Best Banks for Savings Accounts for June 2023

Opening a savings account enables you to maximize what you earn from the money you keep at a bank or credit union. While it's true that some checking accounts pay interest, the vast majority don't, and even the ones that are interest-bearing pay only a pittance.

For anyone who has more money in the bank than needed to cover the daily transactions of their checking account, a savings account provides an opportunity to move surplus cash to an account paying a competitive interest rate.

Another benefit of opening a savings account is that it can help you organize your money according to your needs and goals. For instance, you can use a savings account to hold your emergency fund or to collect money you're accumulating for a large financial goal, like a home purchase or future vacation. By keeping these funds separate in a savings account, you can easily distinguish them from what's available for monthly bills and day-to-day spending in your checking account.

Banks offer savings accounts to assist their profit-making objective. Since one of the primary ways a bank generates revenue is to make loans to consumers and businesses and collect the resulting interest payments, they require a supply of funds in order to make those loans. Offering checking, savings, money market, and certificate of deposit accounts are ways banks attract the capital they need in order to lend money to other customers. It's also how they can enhance their profit-making ability, as the interest rates banks pay on deposit accounts are lower than the rates they can collect on loans. As we've pointed out, most checking accounts pay no interest at all. And the national average rate for savings accounts is just 0.37%. So when a bank can extend an auto loan for 5% or 6% or a credit card rate of 15% to 25%, it generates revenue on the difference between the rate of interest paid and interest earned.

Traditionally, consumers opened a savings account at the same bank where they held their primary checking account. And for many Americans, this is still the case. However, with the advent of the Internet, personal banking options have expanded, and now the most lucrative savings accounts are available online.

This is true in two respects. First, traditional brick-and-mortar banks all have online banking capabilities at this point, and almost all of them allow an account to be opened online. So establishing a new savings account generally can be done from the comfort of your home, rather than requiring you to visit a bank branch.

Second is the important rise of Internet-only banks. These institutions are FDIC-insured banks that offer all the same protections on your funds as traditional physical banks. However, all of an Internet bank's transactions are initiated and carried out online, with no physical branches to build, staff, operate, or maintain. Without the expense of operating a physical footprint in one or multiple communities, online banks enjoy cost savings that allow them to offer higher rates on deposits than traditional banks can typically extend.

The leading savings account rate in the country can fluctuate at any time, as banks and credit unions are free to adjust their rates on savings accounts whenever it suits their purposes. However, what you can see from our rankings of the top rates is that many of the best APYs come from Internet-only banks. Rounding out the top contenders are some online arms of traditional banks and a few credit unions that offer broad, nationwide membership eligibility.

What you also may notice is the absence of the biggest bank names you know. Chase Bank, Bank of America, and Wells Fargo—three of the country's four largest banks by assets—offer savings account rates far below the national average. Competing heavily for deposit funds is something they simply don't do, as their business model and size enable them to secure sufficient capital from other sources.

Among the big-four banks, only Citibank offers a savings account product with a competitive interest rate.

What you can count on from our rankings is that these are the definitively highest savings account rates offered in the country from institutions that are open to customers nationwide. We do not rank them according to advertising or sponsorship relationships, or any criteria other than APY, nationwide availability, and a minimum deposit of $25,000 or less.

If your savings account is at a bank other than where you do your primary checking, an important consideration is that moving your money between checking and savings will not be instantaneous. Transfers between the two will be possible through electronic funds transfers, which sometimes can take place in one day, but may take two or more days, depending on the bank and the time of day you initiate the transfer. So a little more advance planning will be necessary whenever you need to withdraw funds from savings.

While an interim rule allows institutions to decide if they want to allow more than six transactions per month, rules and fees still vary by institution.

So be sure you understand the possible fees and the account's statement cycle.

For deposits into your savings account at another bank, this is similarly possible via electronic funds transfer. But some banks will also offer a smartphone app that allows mobile check deposits, the use of an ATM card, or mail-in envelopes for check deposits.

Lastly, all FDIC banks, whether brick and mortar or internet-only, and all NCUA credit unions, carry U.S. government-backed insurance on up to $250,000 of deposits per individual per institution. If you hold more than that amount in the bank, you'll want to take steps to split the deposits across multiple institutions and/or multiple individuals (such as a spouse) to make sure all of your deposits are insured.

Most banks that offer savings accounts allow you to open more than one. Why would you want to do this? Let's say you want to stash $15,000 in an emergency fund, but you're also making monthly deposits from your checking account to save for a big trip. By opening two accounts, you can keep these two different pots of money visually and mentally separate, making it easy to see how much you've accumulated towards your vacation goal. Some banks even let you give each account a nickname of your choosing.

You also may want to keep two savings accounts at different banks. It can be useful, for instance, to hold a savings account at the same bank as your primary checking, so that you have some surplus funds on hand if you need to make an instant transfer to checking.

Since you might be able to earn significantly more on your savings at a different bank, however, sending some of your funds to an auxiliary savings account can be a smart move for earning more and also reducing spending temptations.