While many people head to their local bank when it comes time to open a savings account, it’s likely that the rates you find there will be relatively low. To get the best possible rate, you might consider something different than a basic savings account.
Online savings accounts
Online-only accounts are a great option for higher earnings and lower fees. Online banks don’t have the same overhead costs as brick-and-mortar banks.
The result is that many of the highest-yield savings accounts can be found at online banks. Many online banks allow you to get started with no minimum deposit, though some of the higher-yielding accounts require larger deposits.12 13
Despite being online banks with no physical branches, you’ll often get an ATM card for withdrawing cash. You also can transfer funds to (or from) your local bank or credit union electronically in about three business days. To add money, you can deposit checks with your mobile device.
Money market accounts
Similar to savings accounts, money market accounts pay interest on your deposits and limit how often you can make certain transfers.14
However, they typically pay more than savings accounts, and it’s easier to spend your money. If you are interested in comparing accounts, check out the best money market rates.
These accounts usually provide a payment card or checkbook you can use for spending up to three times each month, so they’re useful for emergency savings or large, infrequent payments.
Certificates of deposit (CDs)
If you can commit to leaving your savings untouched for at least six months, you might be able to earn more in a CD. These accounts come with varying time commitments, but you may have to pay a penalty if you cash out early.15
Some CDs are flexible, offering penalty-free early withdrawals, but the flexibility often comes with a slightly lower rate.