High-yielding online savings account are like catalysts used to boost the rate of reaction.
They can be described as that “extra,” that boosts your savings, and takes you closer to realizing that amount of money you need to meet your goal.
However, even though there are several online savings accounts available for users across North America, there are only a few that can be regarded as the best of them.
This article will be focused on discussing the best of these high-yielding online savings account.
What is a high yield online savings account?
As the name suggests, a high yield online savings account simply refers to an online deposit account that pays a higher interest rate, and annual percentage yield than a traditional savings account. This type of accounts often offers better returns than traditional checking accounts.
The advancements made in software programming and the internet have played a major role in boosting the use and popularity of these online savings accounts.
How do these high-yielding online savings accounts work?
These high-yield online savings account can be opened online as well as in some traditional banks. However, it is more common to find them in online banks than in physical bank offices.
In addition, these high yield online savings account have a lower operating cost, compared to their counterparts with physical locations. Consequently, it is easier for them to offer higher interest rates than the savings account offered in traditional banks.
Furthermore, minimum deposit requirements differ from one online savings account to the other. Some of them can be opened at no cost, while some others require as much as $100 to open an account.
Like savings account in traditional banks, users can make monthly deposits and withdrawals, however, some online savings account to put a limit on the maximum number of withdrawals a user can make per month.
Finally, a high yield online account can be FDIC protected, if it is offered by an FDIC insured bank. This means that if the bank offering these online savings fails for any reason, the owner of this savings account will enjoy as much coverage as the FDIC coverage provides.
Benefits of High Yielding Savings Account
So, what are the advantages of opening one of these high yields online savings account?
We will be discussing a few in this section:
- A Secure Place To keep Your Savings
These high-yield online savings account offers users the opportunity to save their money in a safe and secure place. Users do not have to worry about the safety of their savings, as their savings are safe and secure.
2. It offers a convenient way to save
Users do not have to go to a physical bank location to be able to fund their savings account. All they need to do is initiate a bank transfer to their online savings account, and then the money will be credited. It’s that easy.
- It can be used to save for short-term financial goals
One of the best ways to save for short-term financial goals is to use a high-yield online savings account. Apart from the fact that it is a safe and convenient way to save, you can be sure your saved money is increasing every day, and getting closer to the amount of money you need.
- It offers higher yields than traditional bank accounts
Another reason why these high-yield online savings accounts stand out is that they offer a higher yield than your traditional bank accounts. The interest they offer will far outpace the Annual Percentage Yield traditional savings bank account has to offer.
- Little or no maintenance cost
Most traditional banks charge maintenance fees on the savings account of their customers. So at the end of the day, savings account holders with traditional banks make very little in the way of interest at the end of the year.
This is not so with these high-yield online savings accounts. Most of them come with little or no monthly maintenance charges. So, the interest they accrue goes directly to the customer.
Disadvantages of High Yield Online Savings Account
- It is not a good long-term investment strategy
High yield savings accounts are easily prone to fluctuations. If the rate of inflation grows higher than the rate of interest it is accruing, the customer may start losing money, instead of gaining.
This makes it a poor long-term investment strategy. The stock market will be a better alternative.
2. Limit on withdrawals and transfers
Online savings accounts usually have a limit to the number of transfers and withdrawals a user can make in a month.
When a user crosses this limit, he starts paying charges for every transaction he makes until the end of that month.
For a high yield online savings account, the federal limit for withdrawals and transfers is six (6) times per month.
The Best High Yield Online Savings Account
In this section, we will be reviewing a few of the top high yield online savings account available for investors. They are as follows:
It is only proper to start this section with the high-yield online savings account offered by Goldman Sachs, a top-of-the-range investment bank, that has its headquarter in New York.
Launched in 2016, Marcus stands as one of the leading high yield online savings account providers.
It offers a savings rate of 0.50%, a figure higher than the national average percentage yield that stands at 0.06%.
Furthermore, it does not have a minimum deposit to open the account. You can open an account with any amount. There are no monthly fees for users, so whatever your money earns is kept for you.
You can deposit money into this account by setting up a direct deposit, or via transfer to the account. You can also credit this account by sending a check via mail or a domestic wire transfer.
Benefits of using this online savings account.
- Same-day transfers of up to $100,000.
Marcus allows users to make transfers of up to $100,000 in one day. If making large transfers is an important consideration for you, Marcus may be an ideal choice.
- Competitive Savings rate
As mentioned earlier, Marcus offers a savings account rate that is way higher than the national average for annual percentage yield. If you seek an online savings account that offers a competitive rate, Marcus is a great choice for you.
Challenges with Using Marcus
- No checking account or ATM network
A major drawback for Marcus is that it does not offer a checking account or ATM network.
Consequently, you may not be able to withdraw from this account with checks or ATMs. You may have to explore other available options.
- Cash deposits are not accepted
In Marcus, users can only make deposits via bank transfers and other options, as they do not accept direct cash deposits from customers.
This is a feature that many other online savings account have available for users.
Besides these limitations, Marcus remains a great option for those searching for a high yield savings account.
- Alliant Credit Union High-Rate Savings Account
This online savings account is offered by Alliant credit union. It offers a higher interest rate than you will find in most banks since it is a credit union.
What’s more, you can apply to become a member of the Alliant Credit Union by first becoming a member of the nonprofit – Foster Care to Success. Alliant will pay the $5 fee on your behalf.
Members can open an online savings account with them and enjoy a solid interest rate, as long as the daily balance does not go below $100.
Furthermore, Alliant credit union’s high-rate savings does not charge a monthly maintenance fee if you opt to receive your monthly account statement electronically.
Alliant allows members to open as many as 19 separate or supplemental accounts, each with its unique name. It also offers special savings account for parents who wish to teach kids about money management.
Advantages of Using Alliant
- More than 80,000 free ATMs
With Alliant, you have access to over 80,000 ATMs where you can make withdrawals free of charge.
- No overdraft fees
Another amazing feature of this online savings account is that users are not charged extra when they make overdraft transactions. This feature is not common among online banks.
- Higher Interest Rates
Finally, interest rates on checking and savings are well above average, with Alliant’s high rate savings account.
Discover Bank Online Savings
As the name suggests, this online savings platform is offered by Discover bank. Discover bank was founded in 1911 and has its headquarters at New Castle, Delaware, United States.
Discover online savings account offers an annual percentage yield that is well above the national average of 0.06% per annum.
Furthermore, users do not have to pay maintenance charges for this account.
Unlike most high yield online savings bank account providers, Discover does not require a minimum balance to earn interest.
Discover also offers a $150 to $200 bonus for opening your first Discover savings account. This offer lasts until the 15th of December 2021.
Benefits of Discover online savings account
- Large ATM network
Discover online savings account offers a large network of ATMs, available for customers to use for their transactions.
- Solid rate on a savings account
It offers a solid interest rate for all savings account, even when there is no significant cash left in the account. This is a unique feature that only a few high yields online savings accounts offer.
- No Monthly Service Fees
Service fees have a way of reducing the growth rate of the funds in your savings account. Discover online savings solves this challenge by offering users no monthly service fees.
Disadvantages
- It does not accept cash deposits. So, users will have to explore other options, to be able to fund their accounts via transfer.
- It has only one physical branch where users can visit. So, customers who like visiting bank locations, may not be able to use this account, if they do not live n the city where it is located.
Related article: Exchange Traded Funds with High Dividends
Conclusion
These are a few of the best high yield online savings account available for users to grow their funds.
Feel free to click any of the links provided in any of the savings accounts discussed above, as they will connect you to learn more about these high yield savings account, and how you can start benefiting from them.
