With the average national bank savings account interest rates now sitting at a paltry 0.06%, according to the U.S. Federal Deposit Insurance Corporation (FDIC), you might be surprised to find out that there are banks willing to pay 12 to 21 times that amount.

Although rates ranging from 0.75% to 1.30% aren’t exactly earthshaking, banks that offer them hope to attract a significant portion of the more than $8.7 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. For example, is a minimum deposit required to open an account? Do you have to maintain a minimum balance to get the advertised interest rate average percentage yield (APY)?

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. Some banks offer additional coverage over $250,000 through the Deposit Insurance Fund (DIF). It’s important to know that FDIC regulations limit electronic and telephone withdrawals and transfers from FDIC-insured savings accounts to six per month. 

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 in order 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 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. (For more, see The Pros and Cons of Internet Banks.)

Wall Street Showing Interest

Goldman Sachs Bank USA, the consumer-oriented side of the well-known Wall Street bank, recently boosted its savings account interest rate to 1.20%, making it one of the highest-paying banks in the country. Goldman Sachs is making the move in order to grow its deposit base, which currently sits at $12 billion.

Goldman’s online bank had previously paid its customers 1.05% and hopes to boost profits by lending monies from the expanded deposit base into areas such as wealth management and investment banking. In addition, savings accounts represent a stable funding source that the bank also plans to use for consumer lending.

Some Customers Don't Fixate on Interest Rates

Other large U.S. banks apparently have no desire to enter the interest-rate race. Bank of America Corp., for example, currently pays 0.01% interest on a savings account that requires a $25 minimum deposit and exerts a $5 per month fee, unless you maintain a balance of $300 or link your savings account to an interest-bearing checking account.

Customers who helped the bank increase savings deposits by $33 billion in 2015 didn't seem to care about the low interest rate. As a result, Bank of America’s low deposit costs helped it post a 40% first-quarter profit increase recently. Clearly, Bank of America’s 4,559 branches and 15,939 ATMs, compared with Goldman Sachs and its zero branches and nonexistent ATMs, make a difference to Bank of America customers that makes them willing to ignore the low rates. 

Banks With the Best Savings Account Rates

All of the banks listed below except Capital One are online only. Capital One has a limited number of branches and ATMs in nine states. Synchrony is the only online bank listed that offers a connection to an extensive ATM network.

None of these banks charges a fee to open or maintain a savings account, and none offers check-writing privileges. Each account is insured by the FDIC for up to $250,000. Banks are listed in descending order of current interest rate APY. Additional information includes the minimum deposit required to open an account, minimum required balance, whether a mobile app is available and highlights of special features offered by the bank. 

Best Interest Rates for Savings Accounts

Bank

APY

Min. Dep.

Min. Bal.

Mobile

Comment

Dollar Savings Direct

1.30%

$0

$1

No

Accepts a check for initial deposit only

GS Bank

1.20%

$0

$1

No

No wire transfer fees

Synchrony

1.15%

$0

$1

Yes

Offers an ATM card

Barclays

1.15% $0 $1 Yes Savings Assistant savings tool

CIT Bank

1.15%

$100

$100

Yes

Text banking to check history and balances

Discover

1.10%

$0

$1

Yes

Overdraft protection for outside accounts

Ally Bank

1.05%

$0

$1

Yes

Free Allpoint ATM access and $10 reimbursement for other ATMs

FNBO Direct

0.95%

$1

$1

Yes

P2P payments available

Bank5 Connect

0.90%

$10

$100

Yes

Debit card and additional DIF insurance

Capital One 360 Savings

0.75%

$0

$1

Yes

Limited branches and ATMs

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. Of the banks listed above, Bank5 Connect also offers additional insurance above $250,000 via the DIF. Interest rates can and do change frequently. Before opening an account with any bank – online or otherwise – check current interest rates with a tool such as the one offered by Bankrate, then visit the bank website to confirm the rate. (For more, see Find the Best Savings Account Rates.)

 

 

 

 

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