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You’re in the market for a savings account — hooray! Way to compile that cash! As you pat yourself on the back and admire the glimmering sunrise of your financial future, it’s only fair that your well-deserved money pile is placed into a federally insured garden that will help it grow into a big fat money stack!
(I knowwww, investing wisely is the miracle-grow for money, but damnit, you might as well make sure that everywhere your money lives [checking, savings, retirement accounts, etc…] is as beneficial to you as possible. Investing is also not something we’re all taught in school nor is it accessible to everyone, and I’m going to stop this sentence before I begin a full rant).
So, savings accounts, yay!
A savings account is useful because it’s interest-bearing and allows for liquidity of its funds (provided you follow its withdrawal limits and minimum balance requirements). It’s your “break glass in case of emergency” box and a place to park your money for future financial goals.
While your go-to bank or credit union might offer a savings account that has a higher interest rate than their checking accounts, your best bet in finding the highest interest rate possible is likely by using a different bank altogether.
You can also get a higher interest rate depending on what type of savings account you choose. Below is a brief breakdown of them:
Standard/Traditional/Regular Savings Account
These generally require a low opening deposit (sometimes none, often between $25 and $100), but tend to offer the lowest interest rates (think 0.01% to 0.1% ). Interest rates are not locked in, so they can fluctuate. Some offer a tiered interest rate system in which the rate increases based on the account balance, however, even with this, you’ll likely find a better rate with a different type of savings account. *
High Yield Savings Account
Offers higher interest rates than the standard/traditional/regular savings accounts, but they don’t necessarily require a higher opening deposit (the common numbers are $0 to $100, though there are some that want over $1,000). Their interest rates can fluctuate but are still consistently higher than those of the standard savings accounts. *
Money Market Account (MMA)
Offers higher interest rates than the standard/traditional/regular savings accounts, but they can fluctuate so should still be compared with those of high yield savings accounts. They often require a high opening deposit (sometimes in the thousands) and/or a high minimum account balance. Rates are sometimes tiered. Unlike other types of savings accounts, they usually offer the ability to write checks. *
Certificate of Deposit (CD)
I would refer to a CD as a savings commitment rather than a type of savings account, but am listing it here because it’s an option. It, like the rest of the above, is an FDIC insured account for your savings, but requires the money to be left in the account for a fixed period of time and has a locked-in interest rate. Minimum opening deposits tend to be high (usually at least $1,000) and you cannot make any additional deposits into the CD during its term, i.e., the amount you open the CD with is the only amount you can put into it. If you withdraw any money from a CD prior to its maturity date, you will be penalized. Note that if you open a CD, set a reminder for when it matures — most banks provide a grace period for you to arrange what you want to do with the matured balance, but if you don’t move it out of the CD during this time, it will automatically be put back into a CD for the same term, at the current, potentially worse, interest rate.
* Per Federal Reserve Board Regulation D, withdrawals and transfers from savings accounts were previously limited to “six per month calendar month or statement cycle of at least four weeks.” Even though the Fed waived this stipulation in April, 2020 due to the pandemic, most banks still impose withdrawal and transfer limits on savings accounts.
As always, any withdrawal limits, maintenance fees, or minimum balance requirements for an account should be confirmed with the specific bank to avoid any penalties, surprise charges, and/or accidental negation of your earned interest. Your earned interest is taxable.
Now that the types of savings accounts have been covered, it’s time to choose one! Unfortunately, because rates are always changing, there’s not a concrete list of the best savings accounts, but there are resources to find the savings accounts with most lucrative interest rates at the moment.
To find the best savings account interest rates available to you currently, try Bankrate. It has a search tool that lets you input your zip code and deposit amount and then provides the current rates for multiple types of savings accounts. Investopedia also provides a useful “best of” list of high interest savings accounts that is updated daily and Doctor of Credit has a list that is generally updated monthly.
In my own search for high interest savings accounts, I’ve often found the best rates with Sallie Mae. In September 2022, Sallie Mae’s money market account has an interest rate of 2.05% and does not require a minimum balance. They also offer a SmartyPig savings account that they describe as an online piggy bank which (in September 2022) has an interest rate of 2.05% for account balances of $10,000 and under.
Another bank I’ve liked is SoFi. They provide rates up to 2.00% (provided you do direct deposit) and they offer a nice $300 opening bonus that can be accessed with my referral link here.
Once you’ve settled on your preferred savings account, make sure to check prior to signing up if there’s an opening bonus offered by the bank and/or Swagbucks to further maximize your reward for being so good at savings accounts (you can read more about how to find available account opening bonuses at my post here).
With that, you’re on your way to the best high interest savings account for you!
