What is a Savings Account?
The importance of savings is not lost on anyone that minds their future. Having some money kept away for a rainy day or certain plans is necessary. Gone are the days of keeping money under the mattress or bed. With banks came accounts you can use to safely keep the money to use later.
A savings account is opened in a bank or financial institution to safely keep the money for as long as you want to. As a way of rewarding you for trusting the bank with your funds, you get interest. Interest rates differ from one bank to the next. Shop around to get the best one before you apply to open. Even though interest earned is not a lot, it’s better than nothing. Having savings is important even for your credit rating.
Always keep in mind what the money is for. If you intend to use it for daily necessities, a savings account is not for you. Open one when you’re sure you can go without withdrawing all the time. The account restricts you to 6 withdrawals per month according to federal law. By putting the funds in a savings account, you limit spending and learn discipline and money management.
Every day, financial institutions and banks come up with different types of savings accounts on offer to clients. With good research, you can land one that fits you. Their competitiveness is to your benefit. You can be lucky enough to get a savings account with a fixed rate. The most common is a variable interest rate. To get the most out of the account, save more for longer without constantly dipping into the savings. You can use your savings when you want a loan for personal use or for your small business.
As you seek the best account, read through the Terms and Conditions for each you come across. Are there extra fees charged and a certain minimum balance to maintain? These are important points to note.
Benefits of a Savings Account
Bank accounts are way safer than keeping hard cash at home.
1. Emergency Fund
Life is unpredictable and emergencies can never be foreseen. It’s important to have some money stored away for a rainy day. By having an emergency fund, it’s not a must you borrow a loan or request assistance from others because this does affect your credit score. Savings accounts are liquid and some permit you to withdraw up to 6 times in a month.
2. Easy to Open
A good savings account has few requirements to set up. Many are online, thus reducing the time spent heading to the bank. With a good internet connection and computer, you can have an account up and running in a few minutes. With external bank transfers, you can deposit money into the savings account from any other bank.
3. Earn Interest
Each bank has a different APY offered to you once you have an account with them. The APY is variable and tends to change from time to time. The more money you save for longer, the better interest it earns. This way you get a return on investment.
4. Reduced Spending
A savings account has a limited times you can withdraw which is an advantage. You develop a savings culture and spend less. It builds a culture of saving which is important and curbs unnecessary spending.
5. Insures your Money
Before you open a savings account, check whether it’s insured by the FDIC. Insured money is safer and secure giving you peace of mind.
The Best Savings Account 2020
| Name of Banks | Age Limit | APY% | Maintenance Fees | Min. Balance | |
| Prime Alliance Personal Savings | 18 | 1.61 Below $10000. 1.71 above $10000 | $0 | $1 | |
| HSBC Direct Savings | 18 | 1.70 | $0 | $1 | |
| BrioDirect Savings Account | 18 | 1.65 | $0 | $25 | |
| CIT Bank Savings Builder | 18 | 1.15 Below $25000 and 1.75 above $25000 | $0 | $100 | |
| Fitness Bank Savings Account | 18 | 1.90 | $0 | $100 | |
| Barclays Online Savings Account | 18 | 1.60 | $0 | $0.01 | |
| First Foundation Online Savings Account | 18 | 1.75 | $0 | $1000 | |
| Discover Online Savings account | 18 | 1.50 | $0 | $0 | |
| VIO Bank Online Savings Account | 18 | 1.85 | $0 | $100 | |
| Marcus by Goldman Sachs Online Savings Account | 18 | 1.70 | $0 | $0 |
1. Prime Alliance Personal Savings
When seeking an account specially designed for individuals, keep this one from Prime Alliance in mind. It has good features that are quite beneficial as you seek out the best savings account. The beauty of it is that you don’t need a minimum balance to keep the account active. It can remain empty and still accessible when you want to use it.
The bank doesn’t charge you any maintenance fee. It’s not a worry even when the account is empty. Once you apply, activate online banking for faster transactions. An option for mobile banking is available as well. The free mobile app revolutionizes how you bank as you can deposit checks through it easily. You have the chance to do up to 6 withdrawals or transfers per month. There is no limit on how much to deposit on the savings account.
The least you can deposit is $1 with an APY of 1.61% and an interest rate of 1.60%. A higher APY of 1.71% and an interest rate of 1.70% is available for deposits above $10000.
Pros
- Good interest rate below or above $10000 in the account
- Mobile and online banking
- Easy check deposit using the app
Cons
- There is a hold on a new account of up to 2 months
2. HSBC Direct Savings
While seeking the best account to open in 2020, consider HSBC Direct Savings. It’s considered a smarter way to save with better interest rates. To apply, ensure you meet the minimum age requirement of 18 years and above. An additional requirement is a social security number. Reside in the US and have a valid address and a US ID.
To open the account successfully, a minimum balance of $1 is required. There are no hidden charges in terms of maintenance fees. Additional features to consider is a free mobile app that you can use to deposit checks. This is quite convenient as it’s not a must you head to the bank. Online transfers are possible with online and mobile banking services.
This account is insured by the FDIC to the maximum as per the law. The APY that applies to this account is 1.70%.
Pros
- Easy to open with $1 minimum balance
- Has app banking for checks
- Easy mobile and online transactions
- No hidden charges
Cons
- APY of 1.70% for all deposits
3. BrioDirect Savings Account
The good thing about this savings account is how easy it is to open. Gone are the days of complex processes and forms to fill out for a simple account. No need to head to the bank to apply. Just access the website and fill out an online application then submit. It’s that simple! Have several documents at hand including your Driver’s license, Social Security, and Passport.
All the money deposited into this savings account is insured by the FDIC further securing it for you. Ensure you register for online and mobile banking to better maintain and manage your account. External Transfer features are available to move money from the account or into it from another bank.
Don’t worry about additional fees as the bank doesn’t charge you anything to maintain the account. The APY is 1.65% and you must deposit $25 when opening the savings account.
Pros
- Can open the account online
- Enables external transfers between banks
- Money is insured by FDIC
Cons
- Must deposit $25 to open this account
4. CIT Bank Savings Builder
The most interesting feature of the Savings Builder is that it’s tiered into several levels. All the levels can change without necessarily informing you. There is a Base Tier that requires a balance of less than $25000. This gets you an APY rate of 1.15%. Next is the Upper Tier which is split into to. The first Upper Tier has a balance of less than $25000 but requires a monthly deposit of $100 or more. Here you get an APY of 1.75%.
The second Upper Tier is for balances above $25000 and gets an APY of 1.75%. The money you deposit is insured by the FDIC. The bank doesn’t charge you any fees to open or maintain this account meaning your overall costs are minimal. There is compounding interest taking place each day. This works in your favor by maximizing your potential to earn.
Pros
- High APY of up to 1.75%
- No opening or maintenance fees
- Tiered levels to suit any client
Cons
- High minimum deposit of $100
5. Fitness Bank Savings Account
For all those who prefer embracing online banking in totality, here is the best savings account for you. Fitness Bank operates online and is different from traditional banks. Instead of normal requirements, here you meet set fitness goals to qualify for the account. You accomplish this by reaching a target of physical steps daily. The beauty of it is the high rates offered that other institutions can’t compete with.
To start the process for opening the savings account, download the Fitness Step Tracker app. Use it to keep a record of the number of steps you take in a day. The higher the number of steps in a month, the more you qualify for a higher rate. The minimum balance required to open and maintain this account is $100 with an APY of 1.90%. Being an online bank means it’s available nationwide. There are no opening or maintenance fees charged.
Pros
- Available online for convenience
- Has one of the highest APY rates at 1.90%
- Easy to open and maintain
- No maintenance fee charged
Cons
- Requires $100 minimum balance
6. Barclays Online Savings Account
In this digital age, it’s quite common for banks to offer online savings accounts. Despite being an online account, you can access your money at any time of the day. It’s possible to make a transfer between banks without being physically available for the transactions.
Direct deposits are possible to make saving easier and enhance discipline. There are no additional fees to worry about. There are no opening or maintenance fees charged. Another great point to note is there is no set minimum amount to deposit when opening this account. The money is insured and secured by the FDIC. The expected APY is 1.60%.
Pros
- Easy to open an account online
- Direct deposit is possible
- You can transfer funds between banks
- No additional fees charged
- Good customer support
Cons
- Can be hard to access when the internet is slow
7. First Foundation Online Savings Account
The First Foundation Bank is yet another option that offers you convenience with online banking. Simply open an account and start saving today. The bank has physical branches across the country in case you need assistance. Once you select this account, expect no additional fees. The bank doesn’t charge for transfers from or to other banks. But keep in mind other banks might charge transfer fees.
External bank transfer is available to move funds to and from. There are no opening or maintenance fees charged. Once you set up the account, access a statement any time you need one on the official bank website. You can call the customer support for any assistance or authorize direct deposit. The APY rate is 1.75% for this online savings account.
Pros
- Account is opened online which is convenient
- Free transfer of funds to and from the account
- No opening or maintenance fees charged
Cons
- Fee of $20 applies for excess withdrawals
- High opening and minimum balance of $1000
8. Discover Online Savings Account
Discover has come up with online savings account for its clients and potential ones. The requirements to open one are simple. It requires your address and social security number. An ID is required as well. Depositing immediately after setting up the account is not a must. The account permits you to deposit later.
Apart from convenience, another advantage of this savings account is no fees are charged. Don’t worry about opening, maintenance or any other additional fees. The APY is 1.50% which is not as high as other banks offer. Still, the online savings account has no minimum balance when you open it
Pros
- Online account that is easy to open and manage
- No additional fees
- No minimum deposit
- Can deposit later after opening the account
Cons
- Lower APY rate as compared to other banks
9. VIO Bank Online Savings Account
The savings account is high yielding from VIO bank which is better than traditional land-based banks. Being online means it can offer higher rates than most. There are no checkbooks available either.
Still, you get assured that your money is safe given the fact that the account is insured by FDIC. The amount insured is up to $250000 as per the law. The application takes a few minutes to complete since everything is done online. The APY is high at a variable of 1.85% which is higher than most savings accounts offer. Expect no additional or monthly fees charged on the account. The minimum deposit expected is $100.
Pros
- Higher APY rate at 1.85%
- No additional or monthly fees
- Insured by the FDIC up to $250000
Cons
- Get no ATM, debit card or checkbook with this account
- Minimum deposit is $100
10. Marcus by Goldman Sachs Online Savings Account
You can find this account primarily online which is convenient for many clients. It’s easy to open requiring only a few details that you fill on the application form. The account is set up within a short time and you can start transacting. Don’t worry about any minimum balance as this online savings account has no requirement. You can choose the amount you want to deposit and maintain it at all times. The APY rate is 1.70%.
No fees apply whether to open or maintain it. For withdrawal, the number of permitted times is 6. More than that sees a penalty fee charged each time. FDIC insures this account to the tune of $250000 keeping your money safe. There is a mobile app that you can use but only on an Apple iOS device.
Pros
- No minimum balance required to open or maintain the account
- No additional fees charged
- Easy to set up with a few requirements
- FDIC insured
Cons
- No ATM or Debit card
- App only available for Apple iOS devices
Having a savings account is essential for several reasons. The main is are to have an emergency fund in case a need arises. Another major reason is to finance a project or an item you want to purchase. The best savings accounts are online and have high yielding APY of 1.50% and above.