The Best Savings Account…

How We Found the Best Savings Account

To find the best savings account, we started with a list of all the online banks we could find that offered savings accounts and FDIC backing (which guarantees that if your bank fails, the government will reimburse you, usually up to $250,000). Our list included larger companies you might be familiar with — like Ally Bank — as well as lesser known options like Live Oak Bank and DollarSavingsDirect. We didn’t include USAA because membership is restricted those who serve in the military and their families, but if you’re eligible, it’s another option worth checking out. We ended up with a list of twenty-four online banks, all federally insured through the FDIC.

We only considered online banks because they offer better APY.

Online banking means giving up some of the conveniences of a brick-and-mortar buildings where you can walk in and ask for help or make a physical deposit. The tradeoff is that you don’t have to worry about whether there’s a branch nearby: Online banks are open for business to customers across the nation. The best online banks also translate some of the overhead normally spent on rent and electricity into increased benefits for you.

In particular, online banks tend to offer much higher interest rates for their savings accounts. Most of the banks on our list offer annual percentage yields (APY) of 1.2% or higher (frequently climbing up to 1.60%) — a stark contrast to most brick-and-mortar banks, which have an average APY of 0.06%. If you made a single $1000 deposit with a 0.06% APY, at the end of the year, you’d have $1000.60. The same deposit in an account with 1.45% APY would give you $1014.61 — twenty times more income than the lower APY account.

Both Ally Bank and Discover Bank significantly outperform brick-and-mortar APY rates.

Then we narrowed in on savings accounts with an APY of at least 1.24%.
To find the savings accounts with the best interest rates, our next step was to directly compare APYs. Our 24 contenders offered APY anywhere from 0.01% (Chime) to 1.80% (DollarSavingsDirect), with an average (mean) APY of 1.24%. To ensure competitive rates, we cut any banks that fell below this 1.24% average.

APY will change, sometimes multiple times per year — based both on the Federal interest rate and the decisions of each individual bank. While all of our finalists currently offer extremely competitive APYs, it’s always a good idea to double-check rates before choosing a savings account based solely on annual percentage yield.

We evaluated each savings account for their customer service.

Next, we evaluated the customer service of our TK finalists, following methodology similar to the one we used when we reviewed the best banks. We wanted to find which banks would be there to support us in our hour of need — whether arranging a deposit or answering questions — plus which banks made it easy to find information about their rates and fees. We looked for:

• Customer Support: We gave points to banks which offered 24/7 live customer support. No one wants to wait for “business hours” when they need answers to time-sensitive questions.
• Modes of Communication: Every bank gave us a phone number to call, but we gave extra points to banks that went above and beyond by offering live chat, email support, or customer service through a social media platform — like answering questions and complaints on Twitter or Facebook. As far as we’re concerned, the easier it is to get ahold of a representative, the better.
• Easy-to-locate Fee Schedules: We were impressed with Ally Bank for transparently displaying their fee schedule front and center on their savings account main page. On the other hand, UFB Direct buried its account details in a 30+ page PDF document that made us hunt through the fine print to learn whether we could be charged an overdraft fee. We wanted banks that made it easy for us to compare our options and make informed decisions.

Two banks with APY rates higher than our top picks were cut in this round — Live Oak Bank (1.60%) and DollarSavingsDirect Bank (1.80%). If you value APY above all else, you can look into these options, but we’d suggest being cautious: These banks essentially cut costs by limiting their customer support. If you have questions or need to close your account, it may be a lot harder to get in touch with a service rep.

We evaluated each savings account for fees.

This left us with five savings accounts available nationally, with competitive APY and excellent customer support services. To find our top picks, we took a closer look at each bank’s fee schedules and disclosures to make sure that we wouldn’t need to pay excessive charges just to have an account. Some of the most common fees include:

• Minimum Balance Fees: a charge for not maintaining a certain level of money in your savings account.
• Monthly Maintenance Fees: a charge to offset costs of maintaining your account with this bank.
• Dormancy or Inactivity Fees: charges usually levied if there has been no account activity (transfers, withdrawals, or deposits) for a prolonged period of time.
• Excessive Withdrawal Fees: the FDIC only permits six withdrawals per month (not including ATM withdrawals). Most banks will charge a fee if you exceed that limit.

None of our top five banks have a minimum balance fee. Alliant Credit Union specifies that to earn interest, you must maintain an average balance of at least $100, and your balance must remain above $5 for your account to stay open. Our other top savings accounts don’t specify their minimum balance requirements but note that if your account doesn’t have any money in it, they may close the account.

Alliant Credit Union also stands out for a more stringent inactivity policy than our other finalist: If your account has seen one year go by without any transfers, withdrawals, or deposits, they will charge you $10 for a dormant or inactive account. If you’re carrying a low balance on a forgotten account, this policy allows them to slowly whittle it down until it reaches $5, at which point they will close the account. By contrast, American Express FSB, Discover Bank, Bank of Internet, and Ally Bank don’t charge your account for inactivity or dormancy.

We still wouldn’t recommend opening up an account and never touching it again: At some point, your account may be considered abandoned — the definition of which varies by state — and your bank may have to hand over any money it contains to the state.

There is one fee that none of our finalists could avoid: A charge for excessive withdrawals. This isn’t surprising, as the FDIC requires that banks limit the number of transactions per savings account to six per month. There are some exceptions: transactions made in person and withdrawals from an ATM don’t count. But preauthorized transactions, automatic transfers, and telephone, fax, or online banking transfers are all on the FDIC’s list of limited transactions.

As long as you won’t need to make account transfers more than, say, once a week, you’re unlikely to fall afoul of this rule. But it’s an important one to be aware of. While excessive transaction policies vary, most banks charge a fine (around $10 to $20 per transaction). And some banks will refuse the transaction, convert your account into a non-interest earning account, or close it entirely.

Our Favorite Savings Accounts at a Glance

*Alliant Credit Union spots you the $5.00 when you open your account, which you’ll pay back before you close your account — so your account balance can’t dip below $5.00.