Finding the best online savings account to put your money in is a crucial decision.
The great thing though, is that you don’t have to limit yourself to just one type of account. Heck, you can have as many different savings accounts as you want — since most of them are free to open!
But it IS important to choose the best online savings account or app so you can make the most of your hard-earned money.
Plus, the best savings accounts are virtually risk-free and FDIC insured.
This type of account provides a good vehicle for shorter or mid-term goals, like saving for a vacation, or building an emergency fund.
With these things in mind, here are some of the best online savings accounts and mobile saving apps to consider stashing your cash in 2018.
1. CIT Bank – Best free savings account
CIT Bank is at the top of this list for a reason! They are a very large and well-established bank (even if you haven’t heard of them before).
All of their deposits are FDIC insured, so your money is safe and sound. CIT Bank specifically works with small businesses and self-employed individuals to offer simplified loans and banking products.
The reason they can offer some of the highest interest rates on savings accounts is because they are an internet-only bank.
There are no monthly maintenance fees and you can open an account with just $100.
2. Discover Bank – Highest savings interest rates
I have been a Discover Bank customer for many years and continue to like and use their online savings account. They continue to be one of the leaders in the industry thanks to excellent customer service and user-friendly credit cards.
With a Discover Online Savings Account your money will earn a very decent interest rate on all balances — often times one of the highest savings rates around.
To open a a new savings account there’s no minimum balance needed and no monthly fee.
3. Digit – Best mobile app for saving
I have been using Digit since January 2015 so I just passed the three-year anniversary mark. Since then I’ve enjoyed Digit so much that my husband and friends even use Digit to save money.
The account is free for the first 100 days and automatically withdraws money (only if you can afford it!) from your checking account every few days.
With Digit’s mobile app savings account your money doesn’t specifically earn an interest rate, but you are awarded savings bonuses.
The monthly fee is $2.99 but there are no transaction limits or minimums to worry about.
Click here >>> open a free Digit savings account.
4. Capital One 360 – Multiple savings accounts
I have also been a customer of Capital One since I was in my early twenties (so that’s nearly a decade for anyone who’s doing the math, ha!).
They offer an amazing array of products for freelancers, small business owners and individuals — no matter what kind of banking needs you have.
With a Capital One 360 savings account you will be awarded with no monthly fees or minimums required. Plus, you can have multiple savings accounts at a time.
5. Ally Bank – Most like a traditional bank
Established in 2001, Ally Bank has had an extremely strong reputation for putting their customers first. Their banking services are very user-friendly and they offer great products such as their online savings account.
With an Ally Bank savings account your deposits will earn a decent interest rate with no monthly fees and only $1 minimum required. You can also easily transfer money back-and-forth from your Ally Bank checking account.
Now that you’ve been able to compare the different types of savings accounts available, it’s important to know how to choose the right one!
Types of savings accounts
When it comes to finding the best online savings account it’s easy to get discouraged about the very small amount of interest you’ll likely earn.
I mean, at best you’ll earn around 1-2% for the money you stash in the account.
However, it’s important to keep in mind that a savings account is just that; for saving money! It’s not particularly geared towards producing decent income or increasing your investment.
Different types of savings accounts are simplistic in nature. They are a means to help you save money towards a certain financial goal!
That being said, here are five types of savings accounts.
Traditional savings account
This type of account is one that almost all banks offer. It’s a no frills, simple place to store and save money.
It’s similar to a checking account. If you need your money it’s available for immediate withdrawal — most of the time without penalties.
However, you won’t have check-writing abilities, and it might come with a higher opening balance. This account is sometimes called a statement savings account, or a normal savings account.
You can often add or withdraw funds at your own discretion. However, this type of savings account at a large bank (such as Chase or Wells Fargo) tends to have a very low interest rate.
For this reason, this is why I’ll be suggesting online savings accounts as the best choice because of their high-yield interest rates.
Money Market deposit account
This account can be used like a regular savings account, with a few differences. It normally has a minimum daily balance requirement, and only a certain number of withdrawals are allowed per month.
Many money market accounts have check-writing abilities but also a small monthly fee charged to them. The interest rate is higher than a regular savings but less than an online savings account.
Online savings account
This type of savings account is conducted exclusively online via internet access only (and sometimes over the phone).
You won’t have to pay any monthly fees and there are no minimum balance requirements. Normally, you have an unlimited amount of transactions as well.
Even with the best online savings accounts, it can, however, take 1-2 business days for your money to transfer between accounts. This means you won’t be able to withdraw your money using a teller or a physical bank branch.
Since the company doesn’t have to pay for a building or overhead costs, this account generally has a very good interest rate.
This is a great savings account for your money! Especially if you’re looking to make a few dollars and don’t need instant access to your funds.
Certificates of Deposits (CD’s)
Sometimes called CD, a certificate of deposit is a savings certificate giving you the right to earn and collect interest upon the maturity date. The maturity date and term can be set anywhere from 30 days to five years.
This often comes with a fixed interest rate as well. It’s a great vehicle for saving money you need for a certain time period. You can lock in one of the best interest rates, with no risk, and watch your balance grow.
A couple drawbacks are that you can’t add more money or withdraw funds — without paying penalties and possibly forgoing the interest already earned.
Mobile savings app
While most of the above choices have been around for decades, mobile money-saving apps are taking the industry by storm. Apps like Digit and Acorns allow users to save and invest money without thinking.
Most mobile savings apps are text-based and offer completely free accounts.
The only drawback is that you might not earn as much interest as you would with an online savings account.
However, this is overcome by the ability to save money without setting up automatic transfers using a tactic called micro-saving.
Very small amounts of money are withdrawn, starting at just $1-2, from your checking account and are added to your mobile app savings account. Next thing you know, you have several hundred dollars saved up without even missing it.
Finding the right online savings account
Now that you understand the various types of accounts it’s important to choose the right online savings account for your needs.
Not all banks and accounts are the same. And you don’t want to end up paying unnecessary fees.
When shopping around, use this checklist:
- Monthly fees
- Withdrawal or transaction limits
- Overdraft and ATM fees
- Minimum balance requirements
- Interest rates on money saved
- Opening balance needed
- Ease of transfers and withdrawals