Banks That Pay the Highest Interest Rates on Savings Accounts

October 18, 2018 — 12:08 PM EDT

With the average national bank savings account interest rates sitting at a paltry 0.08%, as of Sept. 24, 2018, according to the U.S. Federal Deposit Insurance Corporation (FDIC), you might be surprised to find out that there are banks willing to pay more than 25 times that amount.

Although rates ranging from 1.85% to 2.10% aren’t exactly earthshaking, banks that offer them hope to attract a sizable portion of the more than $9.1 trillion in savings that Americans have on deposit.

Savings Account Interest Rates: The Fine Print

When searching for the best bank savings account interest rates, it pays to read the terms and conditions to ensure that you are comparing apples to apples. Is a minimum deposit required to open an account? Do you have to maintain a minimum balance to get the advertised interest rate annual percentage yield (APY)? By knowing the ins and outs, you can ensure the best fit and the best rates.

Most bank savings accounts do not offer check writing but do allow you to link to a checking account – even one not from that bank – to make deposits and transfer funds. Money you deposit in a bank savings account is covered by the FDIC up to $250,000 per account holder. State-chartered savings and cooperative banks in Massachusetts (many of which allow out-of-state accounts) provide additional unlimited insurance over that provided by the FDIC.

It’s important to know that an FDIC regulation limits the number of certain transactions to six each month, including: transfers processed via phone; and, Automatic or preauthorized transfers, such as bill payments and other recurring transfers. The six-transactions limit doesn't apply to withdrawals or transfers made at ATMs, and transactions made in person at a bank.

Best Rates Are Online

Most of the highest-paying banks are online. It costs less to operate online than it does to maintain a physical presence. This means that to get the best rates, you will likely have to forgo instant access to your funds at a local branch or ATM. Withdrawing funds from an online bank normally takes two to four days and is typically done via an electronic funds transfer using your linked checking account.

Putting money into online savings can also be done through electronic funds transfer. Some online banks let you deposit paper checks with a mobile app that takes a picture of the check. Otherwise, paper checks must be mailed in since you can't use an ATM.

Wall Street Showing Interest

Goldman Sachs Bank USA, the consumer-oriented side of the well-known Wall Street bank, offers an interest rate of 1.90% on its Marcus online savings account, which put it on the list below. Goldman Sachs created Marcus to grow its deposit base. In July 2018, Goldman reported that since the consumer bank started in 2016, it’s attracted  more than 1.5 million customers, made $3.1 billion of loans and gathered $23 billion of digital deposits.

According to Goldman Sachs President and COO David Solomon, the company plans to expand its Marcus brand into a whole list of consumer products including mortgages, credit cards, auto loans and insurance. The goal is to build Marcus as a platform for Goldman Sachs over the next half-century.

Some Customers Don’t Fixate on Interest Rates

Some large U.S. banks apparently have no desire to enter the interest-rate race. Chase Bank, for example, offers  just 0.01% interest on savings accounts with no minimum balance requirement. That increases to 0.11%  once account holders have $250,000 in the bank (the level that FDIC insurance stops covering an individual), link the account to Premier Plus Checking or a Sapphire Checking account and make a least five transactions in their checking account. Citibank pays 0.04% on savings up to $25,000, rising to 0.15% for $500,000 or more.

Bank of America offers 0.03%, rising to 0.06% for its most preferred customers (Preferred Rewards, Platinum Honors Tier). Bank of America customers who helped the bank increase savings deposits by $54 billion in 2017 didn’t seem to care about the low interest rate. As a result, Bank of America’s low deposit costs helped it post an $18 billion profit.

Furthermore, Bank of America hauled in $6.9 billion in first-quarter profits in 2018 with no sign of slowing down. Clearly, Bank of America’s roughly 4,600 branches and approximately 16,000 ATMs, compared with Goldman Sachs and its zero branches and nonexistent ATMs, make a difference to Bank of America customers that leads them to ignore the low rates.

Banks with the Best Savings Account Rates

All the banks listed below are either online only or online entities of brick-and-mortar banks. None of these banks charges a fee to open or maintain a savings account, and none offers check-writing privileges on these accounts.

Each account is insured by the FDIC for up to $250,000. Withdrawals or transfers from these accounts are generally limited to six per monthly statement period. Salem Five Direct (Massachusetts) provides unlimited insurance above the $250,000 provided by the FDIC. Banks are listed in descending order of interest rate APY, as of Sept. 25, 2018. Additional information includes the minimum deposit required to open an account, minimum required balance, whether mobile app or ATM access is available and unique fees or interest features.

We are listing only traditional savings accounts, but you might also want to look at money market savings accounts. For example, on the date we checked, Customers Bank offered 2.25% APY on deposits of $25,000 or more in its Ascent Money Market Savings Account (0% interest, the moment the balance drops below $25,000). 

Best Interest Rates for Savings Accounts

Bank

APY

Min. Dep.

Min. Bal.

Mobile

ATM

Comment

 

CIBC Bank USA

2.10%

$1

$1

Yes

No

 

 

 

Salem Five Direct 2.05% $100 $0 Limited  No

0.05% for balance >$1 million

Fees could reduce your earnings

 
HSBC Bank 2.01% $1 $0 Yes No Cannot deposit from another HSBC acct.  
Popular Direct 2.00% $5,000 $.01 Yes No $4/Mo. fee if balance less than $500  
Radius Bank 1.96% $25,000

$0

Yes Yes 0% to 1.5% if balance <$25,000/$100 to open acct.  
Northpointe Bank 1.93% $25,000 $0 Yes No 1.11% if balance <$25,000  

Goldman Sachs Bank USA Marcus

1.90%

$1

$1

Yes

No

$1 million maximum balance limit.

 

Pure Point Financial 1.90% $10,000 $1 Yes No

0.24% if balance <$25,000

Fees could reduce your earnings

 

Synchrony

1.85%

$0

$0

Yes

Yes

Withdrawals also by phone.

Fees could reduce your earnings

 

Barclays

1.85%

$0

$0

Yes

No

Fees could reduce your earnings

 

American Express Nat'l. Bank

1.85%

$1

$0

Yes

No

$4 fee if balance <$500

 

The Bottom Line

Online banks offer the highest interest rates on savings accounts, but still provide FDIC insurance protection up to $250,000 per account holder. Salem Five Direct, as noted above, offers additional unlimited insurance above the FDIC cap. Interest rates can and do change frequently.

Before opening an account with any bank – online or otherwise – check current interest rates with online comparison websites such as Bankrate.com, GO Banking Rates or SavingsAccounts.com. You'll find that each may have a slightly different list, so it pays to check more than one. Then visit the bank website to confirm the rate.