a credit card.

9 Steps to Get a Personal Loan

Getting a personal loan is a fairly straightforward process. If you’ve applied for other types of loans, the steps will look familiar.

1. Decide Between a Secured or Unsecured Loan

The first step to getting a personal loan is to decide whether you’re interested in a secured or unsecured loan. To get a secured loan, you’ll need to offer an asset you own as collateral. If you default on your loan, the lender will take your asset. The asset can be your house, car, or another valuable item.

A secured loan can give the chance to borrow more money at a lower interest rate because the collateral makes lenders feel more confident they’ll get their money back if you stop making payments.

An unsecured loan, on the other hand, doesn’t involve any collateral and comes with a quicker application process. It’s more difficult to qualify for than a secured loan, so it may not be an option if you don’t have the best credit.

Related: How to Get Out of Debt: A Step-by-Step Guide

2. Assess Your Creditworthiness

Your creditworthiness describes how responsible you are with loans and how likely you are to repay your loan. When lenders consider you for a personal loan, they’ll look at your credit report to figure out whether you’re a responsible or risky borrower.

It’s a good idea to get a free credit report from one of the three major credit bureaus — Experian, Equifax, or TransUnion — before applying for a loan.

If you have subpar credit, you may want to focus on improving your credit by doing things like paying your bills on time and lowering your total credit use before applying for a personal loan. This way, you can increase your chances of landing a favorable interest rate and terms.

3. Compare Rates Online

Interest rates vary from lender to lender. Look at several different lenders including banks, credit unions, and online-only lenders to find out what kinds of rates they’re offering. Comparing rates online can reduce your risk of overpaying for a personal loan.

4. Get Pre-Qualified

Once you’ve found the right lender, you’ll need to go through the pre-qualification process. While the exact steps to prequalify will depend on the lender, most lenders require you to apply online, in person, or via phone.

They’ll ask for personal information such as your name, address, income, employment details, and the amount you want to borrow. After the lender has reviewed your application, they’ll send you some loan options.

5. Look for the Best Deal

Don’t make the mistake of pre-qualifying with just one lender. By pre-qualifying with several different lenders, you can compare all of your options and find the best deal available to you.

Looking for the best deal can save you hundreds or even thousands of dollars down the road. Don’t forget to look at online-only lenders who may have better rates and lower fees.

Related: Should You Pay Off Debt or Save Money? Here’s How to Decide

6. Know the Alternatives to a Personal Loan

Although a personal loan may make sense for your situation, you should know your alternatives before pursuing one. A 0% APR credit card can be beneficial if you need access to quick cash and are confident that you’ll be able to repay it on time and in full. These offers are usually only available to people with excellent credit.

You may also look into a home equity line of credit, or HELOC, where you can get a revolving credit line that’s secured by your home. A HELOC may have a lower interest rate because the home is used as collateral. If your home has equity and you know you’ll be able to pay off your loan and avoid foreclosure, this may be a good choice.

Consider getting a co-signer if you don’t qualify for a loan on your own.

7. Understand Your Offers

Take the time to really understand all the personal loan offers you get. While it’s important to look at interest rates, monthly payments, and terms, it’s just as crucial to compare fees, payment options, and other important details.

One offer may have the lowest interest rate and seem like the best option, but it may have a higher APR or charge a prepayment penalty. Understanding the ins and outs of each offer can help you avoid unwanted surprises later on.

Related: How to Get Pre-Approved for a Mortgage and When to Start Trying

8. Submit Your Application

When you’ve decided on a lender and offer, it’s time to officially submit your application online, in person, or via phone. You’ll need to submit some documents, so gather those in advance to expedite the process. These documents may include tax returns, recent pay stubs, and a valid ID.

When you submit your application, the lender will likely perform a hard credit inquiry, which can affect your credit score. To avoid lowering your score too much, try not to apply for too many personal loans at once.

Once you’ve submitted your application, you’ll need to wait for a decision from the lender. While some lenders guarantee same-day decisions, others take a few business days or longer to get back to prospective borrowers.

9. Accept Your Loan

You’ll have a few business days to accept the loan after you’ve been approved. When you accept the loan, find out when the first payment is due. Consider setting up automatic payments from your checking account.

Automatic payments can reduce your risk of forgetting to pay on time and can even land you some great discounts on your interest rate. If possible, add extra payments to your loan each month. This can save you money on interest and help pay off your loan early.

A Personal Loan Can Save You Money

As long as you take the time to find the best offer and lender, a personal loan can be a great way to cover your expenses or make large purchases without breaking the bank. If you make payments on time, you can even improve your credit score in the process.

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Best Money Market Accounts in 2020

Think of a money market account (MMA) as a blend between a checking and a savings account.

MMAs typically offer a higher interest rate than traditional savings accounts, and, depending on the bank, will allow quick access to funds via check writing, electronic funds transfer (EFT), and/or debit card or ATM withdrawals. We’ve found the best money market rates that are available on the market, which are outlined below. 

Best Money Market Rates in December 2019

Interested in seeing how these rates compare to online savings accounts? See our roundup of best online savings account here.

Money Market Accounts vs. Other Account Types

Here are the key differences between MMAs, savings, and checking accounts:

Account Type Interest Rate Key Features
Money Market Account (MMA) High You can write checks or make debit card purchases on the account, up to 6 times a month. This is the key difference between an MMA and savings or checking account. Depending on account, you could get a higher interest than a normal savings account. Some online banks will have savings accounts that are competitive with MMAs.
Savings Account High Online-only banks usually have very high interest rates (and are sometimes higher than money market accounts, depending on the bank). You cannot make purchases directly from a savings accounts, but you can quickly transfer money from a savings to a checking account.
Checking Account Very low, or zero This is your everyday spending account, which is usually linked to a debit card. A checking account is not designed to be a place to amass significant savings. Most checking accounts offer no interest, so your money will not grow.

Before you open a money market account, make sure you at least have a checking account. A checking account is a basic necessity that everyone should have before they consider opening any other banking or investing account types.

Money Market Accounts (MMAs) at a Glance

  • Usually, have higher interest rates than traditional savings or checking accounts
  • May have higher minimum opening balances and maintenance balances
  • Ability to withdraw up to six times per month
  • May have fees for excess withdrawals or falling below minimums

Deposits and interest payments held in MMAs at FDIC-insured banks are covered by FDIC insurance. This means that if the bank fails for any reason, the federal government will reimburse your account balance (up to $250,000 per depositor, per FDIC-insured bank, per ownership category). MMAs held at credit unions are insured by the National Credit Union Administration, which is the equivalent of FDIC insurance for banks.

When to Consider Opening a Money Market Account

There are several instances where opening a money market account makes sense:

Saving up for a down payment:  When you are putting money away to save towards a house, the combination of high interest, liquidity, and stability that comes with a money market account is ideal. 

A place to park your emergency fund: Experts recommend having 3-6 months of living expenses saved up and tucked away in case something unexpected happens (ie, job loss, pay cut, car repairs, etc). A money market account provides quick access to your money and an appealing interest rate, which makes it perfect for an emergency fund.

Sinking funds for planned, irregular expenses: A sinking fund is used for any expense that you know is coming. Think of things like insurance payments, property taxes, vacations, holiday shopping, back-to-school shopping, etc. 

What’s the Average Interest Rate for Money Market Accounts?

At the time of this writing, the national average annual percentage yield (APY) for money market accounts is 0.24%. This is according to a weekly survey of institutions done by Bankrate.

Despite the low national average, there are many banks that offer nearly ten times that much interest. Don’t just automatically sign up for your current bank’s MMA; be sure to shop around to make sure you are getting the best rate possible.

Keep in mind that interest rates can fluctuate often, which can increase or decrease your returns.

How DollarSprout Rates Money Market Accounts

The Editorial Team at DollarSprout looks at multiple factors when determining a 1-5 star rating for online savings accounts. Here are the most important factors that weigh into our ratings:

  • Annual Percentage Yield (APY)
  • Fees, and the likelihood that a user will incur them
  • Account balance requirements
  • Customer service
  • Mobile app reviews

For money market accounts in particular, APY and fees play a heavier role in our ratings than other factors because they directly affect your bottom line. For other product categories (such as checking accounts, for instance), we may place an emphasis on other factors when determining a rating.

The star ratings are broken down into half-star increments, with 1 star being poor and 5 stars being excellent.

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How to Open a Bank Account Online the Easy Way: A Step-by-Step Guide

Banking has come a long way since the days of our parents.

These days, thanks to the online banking revolution, banking tasks are much easier to manage.

After all, two-thirds of Americans do most of their banking online, according to one American Banking Association survey.

To start saving time with online banking, you’ll first need to open up a bank account online. If you’ve never done it before, it’s a lot easier than you might think.

Table of Contents

  • What Does it Mean to Bank Online?
  • Where to Open an Online Bank Account
    • Check if Your Local Banks Offer Online Banking
    • CIT Bank
    • Discover Bank
    • BBVA
  • How to Open a Bank Account Online in 5 Easy Steps
    • 1. Gather Your Information
    • 2. Research and Choose an Online Bank
    • 3. Choose Your Account
    • 4. Complete Your Application
    • 5. Fund Your Account
  • FAQs About Opening a Bank Account Online
    • Are There Any Free Bank Accounts Online?
    • Can You Open a Bank Account Online with No Deposit?
    • Can You Open a Bank Account Without a Photo ID?
  • Opening an Online Bank Account is Easy

What Does it Mean to Bank Online?

Online banking is a style of bank account management in which you can complete almost all banking activities online. By banking online, you can open your account, transfer money between accounts, send money to friends and family, and pay bills — all from your phone or computer.

Banks that offer online banking can be entirely online. In other words, there are no physical branches that you can visit. Other types of banks offer both options, where you may be able to visit a branch location and conduct your business online, depending on what is most convenient for you.

It’s important to note that if you choose an online-only bank with no physical branches, you may be limited in your ability to use cash. With these banks, you may not be able to withdraw or deposit cash at all, unless you use an ATM.

Furthermore, many online banks only allow you to withdraw cash at an ATM but don’t accept cash deposits, even at special deposit-accepting ATMs.

Related: How Many Bank Accounts Should I Have? At Least These 3

Where to Open an Online Bank Account

Fortunately, there are many options for places to open an online bank account.

Check if Your Local Banks Offer Online Banking

The first option is to check with your current bank to see if they offer online banking. These days, most banks offer this option, with the exception of small banks and credit unions.

Start with your bank’s website. If you can’t find the information you’re looking for, give them a call and ask what the process is like for current members to set up online banking.

CIT Bank

CIT Bank offers great rates on its savings accounts. If you’re interested in opening an account here, you can do it entirely online.

You’ll need to provide your Social Security Number and your driver’s license number (or other state ID number). Finally, to make an opening deposit, you’ll also need to write yourself a check from your current bank account or provide your routing and account numbers to fund your initial deposit.

Related: CIT Bank Review 2019

Discover Bank

Discover Bank also offers some great high-yield accounts you can open entirely online.

The process for opening an account at Discover Bank is simple. Again, you’ll need to provide details like your Social Security Number, name, email, etc. Discover Bank’s savings account has no minimum deposit requirements, so you don’t need to transfer any money to fund your account right away.

Related: Discover Bank Review 2019

BBVA

BBVA takes it a step further than some other banks by offering a Consumer Switch Kit. This kit helps you completely switch banks, including setting up direct deposit to your new bank account and checking to make sure all your financial information points to your new bank.

Related: BBVA Review: No-Frills Checking, Savings, and CDs

 

How to Open a Bank Account Online in 5 Easy Steps

Opening a bank account online is often easier than doing it in person. After all, how many times have you gone to apply for something in person and forgotten a key document you need?

With online banking, you don’t have to worry about that because you apply right from the comfort of your home.

1. Gather Your Information

Banks are required by law to verify your identity. The easiest way to do this is by checking your government-issued identification.

It’s handy to have a scanner or scanner app handy, since you may be required to scan the entire document. In other cases, the bank will only ask for the identification number. In particular, you may need these documents:

  • Social Security Number or Social Security Card
  • Driver’s License Number or Driver’s License (or other state-issued ID)

If you’re not a U.S. citizen, you may also need to scan and send in your immigration papers.

2. Research and Choose an Online Bank

The next step is to find a bank you’d like to open an account with.

If you’re happy with your current bank, you can check with them to see if they offer online banking. That way you won’t need to open a new account. If your current bank doesn’t offer an online option or you’re not satisfied with the products and services, there are plenty of alternatives to choose from.

Try searching for banks according to what’s most important for you. For instance, maybe you prefer the highest-rated banks for customer service or the banks that have the highest APY on savings accounts.

3. Choose Your Account

Once you’ve narrowed it down to a particular bank, it’s time to choose what accounts you want to open.

Most banks require customers to open one savings account at a minimum. If you choose a credit union, you’ll need to make a small deposit in a savings account to establish your membership before you can open any other account types.

You may also want to consider opening a checking account if this will be your main bank. If you’re saving for long-term goals, consider a money market account and/or a certificate of deposit.

Related: Checking vs. Savings Account: What’s the Difference?

4. Complete Your Application

Now it’s time to actually apply for these accounts. You can usually apply for all of your chosen accounts at the same time rather than completing a separate application for each account.

You’ll need to provide the documentation you gathered earlier in this step as well as details about yourself such as your name, address, and phone number. If you’re applying with a credit union, you’ll need to provide proof that you meet the membership criteria.

Some banks require you to mail in a page with your signature on it so they know what it looks like. You may have to print out and mail in a form or wait for them to send you a form with a stamped envelope to mail back. This can take a few days to process, so keep this in mind if you’re looking for a bank account you can open and start using quickly.

5. Fund Your Account

The last step is to make an opening deposit. The easiest way to do this is by linking your current bank account by providing your new bank with the necessary routing and account numbers.

Some banks will make a small test deposit of $1.00 or less into your account to verify that you actually do own the account. If this happens, you’ll then need to go back to your new bank and report the exact amount of the deposits to confirm the link between the two accounts.

From there, you can deposit as little or as much as you want into the new account and close your old one if you wish.

Related: Radius Bank Savings Account Review: Is It Really All That Good?

FAQs About Opening a Bank Account Online

Here are the answers to some popular questions that come up regarding banking online.

Are There Any Free Bank Accounts Online?

Yes, there are many free bank accounts available. You’ll need to be careful to read the fine print though so you understand exactly what fees are involved. You can find all of the information you need in the bank’s Schedule of Fees or Truth-In-Savings Disclosure.

For example, some banks don’t charge any fees at all and are thus truly fee-free. Other banks advertise as being “free” because they don’t charge a monthly fee. However, they may come with other fees such as overdraft charges or inactivity fees.

Can You Open a Bank Account Online with No Deposit?

This depends on the bank’s policies. Some bank accounts have minimum opening deposit requirements while other banks have no minimum requirements at all.

The best way to know is by contacting the bank or reading through the fine print.

Can You Open a Bank Account Without a Photo ID?

You’ll be hard pressed to find a bank that doesn’t require a photo ID. In fact, most banks require two forms of ID in order to open a bank account online or in person.

Opening an Online Bank Account is Easy

The internet has made many everyday activities easier, and opening a new bank account is no exception. As long as you have the right documents in place and a way to scan them, opening a bank account online shouldn’t take more than a few minutes of your time.

Best of all, you only have to do it once and you’ll be all set with your new online bank.

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