Best Savings Accounts Rates
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Best Savings Accounts Rates
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By: Aldo Saenz

 

A savings account is a deposit account kept at a financial institution that guarantees your principal and pays interest. If you want to save money and earn a competitive annual percentage yield (APY), we've identified a number of different savings accounts that are currently offering yields of about 6.23%, which might be an ideal place for you to stash your hard-earned cash. While savings account rates at large traditional banks typically stay close to zero, some online banks offer rates higher than the average rate of 0.94% our research has identified. We've done the heavy lifting and sifted through the thousands of banks around the country to bring you the savings accounts offering some of the best features and highest APYs for June 2024.

 

What is a savings account?

 

Savings accounts are federally insured, interest-bearing deposit accounts. The rates offered on these accounts are variable and fluctuate depending on economic conditions and the Fed Funds rate. They are ideal for setting money aside that is not needed for immediate, day-to-day use. Most banks and credit unions limit the number of withdrawals to six per month or statement cycle in accordance with Federal Regulation D.

 

What are savings accounts typically used for?

Savings accounts are very good tools to save money for shorter-term goals, such as an emergency fund or a down payment on a house or car. The current nationwide average yield for savings accounts is 0.94%.  The best savings account is 6.23%, which has a very attractive yield and is ideal for helping your money grow at a faster rate to get you to your financial goals. 

 

Is a savings account safe?

Generally speaking, yes. As long as your bank is FDIC insured or your credit union is NCUA insured and your account falls within the limits of up to $250,000 per depositor, per account ownership type, and per financial institution, there isn’t much to worry about as your money is insured in case of a bank failure, which is rare.

 

How to select the best savings account?

 

Savings accounts are an excellent way to meet your financial goals. It is very important to select a savings account with the following features:

 

  • A competitive APY

  • No monthly service charge, or at least one that can be waived by meeting a certain account balance

  • No minimum account balance requirement

  • A low opening deposit requirement

  • Online and mobile banking features to be able to easily manage your accounts 24/7

 

You may not be able to find a savings account that satisfies all of the above, but as long as you find a bank or credit union and a savings account that meets your financial needs and checks the very important points above, that is what is most important.

 

Pros and cons of having a savings account

 

Easy access to funds via a debit/ATM card or mobile banking.Most savings accounts limit the number of withdrawals to six as per Federal Regulation D.
Savings accounts are safe and typically fall under FDIC insurance at a bank or NCUA insurance at a credit union.Interest rates can vary and are variable.
Savings account are interest-bearing accounts and earn interest., which can very depending on the type of savings account that is opened.Rates offered on most conventional savings accounts tend to be very low.
Many banks and credit unions require little to no opening deposit, making opening an account fairly easy.There may be inactivity fees, non-network ATM fees, withdrawal limit penalties, etc.
The interest earned is taxable.

 

Alternatives to savings accounts

 

   

  • Money Market Accounts: A money market account is a type of interest-bearing account available at banks and credit unions. They are similar to savings accounts; however, one significant difference is that many money market accounts also provide some checking-writing features. They also tend to offer higher yields than conventional savings accounts.

   

  • Certificates of Deposit (CDs): Banks and credit unions both offer a type of deposit account known as a certificate of deposit, or CD. Generally speaking, you commit to leaving your money in the CD for a predetermined period without taking any withdrawals. Early withdrawals may incur penalties, depending on the type of CD. Rates offered CDs tend to be significantly higher than conventional savings account, making them an attractive option for people with idle cash.

  

  • Checking accounts: A checking account is a form of deposit account that can be opened at a physical bank, an internet bank, or a credit union. Checking accounts allows you to deposit funds and then withdraw from them to pay bills or make purchases. They are also known as transactional accounts. Keep in mind, the money in your checking account is money that you intend to use in the short term to meet your daily expenses. As the money isn't tied up for prolonged periods of time such as with a CD, the average rates offered on these accounts is only approximately 0.19%.

 

Frequently Asked Questions

   

Are there withdrawal limits on my savings account?
If my account offers a debit card, do debit card purchases count as withdrawals?
Is it safe to put my money in a savings account?
Is interest earned in my account taxable?
How often do savings accounts pay interest?
How do you calculate interest on a savings account?
How frequently do savings account interest rates change?
Which savings account is the best?
Is it true that online banks pay more interest than traditional banks?
Should I have multiple savings accounts?

 

Terms to know

 

 

Annual Percentage Yield (APY): The total interest you receive on money in an account over the course of a year is expressed as an annual percentage yield or APY for short. The interest rate on an account is only one component of the APY, which also considers how frequently your interest compounds. The APY of an account provides a more precise estimate of how much money it will earn in a year. For example, The best savings account we've identified from our research is 6.23%, which is a very good rate to help your money grow faster.

 

Minimum Required Balance: The smallest amount of money you must deposit or keep in a savings account to avoid a monthly maintenance fee.

 

Minimum Opening Deposit: Depending on the bank, a minimum amount may be required to be deposited into a savings account just to open the account. Most online banks with lower overhead expenses do not require this but traditional banks might.

 

Interest: Interest is the money you earn from depositing your cash with a bank. When you deposit money with a bank, the bank borrows it from you, since it will lend a portion of it to clients or other banks, and the money they pay you is the interest.

 

Compound Interest: Compound interest is the interest you earn on interest you have already been paid.  This may be demonstrated using simple math: if you have $100 and it generates 5% interest every year, you will have $105 at the end of the first year. You'll have $110.25 by the end of the second year, because you earned interest on the $105, and so on and so forth.

 

Methodology

 

Our editorial staff continually updates the information contained on our website. Our editorial staff has analyzed virtually all of the banks and credit unions that it follows, and it does weekly rate analysis for more than 250 prominent banks and credit unions. These institutions were chosen because they provide competitive APYs, low fees, and other factors we find important. These banks and credit unions often provide accounts that are available nationally. All of these banks are FDIC-insured, and all of these credit unions are NCUA-insured. Choosing an FDIC-insured bank or an NCUA-backed credit union assures that your money is protected as long as it stays within insurance limits and requirements.

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