Most of us know we should save for retirement, but sometimes it’s tough to get started. If your employer sponsors a retirement plan — especially if it offers a generous match to your contributions — that’s usually the best place to begin. But even if you don’t have a retirement plan through your job, you can still save for the future. One of the best ways to do so is through a Roth IRA.
What Is a Roth IRA?
An IRA is an individual retirement arrangement, a retirement plan that gives you tax advantages when saving for retirement. There are two types of IRAs:
With a traditional IRA, the money you contribute is typically tax-deductible, but the money you pull out at retirement will be taxed at the then-current rate.
With a Roth IRA, you contribute after-tax dollars, but when you retire, you don’t have to pay taxes on the investment returns.
In other words, money in a traditional IRA is taxed when you pull it out, but the money in a Roth IRA is taxed before you put it in.
You make investments in an IRA through an individual retirement account. You have just one Roth IRA, but you can have many Roth IRA accounts. That may sound confusing, but all you really need to know is that you can have a Roth IRA account at your credit union and a different Roth IRA account at your broker, but they’ll both be part of the same individual retirement arrangement. Clear as mud?
It’s important to understand that an IRA isn’t itself an investment — it’s a place to put investments. When you open an IRA account, it’s like an empty bucket waiting to be filled. You might, for instance, buy stocks to put into your bucket, or maybe bonds. Some people use their IRA accounts to invest in real estate, and some simply let their cash sit there, earning interest on certificates of deposit.
Roth IRA Rules and Requirements
There are some restrictions on who can contribute to Roth IRAs. These arrangements are designed to help ordinary working folks to save for retirement by giving them a significant tax break. They’re not meant for people with really high incomes.
For 2012:
If your tax status is single and you earn more than $110,000 but less than $125,000, the amount you can contribute will be limited. If you earn more than $125,000, you can’t contribute to a Roth IRA at all.
If you’re married and filing jointly, your contributions are limited if your household income is more than $173,000. If you and your spouse earn more than $183,000, you can’t contribute to a Roth IRA.
These income limits are based on your modified adjusted gross income. (If you don’t know what that is, don’t worry about it unless you’re close to the limit.) Also note that Roth IRA income limits generally increase every year.
A few other useful facts:
If you’re younger than age 50, you can contribute $5,000 to your Roth IRA in 2012. If you’re over 50, you can contribute up to $6,000.
To invest in a Roth IRA in a given year, you (or your spouse) need to have earned income. In other words, you can’t fund a Roth IRA if all of the money you received that year came from an inheritance.
You can use a Roth IRA even if you have a 401(k) or other retirement plan.
You have longer than you might expect to make your Roth IRA contributions each year — you have until the tax deadline. For instance, if you want to contribute to your 2011 Roth IRA, you still can. You have until April 17th!
You may be able to convert your traditional IRA to a Roth IRA. This gets arcane, though, and is beyond the scope of this article. If you can’t figure out the IRS doc I linked to, consult a professional.
You can withdraw your contributions to a Roth IRA at any time without penalty. But if you try to withdraw the earnings (the returns on your contributions) before age 59-1/2, you’ll have to pay taxes and, probably, a 10% early-withdrawal penalty.
Lastly — and this is important for many people — if you’ve had your Roth IRA long enough, you can withdraw up to $10,000 in earnings without penalty in order to buy your first home. (You’re still taxed on that money, though.) Check out this article from The Motley Fool for more info.
There are other guidelines and provisions, but these are the basics. If you want more info, check out Publication 590 at the IRS website or contact your friendly neighborhood financial planner.
How to Open a Roth IRA Account
Opening a Roth IRA account is easy. If you’ve ever filled out a job application, applied for a credit card, or opened a bank account, you’ve got what it takes to open a Roth IRA account.
Deciding where to open your Roth IRA account is the toughest part of the process. If you already have an investment advisor, ask her for recommendations, but look for other options, too. Many banks and credit unions offer IRA accounts (though you’ll usually be able to invest only in deposit accounts, like CDs and savings accounts).
If you’re willing to make some decisions on your own, you can open an IRA account through a discount broker or mutual fund company. There are a lot of good options out there, but you might start your search with these firms:
I recommend that you set aside an hour or two some Saturday morning to explore the options over a cup of coffee and a bowl of Lucky Charms. With a little research, you should be able to find a company and program that suit your needs. When you’re shopping around for a place to open an IRA account, ask the following questions:
Is there a minimum initial investment?
What sorts of fees will be charged to the account?
Can you make automatic contributions?
What investment options are available?
Are electronic statements available?
Search for a company that suits your needs, but don’t fret about finding a perfect match. Remember: The perfect is the enemy of the good. Find a good match, and then set your IRA account in motion. You can move your money to a new IRA account if the first company you choose isn’t a good fit.
Once you pick a place to open your IRA account, it’s time to fill out the application. Some firms want you to download forms and then mail them back. So 1999! Most places should let you apply online, though. To complete the application, you’ll need your Social Security number, bank account info (so you can transfer funds), info about your current employer, money in a bank account (depending on where you open your Roth IRA account, you might need anywhere from $25 to $3000), and about half an hour of free time.
Some applications will ask a few simple questions about your investment plans and goals. Once you complete the application, you’ll transfer money to your new account. (It’ll probably earn interest until you choose an investment.) That’s all there is to it.
I haven’t mentioned Roth IRAs around here much over the past few years. For one thing, I did a series of articles on the Roth when this site was young. I’ve always just pointed back there. For another, as my own income grew, the Roth was no longer an option. Starting next year, though, I’l be back in Roth IRA land. You can be darn sure I’ll max that sucker out every year. And so should you, if it’s an option.
Do you have a Roth IRA? Where do you have your accounts? What sorts of investments do you put in them? Any advice for newbies who want to open a Roth IRA account but don’t know where to start? Share your advice in the comments below!
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
If you’re in the market for a straightforward savings account that offers government-backed deposit insurance and accepts applications from people all across the United States, banks aren’t your only option.
You can also choose from a bunch of reputable credit unions with national footprints and attractive savings yields. One of the best of this group is Alliant Credit Union. Its Alliant High-Rate Savings Account is rewarding, flexible, and mobile-friendly.
But the Alliant High-Rate Savings Account isn’t perfect, so take a few minutes to review its upsides and downsides before applying.
What Is the Alliant High-Rate Savings Account?
The Alliant High-Rate Savings Account is a high-yield savings account with no monthly fee when you opt into paper statements. It has a strong yield on all balances — 3.10% APY with an average daily balance of $100 or more — and, somewhat unusually, comes with an ATM card that enables fee-free withdrawals at about 80,000 machines nationwide.
The Alliant High-Rate Savings Account has other useful features, including digital bill pay and mobile check deposit. One standout capability is its supplemental savings accounts, which let you track your progress toward up to 19 savings goals at once.
The Alliant High-Rate Savings Account requires Alliant Credit Union membership, but it’s easy to qualify by joining Alliant’s nonprofit partner.
What Sets the Alliant High-Rate Savings Account Apart?
The Alliant High-Rate Savings Account stands out for a few reasons — nothing earth-shattering, but certainly notable:
Above-average yield. It’s not quite at the top of the savings account heap, but the Alliant High-Rate Savings Account’s yield is well above average for national credit unions. Not to mention big banks, many of which raised rates in years.
ATM card with expansive fee-free ATM network. It wouldn’t raise eyebrows in a checking account, but Alliant High-Rate Savings’ ATM card is unusual in the savings account world. Throw in a big fee-free ATM network with 80,000-plus machines and it’s a big selling point.
Lots of subaccounts for easy budgeting and goal-setting. You can open nearly 20 separate savings accounts linked to your main High-Rate Savings Account. All earn the same high yield and have the same features and capabilities. They just make saving for and tracking goals much easier.
Key Features of the Alliant High-Rate Savings Account
Before you open an Alliant High-Rate Savings Account, review its core features and capabilities to understand what you’re getting into. Pay close attention to Alliant’s membership requirements and supplemental savings accounts option.
Membership Requirements
You must be an Alliant Credit Union member to open a High-Rate Savings Account.
If you don’t live in Alliant’s home territory — basically, the greater Chicago area — the easiest way to become a member is to join the nonprofit Foster Care 2 Success. There’s no out-of-pocket expense involved because Alliant Credit Union picks up Foster Care 2 Success’ one-time joining fee of $5.
Account Yield (Interest)
This account yields 3.10% APY on all balances. You need to maintain an average daily balance of $100 or more to earn this interest rate.
Account Fees & Minimums
The minimum balance to open and maintain your account is $5. You do need to maintain a $100 average daily balance to earn the posted yield.
There’s a $1 monthly paper statement fee if you don’t opt into electronic statements. Otherwise, this account has on monthly or recurring fees.
ATM Access
Alliant Credit Union has more than 80,000 fee-free ATMs in its network. These are distributed across the United States, including in places where Alliant has no branches.
Unusually for a savings account, Alliant High-Rate Savings offers an ATM card that works at hundreds of thousands of in-network and out-of-network machines. However, it’s not a debit card and can’t be used at other merchants.
Supplemental Savings Accounts (Subaccounts)
You can open up to 19 supplemental savings accounts tied to your main High-Rate Savings Account. This is helpful for setting and tracking specific savings goals without maintaining a separate spreadsheet or using a third-party budgeting tool.
Your supplemental savings account balances earn the same yield as your main savings account balance.
Mobile Banking Tools
Alliant Credit Union offers a nice lineup of mobile banking tools:
Mobile check deposit
Digital billpay
Person-to-person and external account transfers
Integrations with third-party finance apps like Mint and Quicken
Deposit Insurance
The Alliant High-Rate Savings Account comes with up to $250,000 in deposit insurance from the National Credit Union Administration, or NCUA.
Even though NCUA coverage isn’t exactly the same as Federal Deposit Insurance Corporation (FDIC) deposit insurance, it’s the same from a practical standpoint and should reassure you that your money is protected in the unlikely event Alliant Credit Union fails.
Pros & Cons of the Alliant High-Rate Savings Account
No monthly fee with electronic statements
Low balance requirements
Up to 19 supplemental savings accounts
Must be an Alliant Credit Union member to qualify
Not the highest available savings yield
No interest on balances below $100
Advantages
The advantages of the Alliant High-Rate Savings Account include its low fees, lack of minimum balances (except to earn interest), and supplemental savings accounts feature.
No monthly fee with electronic statements. As long as you opt into electronic statements, you pay no monthly maintenance fee on this account. Even if you don’t, the paper statement fee is just $1 per month, which is reasonable as far as paper statement fees go.
Low balance requirements. You need just $5 in your account to keep it open. That barely qualifies as a minimum balance requirement these days.
Above-average yield. While not quite the best around, this account’s yield is well above average for credit union savings accounts.
ATM card and broad fee-free ATM access. Most savings accounts don’t offer ATM cards, let alone fee-free withdrawals at more than 80,000 ATMs. If you want the option to withdraw cash directly from your savings balance, this is the right account for you.
Up to 19 supplemental savings accounts. You can set up, track, and save toward up to 19 savings goals simultaneously with the Alliant High-Rate Savings Account. Each subaccount earns the same high yield and has deposit insurance coverage, though the cumulative deposit insurance limit is still $250,000 no matter how many you have open at once.
Useful mobile features. The Alliant High-Rate Savings Account boasts mobile check deposit, fast and free person-to-person transfers, and digital billpay. In short, it has most of the mobile features you expect from an online savings account.
Full deposit insurance. This account comes with up to $250,000 in deposit insurance. That’s the standard limit at banks and credit unions alike, and reassuring in the unlikely event of Alliant’s failure.
Disadvantages
The Alliant High-Rate Savings Account has few downsides. The biggest are the credit union membership requirement and the $100 average daily balance requirement to earn interest.
Must become an Alliant member to qualify. Opening an Alliant High-Rate Savings Account takes some additional time if you’re not yet an Alliant member. It’s easy to qualify, but this could still be a deal-breaker if you’re pressed for time.
No yield below $100 average daily balance. You need to maintain an average daily balance of at least $100 to earn interest on your balance. While modest, this could be an issue for savers just starting out.
Can find higher yields if you know where to look. The Alliant High-Rate Savings Account has an excellent yield compared with many other credit union savings accounts, but it’s surpassed by a good number of online banks. Time will tell if that chances, but for now, it’s worth keeping in mind.
How the Alliant High-Rate Savings Account Stacks Up
Before you open an Alliant High-Rate Savings Account, see how it compares to another popular savings account available to applicants all across the United States: CIT Bank Platinum Savings.
Alliant High-Rate Savings
CIT Bank Platinum Savings
Minimum Balance
$5
$100
Monthly Fee
$0 with e-statements
$0
Account Yield
3.10% APY
Up to Up to 4.75% APY
Minimum for Yield
$100
$5,000
ATM Access
Yes, 80,000 fee-free
No
Savings Goals
Yes
Yes
You can see that the Alliant High-Rate Savings Account is ideal for folks without big existing savings balances. It’s also a plus for those who want to be able to withdraw cash directly from their savings accounts without heading inside a bank branch.
By contrast, CIT Bank Platinum Savings is best for folks with higher balances seeking to maximize yield.
Final Word
The Alliant High-Rate Savings Account is mostly a straightforward credit union savings account, but it does throw a few curveballs. These are mostly to the good: an above-average yield on all balances, an ATM card with more than 80,000 fee-free ATMs in its network, and easy budgeting and savings goal-setting with supplemental savings accounts.
The biggest downsides to this account aren’t fatal flaws by any means. There’s a bit of friction to open an account, especially if you’re not yet an Alliant member, and some online banks offer even higher savings yields. But overall, the Alliant High-Rate Savings Account has a lot more to like than dislike.
The Verdict
Our rating
Alliant High-Rate Savings Account
The Alliant High-Rate Savings Account has everything you need in a savings account and nothing you don’t. Standout features include up to 19 supplemental savings accounts with the same high yield and fee-free withdrawals at more than 80,000 ATMs. The mobile banking capabilities are a hit too.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
It may be known for blues music and catfish farming, but the Magnolia State has plenty to offer when it comes to work and play. Mississippi is home to industries from technology to agriculture, with everything in between.
If you live in the state, you’re likely hoping to find the best banks in Mississippi to fit your checking and savings account needs.
12 Best Banks in Mississippi
Whether you’re looking for a national bank, a regional bank, or a small community bank, there are so many banks in Mississippi, it’s easy to find one that meets all your needs. You may even find the options overwhelming. Here’s a list of some of the best bank accounts in the state to help you narrow it down.
1. BankPlus
Local banks bring benefits like personalized customer service. BankPlus is a local bank with branches and ATMs throughout Mississippi. One downside to BankPlus, though, is its ATM availability. If you need to withdraw cash from your checking account, you’ll have to find a BankPlus ATM to avoid the fee.
Fees:
$6 monthly service fee
$36 overdraft fee
Balance requirements:
$100 minimum opening deposit
No minimum balance requirements
ATMs:
Fee-free at BankPlus ATMs
Interest on balance:
Up to 0.05% APY on savings accounts
Up to 0.55% APY on CDs
Additional perks:
Interactive teller machines connect you with live bank representatives
Up to $1,200 in cell phone protection per year
2. Planters Bank
Planters Bank could be a great option if you’re looking for a bank with physical branches. You’ll find physical locations across Mississippi, as well as in Tennessee and Louisiana.
This bank is better for those who don’t need to regularly make cash deposits and withdrawals while traveling. You’ll have to track down a SUM Network ATM, and even then, Planters charges a $1.50 fee in addition to what the third-party bank charges.
Fees:
No monthly maintenance fees
$36 overdraft fee
Balance requirements:
$50 minimum opening deposit
No minimum balance requirements
ATMs:
Interest on balance:
Up to 2.50% APY on money market accounts
Additional perks:
Robust mobile banking features
Unlimited check writing
3. Chime
Chime is an online and mobile banking solution that has everything you need to manage your accounts in its mobile banking app. You’ll get a fee-free1 checking account and access to a savings account that pays 2.00% APY3. With qualifying direct deposits in place, Chime will spot you in up to $2005 on debit card purchases with no overdraft fees.
Fees:
No monthly fees
No fees for overdrafts
Balance requirements:
No minimum opening deposit
No minimum balance required
ATMs:
Fee-free at 60,000+ ATMs nationwide
$2.50 for each out-of-network ATM transaction
Interest on balance:
2.00% APY on savings accounts
Additional perks:
4. Renasant Bank
Renasant Bank is a regional bank based in Tupelo. You’ll find 195 branches in seven states, including throughout Mississippi. There are multiple checking accounts, including a basic account that’s fee-free as long as you enroll in eStatements, have at least one direct deposit a month, or maintain a daily balance of $1,000.
Fees:
$10 monthly fee (waived with requirements)
$36 overdraft fee
Balance requirements:
$50 minimum deposit to open
No minimum balance requirement
ATMs:
Fee-free at 225 Renasant Bank ATMs and ITMs
$3 per out-of-network ATM transaction
Interest on balance:
0.05% APY on savings accounts
Up to 4.46% APY on CDs
Additional perks:
Small business owners have a wide range of checking and loan options
Children’s savings accounts available
5. GO2bank
Another online bank is GO2bank, which offers fee-free cash withdrawals through the Allpoint ATM network. If you need to deposit cash, you can take your free debit card to one of 90,000+ retail partners nationwide.
GO2bank’s checking account is free as long as you receive at least one payroll or government benefits electronic deposit each month.
Fees:
$5 monthly maintenance fee (waived with requirements)
$15 fee for overdrafts
Balance requirements:
No minimum opening deposit
No minimum balance required
ATMs:
Fee-free at Allpoint ATMs nationwide
$3 for each out-of-network ATM withdrawal
Interest on balance:
4.50% APY on savings accounts
Additional perks:
Secured credit card helps you build credit with no credit check required
Up to 7% cash back on gift card purchases
6. Cadence Bank
Cadence Bank began at the back of a hardware store in Verona, Mississippi in 1876. Over the years, Cadence has expanded to a regional bank and now has branches in Mississippi, Alabama, Arkansas, Florida, Georgia, Louisiana, Missouri, Tennessee, Texas, and Illinois.
The My Way checking account waives service fees as long as you maintain a $250 balance, have five debit card purchases monthly or at least one $100+ direct deposit, or are a student under 25.
Fees:
$8 monthly service fee (waived with requirements)
$36 overdraft fee
Balance requirements:
$50 minimum deposit to open
$250 minimum balance required
ATMs:
Fee-free at 400+ Cadence ATMs and ITMs
Interest on balance:
Up to 4.49% APY on CDs
Additional perks:
Special checking account option for seniors 62 and over
Wealth management services available
7. Ally Bank
Online and mobile banking have created an appealing alternative to big banks. Ally Bank gives you a checking account with no monthly maintenance fees and no minimum balance required.
You’ll have everything you need in the mobile app, as well as access to cash at Allpoint ATMs nationwide. But one of Ally’s best features is its competitive rates on savings accounts, CDs, and money market accounts.
Fees:
No monthly maintenance fees
No overdraft fees
Balance requirements:
No minimum deposit to open
No minimum balance requirement
ATMs:
Fee-free at 53,000+ Allpoint ATMs nationwide
Up to $10 in third-party ATM fees reimbursed monthly
Interest on balance:
0.25% APY on checking accounts
3.85% APY on savings accounts
Up to 4.80% APY on CDs
4.15% APY on money market accounts
Additional perks:
Paycheck funds available up to two days early
SpotMe covers you for up to $200 in overdrafts
8. Wells Fargo
National banks bring their own benefits, including a wide range of banking services and a vast branch and ATM network. Wells Fargo is one of the largest banks in the country, and you’ll likely find a bank branch near you.
Wells Fargo has a checking account with no monthly service fees as long as you keep a $500 balance, receive $500 or more in qualifying electronic deposits monthly, or you’re between the ages of 17 and 24. If you’re attending college, you can also enjoy a free checking account by linking your checking account to a Wells Fargo campus card.
Fees:
$10 monthly fee (waived with requirements)
$35 fee for overdrafts
Balance requirements:
$25 opening deposit required
No minimum daily balance
ATMs:
Fee-free at Wells Fargo ATMs nationwide
$2.50 fee for out-of-network transactions
Interest on balance:
Up to 2.51% APY on savings
Up to 4.51% APY on CDs
Additional perks:
$300 for new checking accounts
Earn 20,000 bonus points with the new Wells Fargo VISA
9. Regions Bank
Regions Bank is a regional bank that operates throughout the South, Midwest, and Texas. You’ll find branches and ATMs throughout Mississippi, including DepositSmart ATMs that make it easy to make check and cash deposits.
The Regions Bank LifeGreen eAccess Account is an online and mobile banking option with no monthly maintenance fees as long as you make at least 10 debit or credit card purchases each month.
Fees:
$8 monthly maintenance fee (waived with requirements)
$36 overdraft fee
Balance requirements:
$50 minimum deposit to open
No minimum balance required
ATMs:
Fee-free at Regions Bank ATMs
$3 out-of-network ATM fee
Interest on balance:
0.01% APY on savings accounts
Up to 4.75% APY on CDs
Up to 1.50% APY on money market accounts
Additional perks:
DepositSmart ATMs make it easy to deposit cash and checks
Wealth management services available
10. PriorityOne Bank
For a smaller, community bank, look at PriorityOne Bank, which has 16 locations across Mississippi. PriorityOne offers multiple checking account options, including a basic account with all the mobile banking features you’ll need, as well as unlimited check writing. This account is $7 a month, but you can have the fee waived if you keep at least a $100 daily balance.
Fees:
$7 service fee (waived with requirements)
$35 overdraft fee
Balance requirements:
$50 minimum deposit to open
No minimum balance required
ATMs:
Fee-free at PriorityOne Bank ATMs
Interest on balance:
Up to 0.10% APY on savings accounts
Up to 1.00% APY on CDs
Up to 0.20% APY on money market accounts
Additional perks:
Check Buy-Back program pays for unused check and debit cards from your previous bank
Variety of banking options for small business owners
11. Trustmark National Bank
Another option is Trustmark National Bank, which is headquartered in Jackson. Although Trustmark National Bank qualifies as one of the big banks, it’s confined to the Southeast U.S., with 180 branches, ATMs, and ITMs.
You’ll enjoy a free checking account as long as you make at least 15 debit transactions monthly, receive at least $100 in electronic deposits monthly, or keep an average balance of $1,500. Trustmark National Bank also currently has account options for both students and small business owners.
Fees:
$10 monthly fee (waived with requirements)
$36 fee for overdrafts
Balance requirements:
$50 minimum opening deposit
No minimum daily balance required
ATMs:
Fee-free at Trustmark National Bank ATMs
$2.50 for each non-Trustmark National Bank ATM withdrawal
Interest on balance:
Rates not publicly disclosed
Additional perks:
$50 bonus for opening Trustmark National Bank student checking account
Banking options for small business owners available
12. First State Bank
Another community bank option is First State Bank, which has multiple branches in Waynesboro, as well as in Ellisville, Laurel, Leakesville, Lucedale, Meridian, Quitman, and State Line. There are multiple checking options, but the best checking account if you’re looking for a fee-free option is Kasasa Cash Checking.
Although there’s no opening deposit, you’ll have no monthly fees. Best of all, it’s a rewards checking account. You’ll also earn up to 1.00% APY on your balance.
Fees:
No monthly fees
$37 fee for overdrafts
Balance requirements:
$100 minimum opening deposit
No minimum daily balance required
ATMs:
Fee-free at First State Bank ATMs
Up to $25 in out-of-network ATM fees refunded each cycle
Interest on balance:
Up to 1.00% APY on checking account
Up to 0.25% APY on savings account
Additional perks:
Rewards checking account with no monthly fees
Travel and Leisure Club open to account holders aged 50 and over
How We Determined the Best Banks in Mississippi
Personal preferences can vary widely when it comes to a bank account. For that reason, we looked at a variety of options, including national bank branches in Mississippi and small but powerful local options.
The banks we looked at had as many as six different checking accounts and four different savings accounts. To make a fair comparison, we looked at the simplest checking account at each bank. However, in your search, you may be willing to pay a monthly fee or maintain a high minimum daily balance in exchange for features like high interest rates and cash back rewards checking account options.
We also looked at rates on savings accounts, CDs, and money markets, but if you’re interested in those features, you may want to compare the minimum opening deposit, required balance, and fees that go with those account types.
Finding Your Ideal Checking Account
If you’re shopping for a bank, chances are you want a place to park your paycheck. From there, you can add on the savings accounts and other financial products you want. Here are some things to consider as you’re researching banks in Mississippi.
Big Banks vs. Online Banks
There are benefits to a big bank with physical branches across the country. You’ll typically see a large number of checking options, which means you’re likely to find the best checking account to fit your needs. Having access to cash and in-person customer service while you’re traveling is also a big bonus.
But there are benefits to an online bank account as well. Since a free debit card is a standard feature on both online and traditional bank accounts, mobile banking is often as full-featured as a brick-and-mortar financial institution. If you’re concerned about cash access, many checking accounts now feature partnerships with national ATM networks that let you withdraw cash without paying extra account fees.
Difficult to Meet Fee-Waiver Requirements
Free checking accounts sometimes come with requirements. This may be maintaining a balance every day. That means the monthly fees will kick in if your account ever drops below that minimum.
These days, though, many banks offer an alternative to that balance minimum. The best checking accounts also allow you to waive the fee by receiving a certain number of electronic deposits each month. If your paycheck or government benefits check goes into your account once or twice a month, this should qualify you for fee-free checking.
Access to Mobile Banking Services
What matters in a bank is what you can do through your mobile device. It’s important to not only look for features like bill pay and remote check deposit, but also check to see if an account offers budgeting tools and financial advice services. This is where some banks stand out. Online-only banks and large, corporate banks may have state-of-the-art mobile services, while small banks may struggle to keep up.
When you’re looking for the best checking accounts and savings vehicles, it’s important to consider the features you need, then look for the account that will fill those needs. National banks, regional banks, credit unions, and local banks each have their own benefits. But the best banks in Mississippi are the ones who give you the conveniences you need, whether you’re traveling or staying close to home.
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
3. The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is accurate as of May, 22, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.
5. Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.
When you see an advertisement for a “free” business checking account, most of the time it’s not entirely “free.” After all, for these banks to stay in business, they have to make money off of you somehow!
A top priority in our list was to include banks that offered competitive business checking accounts for freelancers, small business owners, entrepreneurs, and growing businesses. Business checking accounts typically won’t provide account holders with an opportunity to earn interest and they’ll charge slightly higher fees, so our list focuses on those banks that keep their fees to a minimum and also highlights some that offer interest.
Even so, it’s important to always read the fine print before signing up for a new checking account. Here are the most important features to consider in a business checking account:
Balance and deposit requirements
Some banks charge a monthly fee if your business checking account’s balance falls below a certain threshold. It’s calculated on an average, by day, so as long as you’re maintaining a certain level of money in the account you should be fine. A bank may also require a minimum initial deposit, which may disqualify you from opening the account if you don’t have the money available.
On the flip side, some banks will actually reward you for having a high balance, much like they do with a personal checking or savings account (typically a higher interest rate). With business checking accounts, you may get a higher interest rate or even a reduction (or elimination) of some fees by carrying a large balance.
If you don’t see anything in the fine print about high-balance bonuses, then contact a service representative to see if they’re willing to give you a break if you agree to keep your balance above a certain amount.
Monthly maintenance fees
Monthly maintenance fees don’t exist with every business checking account. And those that do require a monthly fee may offer account holders an opportunity to waive the fee (typically by maintaining a minimum account balance). On average, these fees are typically $10-$15, but in some cases, they can jump as high as $50.
Before you sign up for a business checking account, confirm if there’s a monthly maintenance fee. If there is, see if there is an option to waive the fee by maintaining a minimum account balance or ask to have the fee waived.
Monthly transaction limits
With a business checking account, most banks will put a limit on the number of transactions you make every month. Seems kind of backward, doesn’t it? With a personal checking account, you’re often encouraged to make unlimited transactions, not limit them.
Limits placed on account transactions also don’t apply to just debit card charges. It usually includes things like deposits (both check and cash), withdrawals, checks written, and payments you make electronically.
Most banks will put a limit of up to 500 transactions, depending on the bank. On average, though, you typically won’t see a limit below 100 transactions per month. Expect the fees to be as high as 50 cents per transaction over the stated limit. That’s like a 25% surcharge on a $2.50 coffee.
It is possible to find unlimited transactions with a business account, but not easily. Some banks may offer an unlimited transactions option for a higher monthly fee, or you could find a bank that doesn’t have a limit on transactions at all. However, you’ll likely have to pay a higher monthly fee if you go that route. Alternatively, you could keep track of your transactions and stay below the allotted amount each month to avoid paying any monthly fee requirements.
What are the benefits of having a business checking account?
1. It keeps your personal and business finances separate
While technically (and legally), you can use a personal bank for your small business, it isn’t recommended.
That’s because mixing the two can make it difficult to track your income and expenses. And if you accidentally pay personal expenses from a business account, those expenses are subject to taxes and can convolute your books.
It’s best to have a separate, business-only bank account where you can do all of your business banking and ensure it’s kept separate from your personal finances.
Read more: How to separate your personal and business finances (and why you should)
2. It can help you manage your cash flow more effectively
Cash flow is the lifeblood of any business. If you can’t manage your cash flow effectively, your business will inevitably fail. That’s why finding the best business checking accounts is so important — so you can keep track of your incoming and outgoing cash. With these checking accounts, you can easily track your expenses and income, which can also help you get a loan for your business, if needed.
3. It can help you build business credit
One of the most important things you can do for your business is build credit. When you have good business credit, you’ll have a better chance of qualifying for a loan or line of credit should you ever need them. It can also help you get better terms on those loans.
One of the best ways to build business credit is to open a business bank account. When you have a business bank account, it shows that you’re a legitimate business and helps build your credit history. If you’re thinking about opening a checking account, make sure you choose a bank that reports to the major credit bureaus, so you can build your business credit history every time you make a deposit.
Read more: How to build and establish business credit
4. It can offer additional perks, such as rewards programs or interest-earning potential
The best business checking accounts will also often offer additional perks that can help your business. For example, some banks offer rewards programs that give you cash back or points for every purchase you make. Others may offer interest-bearing accounts, which can help you earn money on your deposited funds.
What do you need to open a small business checking account?
There are a few requirements you’ll need to open a business checking account, which may (or may not) include:
A business license or incorporation documents – The business account will need to be opened in the name of your business. This is why it’s important to have your business license or incorporation documents handy.
Your Employer Identification Number (EIN) – Your EIN is a nine-digit number that is assigned to a business, also known as a federal identification number.
A government-issued ID – Your driver’s license will typically meet this requirement.
The bottom line
It shouldn’t matter if you’re an established small business or a brand new blog. If you have a business, you’re a business owner. As such, you should find one of the best business checking accounts on the market to keep your personal and professional finances separate.
Every business has different needs, and every bank account offers different services and features to meet those needs. Before you sign up for a business checking account, be sure to do your research. Look for details like fees and transaction limits. See if you can find an account that offers interest or cash back. Consider multiple options to make sure you find the account that best suits your business.
Featured image: Cast Of Thousands/Shutterstock.com
Opening a bank account for your teen is a great way to begin teaching financial responsibility and money management. If your teen’s account is linked to yours, it’s also a convenient way to pay them an allowance, reward them for good grades, or even transfer money for pizza when your teen is out with friends.
It’s no wonder a recent Fidelity study reported that 49% of teens in the U.S. have opened bank accounts. But which checking account is best? And what should you look for in checking accounts for teens?
10 Best Teen Checking Accounts
While there are many options available for teen checking accounts, parents frequently choose to establish accounts for their teens at their own primary banking institutions. This list includes many top national banks.
Their inclusion isn’t necessarily due to their teen checking accounts offering the highest interest rates or the most features. Instead, their comprehensive services for adults and strong reputations make them a viable consideration.
1. Copper Card
Copper Bank, Member FDIC, is a federally insured online bank dedicated to helping kids and teens learn how to manage money. Copper Bank has invested more than $1 million in high school financial literacy and the app helps teach kids the basics of investing.
Copper accounts are available to kids ages 6 and up, as long as they have their own mobile phone number separate from the adult account holder. Children and teens receive a Copper Spending Account debit card that is compatible with Google Pay and Apple Pay. Users can also use the debit card for fee-free transactions at 55,000+ ATMs nationwide.
Copper offers a ton of enticing features parents and teens will love. First, there are no overdraft fees, no minimum balance, or maintenance fees. Parents will pay a small fee of 2.5% + 30 cents of the total transaction for an “instant transfer” from a linked debit card. Otherwise, it can take 3 to 5 business days for funds to arrive in the Copper account.
Copper makes banking convenient for parents and rewarding for kids. Parents can set up automatic transfers for allowance, or can even transfer money automatically when the Copper account drops below a specific number.
Copper lets kids round-up their debit card transactions to be automatically transferred into their linked savings account. Users can set specific savings goals and earn interest with up to 5% annual percentage yield. This can motivate kids to save as they watch their money grow.
Copper also allows kids and teens to invest, starting with as little as $1. Investing is automated based on your child’s risk profile, and Copper even reinvests dividends and uses dollar-cost averaging to set your child up for investment success and good habits for life.
2. USAA Youth Spending Account
USAA offers a joint account that a parent or legal guardian can open with a child of any age. The USAA Youth Spending Account includes a debit card that allows the adult account holder to increase or decrease daily spending limits. Children can use their card at point-of-sale transactions and without fees at any of 100,000 preferred ATMs in the USAA network.
Once the child turns 13, you can use the mobile app to give them the ability to transfer money, make remote deposits, and more.
When your child turns 18, the USAA Youth Spending Account will be converted automatically to a USAA Classic Checking account. You can choose to stay on as a joint account holder to help your teen manage their money while they are away at college or in the military.
The USAA Classic Checking account has no monthly fee for college students or members of the military.
There are a few things to be aware of before you open the banking account:
USAA is available only to veterans, active duty military, national guard, reservists, military spouses and others who meet a few criteria related to the U.S. Armed Forces
The USAA Youth Spending Account requires a $25 minimum opening deposit
Your child will earn .01% annual percentage yield if they maintain a daily balance of $1,000 or more
3. PNC Bank Student Banking
PNC Bank offers a VirtualWallet student account for teens and young adults ages 16 and up. Teens under 18 will need to open a joint account with a parent or legal guardian. College students may have to show proof of enrollment. After six years, the student account becomes a regular PNC Bank Virtual Wallet account, with all the same features and benefits.
The Virtual Wallet account includes a “Spend” primary checking account, a “Reserve” savings for short-term savings and a “Growth” account for long-term savings for big ticket items or to build up emergency cash reserves.
The Virtual Wallet has no monthly service fees for students and includes fee-free ATM withdrawals at PNC Bank ATMs. Teens and adults, alike, receive ATM rebates for the first two non-PNC bank ATM withdrawals and up to $5 in ATM fee reimbursements per statement period for ATM surcharges collected by other financial institutions.
Unlike some student bank accounts, which decline transactions that would put your account in the negative, the PNC Bank Virtual Wallet offers one automatic courtesy refund of Overdraft item fees per month. However, the Virtual Wallet’s Low Cash Mode makes it easy to avoid overdrafts with alerts that tell you when your spending balance drops below a certain point.
You can also use Payment Control to choose to pay or return certain ACH transactions if your account balance is negative.
4. Wells Fargo Clear Access
Wells Fargo Clear Access is designed for teens ages 13 and up, as well as previously underbanked or unbanked customers. It’s considered a “second chance” bank account, but the lack of overdraft charges and no monthly fees also makes it great for teens just learning financial responsibility.
Be aware that children under 18 cannot open an account online. They must open the bank account at one of the 4,800 Wells Fargo branch locations nationwide.
Clear Access has no monthly fee for account holders ages 13 to 24. Teens 16 and under will need a joint account holder who is over the age of 18.
Wells Fargo Clear Access was certified by the Bank on National Account Standards as meeting the requirements for safe and affordable bank accounts with no overdraft fees. A straightforward account with few bells and whistles, the account includes access to the user-friendly Wells Fargo mobile banking app and mobile check deposits. You also get Zelle person-to-person payments and a debit card compatible with digital wallets like Google Pay.
There are no overdraft fees with Clear Access, but transactions that would bring your account into the negative are likely to be declined. There is no minimum balance requirement, but you’ll need a $25 minimum opening deposit.
5. Chase First Banking Account
The Chase First Checking Account is available to kids ages 6 to 17 and has no monthly fees. To open an account for your teen or tween, you must have a qualifying Chase checking account, such as Chase Total Checking.
It’s easy to open an account online and make transfers from your account to the Chase First Banking account in the mobile app. You can set up automatic recurring transfers for allowance or approve requests from your child for money.
Set a spending limit for general spending or for specific purposes. You can even create a list of approved stores where your child can shop with their debit card. For existing Chase customers, Chase First is one of the smartest choices for a teen checking account due to the convenience and easy parental controls.
6. Capital One MONEY Teen Checking Account
The Capital One MONEY Teen checking account is one of the most popular checking accounts for kids. You don’t need a Capital One account to open a MONEY account with your kids, as the account can accept external transfers.
The account is available for kids ages 8 and up. Once the teen turns 18, they can convert it to a Capital One 360 Checking Account of their own with no monthly fee.
Unlike Chase, Capital One MONEY Teen pays interest on checking account balances. It’s only 0.10% annual percentage yield, but it is enough to begin teaching kids the value of compounding interest. Capital One’s teen product has no monthly service fee, no minimum balance requirement, and no minimum opening deposit.
Through the mobile app, kids and teens can set savings goals, designate funds in “savings buckets” or for spending with their Capital One Mastercard debit card, and make withdrawals at any Capital One or AllPoint ATMs with no fees.
Parents can make automatic transfers for allowance, set up one-time transfers, and even pay kids rewards if they meet specific savings goals. You can track spending and view transactions in the mobile app or set up text alerts.
7. Bank of America Advantage SafeBalance
Unlike the other three largest national banks in the U.S., Bank of America does not have a dedicated teen checking account. However, Bank of America customers can open a joint account with their child who is age 13 or older and give them access to their own debit card.
Bank of America recommends the Advantage SafeBalance bank account for teens and college students under 25. There is no monthly fee on the account if one of the account holders is under 18, or under the age of 25 and a student, or if any of the account holders are members of Bank of America Preferred Rewards.
A straightforward, checkless account, BofA calls SafeBalance “a smart start for students.” Kids ages 16 and up can be sole owners of the account, but you might choose to be a joint account holder for convenience.
The SafeBalance account doesn’t have a lot of bells and whistles, but it is a great way to get your child set for the future with an account at a nationwide, reputable bank with 4,000 branch locations nationwide.
8. Axos Bank First Checking
Axos Bank First Checking offers a checking account where you can earn interest. It pays a 0.10% annual percentage yield on all balances. It is available for teens ages 13 to 17, with an adult account holder.
Axos First Checking boasts no monthly maintenance fee, no overdraft fee, and reimburses up to $12 per month in out-of-network ATM surcharges.
Be aware that your child can only make $500 in debit card purchases per day and can only withdraw up to $100 per day at ATMs.
Axos Bank is consistently rated one of the best for online banking by top personal finance websites. The First Checking account is a straightforward way to teach teens financial independence and the ease of online banking.
9. Connexus Credit Union Teen Checking Account
Connexus is a top-rated credit union that’s easy to join with a one-time donation to become a member of the Connexus Association. The Connexus Credit Union Teen Checking account offers up to 2.0% annual percentage yield with zero monthly service fees, free ATM transactions within the Co-Op or MoneyPass networks, and overdraft protection with linked accounts.
Kids ages 10 to 17 can open a teen checking account to earn a high APY. When they turn 18, the credit union will transition their teen account into a Connexus Innovative Checking account with no monthly fees.
Young adults can choose to convert the account into an Xtraordinary checking account through the credit union to earn interest. The Xtraordinary account offers up to 1.75% APY when you make 15 debit card purchases or spend $400 with your debit card.
10. Alliant Credit Union Teen Checking
Alliant Credit Union has won awards from top personal finance sites as one of the best credit unions in the country. With no monthly service fees and no overdraft fee, it’s a straightforward account that will introduce teens to the personalized service of credit unions.
Teens can earn interest with a rate of 0.25% APY on their checking account balance. Keep in mind, to earn that high yield, they will need to opt in to receive eStatements and make at least one electronic deposit per month.
As with a regular Alliant credit union account, your teen will receive up to $20 in ATM fee reimbursements per month, and pay no fees at 80,000+ ATMs nationwide.
Alliant Credit Union Teen Checking is one of the few teen checking accounts that provides overdraft protection. If you sign up with a linked savings account, Alliant Credit Union Teen checking will automatically transfer funds from savings to cover debit card purchases.
You will need a $25 minimum deposit to open an account with your teen, ages 13 to 17.
Prepaid Debit Cards for Kids
If you feel your child or teen isn’t ready for a checking account, you might consider a prepaid debit card for kids, instead. Products like Greenlight, Cash App, Revolut<18 are not your typical banking account, but are prepaid debit cards that provide kids with easy access to money.
1. Greenlight
Greenlight is one of the original names in pre-paid debit cards for kids and teens. Greenlight offers three different plans with the following monthly service fees.
Greenlight Core: $4.99/month
Greenlight Max: $9.98/month
Greenlight Infinity/$14.98/month
Each plan includes debit cards for up to five children or teens, access to the app, and parental controls. After that, these plans vary somewhat in their offerings.
The Core plan pays 1% interest. Greenlight Max pays 1% cash back on your child’s debit card purchases, deposited automatically into their savings account to earn 2% interest.
Greenlight Infinity also pays 1% cash back on purchases. It pays 5% APY on savings. But Greenlight Infinity is much more than just a debit card or money account. It’s also a family safety and protection app that provides the ability to send and receive SOS alerts, crash detection that automatically alerts 911 in the event of a car crash, and family location sharing.
Greenlight has vast capabilities for money management, including the ability to set limits on spending, reward kids with deposits for chores or accomplishments such as high grades, and pay a monthly allowance.
Kids can create a customized card, as well, which often appeals to teens.
2. Cash Card
Cash App is the popular person to person payment app that comes with a debit card you can use for online or in-store purchases. Now, everyone age 13 and up can gain access to a customized Cash Card of their own.
Cash Card is an easy-to-use card that allows you to send and receive money from external accounts or from friends and family who also use Cash App. You can use Boosts in Cash app to find savings on everyday items from popular stores. Boosts are a great way to teach kids how to save money while shopping.
There is no minimum deposit to open a Cash App account.
3. Revolut
Revolut has no monthly service fee and links to an external account or your Revolut online bank account. You can set spending limits and receive alerts when your child uses their debit card.
You can also assign “tasks” to your kids and set up instant transfers from your account when the task is complete. You can also set up automatically allowance payments, or create a list of chores and put money directly on your teen’s debit card when that chore is done.
Features to Consider for Opening a Teen Checking Account
The features you’ll find in the best free checking accounts for adults should also apply to teen checking accounts. Most of the best teen checking accounts on our list meet the following requirements.
No Monthly Maintenance Fees
You don’t want to pay money so your teen can learn about managing money. Teach your teen early on that some of the best things in life – including their checking account – can be free.
Low Minimum Balance Requirements
Look for an account with no minimum opening deposit and no minimum balance requirements. Fortunately, even banks that have minimum balance requirements to waive fees for other checking accounts typically have no requirements for free checking for teens.
Low or No Fees
Make sure there are no ATM fees, no overdraft fees, and no hidden fees for any reason. Most teen checking accounts will decline a purchase rather than put the account into overdraft, which can help teens build financial responsibility and learn money management.
Linked Savings Accounts
When you’re evaluating a teen checking account, you may also want to look for a linked savings account with savings buckets, so your teen can set goals and plan for future purchases. Compare interest rates on teen accounts, discuss the other features and benefits, and enroll your teen in making the choice with you.
Parental Controls
You should be able to lock and unlock your teen’s checking account within the mobile app, set spending limits, and even designate certain funds to be used only for specific purposes.
Online Banking Through a Desktop Portal or Mobile App
Teens today are tech savvy. Fortunately, most teen bank accounts – even those from brick and mortar banks and credit unions – include an easy to use mobile app with separate logins for teens and their parents.
Direct Deposit
Features like direct deposit may not be as important, unless your teen is working and wants their paychecks deposited into their account. Most of the bank accounts on this list, however, do offer the service. Some even deposit funds up to two days earlier than usual.
It’s a nice bonus when teen checking accounts can be converted into a regular checking account once your child reaches adulthood.
Pros and Cons of Bank Accounts for Teens
As you evaluate the features of these teen checking accounts, you might wonder if it’s even worthwhile to open a checking account for your teen. Opening a bank account for your teen can help them develop good personal finance habits early on.
Let’s consider other benefits and drawbacks of checking accounts for teens.
Pros
Conveniently transfer money from your linked account, wherever you are
Teach children and teens about saving and investing
Teach the basics of using a mobile banking app
Build financial responsibility
Money is protected by the Federal Deposit Insurance Corporation up to $500,000 for joint accounts
Cons
Teens unfamiliar with budgeting may spend more with a debit card handy
Some financial institutions charge fees
Your teen may lose their debit card, creating a security risk
You may need to make a minimum deposit to open the account
When all is said and done, the benefits of teen checking accounts far outweigh any inconveniences. Just make sure to choose a banking account with no minimum deposit requirements or monthly service fee at a bank or credit union that offers responsive customer service.
Also, make sure you can keep tabs on your teen’s spending through alerts or a mobile app.
How to Choose a Teen Checking Account
Now that we’ve explored some of the best checking accounts for teens, you may have already made your choice. If not, here are some aspects to think about when choosing the best checking account or prepaid spending account for your tween, teen, or college student.
Choose the Type of Teen Account You Want (Checking Account vs. Savings Account)
First, think about whether you want a prepaid debit card, a checking account, a savings account, or both. Do you want to choose a money account from a bank or credit union? Would you prefer to open the account at a brick and mortar bank or are you and your teens comfortable banking online only?
The answers to these questions should give you a good place to start.
Consider the fee menu (monthly service fees, recurring transactions, ATM withdrawals, card reload, etc.)
It shouldn’t cost money to teach your teen money management. Consider any fees related to the account. Similarly, you might prefer a bank or credit union with no minimum deposit to open an account.
Some of the best teen checking accounts pay interest, which is a great incentive to help your teen start saving money and to put a little extra money in their pocket.
Consider the Age and Responsibility Level of your Teen
Most of the best teen checking accounts feature alerts for parents through text or an app, capabilities to freeze spending or set limits, and turn off the debit card in the app in case it’s lost or stolen. These are good capabilities as your teen learns how to manage money.
Because you can’t spend every minute tracking your teen’s finance, however, you also want an account that will either decline transactions that would put the account into the negative, offer overdraft protection, or waive overdraft fee.
How to Open a Teen Checking Account
When you’re ready to open a checking account for your teen, you’ll want to make sure you have their date-of-birth and Social Security number handy, as well as your own. Make note of any minimum deposit requirements, as well, and have a plan in place to fund the account.
Fund the Teen Checking Account and Activate the Debit Card
Most teen checking accounts will allow you to make a deposit from an external account or make a mobile check deposit in the app. If your teen works, you can have them request a form to have their paycheck deposited automatically via ACH transfer.
If you open a teen account with Chase, Bank of America, or other big banks, you can easily transfer funds from your linked internal account in minutes.
Once your teen receives their debit card, you will want to show them how to activate it by calling the number on the card or setting up their PIN at an ATM within the network. Let them know that their PIN should be easy for them to remember, but hard for anyone else to guess. They shouldn’t use their birthday or the last four digits of their phone number, for instance.
Frequently Asked Questions
Do teen checking accounts have monthly fees?
Most of the best checking accounts on our list do not have maintenance fees, service fees, or ATM fees.
Can a minor have a checking account?
Yes, a minor can open a checking account jointly with a parent or guardian.
What happens to a teen checking account when I turn 18?
Some of the best teen checking accounts automatically convert to regular checking accounts when the child turns 18.
Can I open a teenage bank account online?
You can open many of the checking accounts on this list online. However, to open a Wells Fargo Clear Access account for a person under the age of 18, you’ll need to visit a brick and mortar branch.
What is the minimum age to open a teen checking account?
Some teen checking accounts are available to children as young as six years or eight years old, as long as they are opened jointly with a parent or guardian. Teens 18 and older can open an account on their own. Many student checking accounts designed for young adults ages 18 to 25 have no fees for college students.
How much money should you keep in your teenager’s checking account?
How much money you keep in your teen’s checking account will depend on a variety of factors. How much can you afford to pay in allowance or fees for chores per month? Is your child earning any money of their own they can deposit? Do they typically receive cash gifts for birthdays or holidays?
Keep in mind, funds in teen checking accounts are FDIC insured up to the federal limit of $250,000 per account holder, per account type. In the case of jointly held accounts with a parent and a minor account holder, these accounts are insured for $500,000 in total, or up to $1 million if you have linked checking and savings.
When you choose a bank for your daily checking and savings needs, you can choose between a national bank, a smaller regional bank, credit unions of varying sizes, and even online banks and financial technology companies.
Since early 2023, when Signature Bank and Silicon Valley Bank both experienced failures after customers pulled out large amounts of money during bank runs, banking customers may feel more comfortable choosing a national bank.
Although the U.S. government took extraordinary measures to protect the assets of SVB and Signature Bank customers, and deposits held in the accounts were FDIC insured, many customers were still rightfully concerned about gaining access to their money in a timely manner.
After the banking crisis of 2008, the Federal government declared banks like JPMorgan Chase, Bank of America, Citibank, and Wells Fargo as “too big to fail.” But these aren’t the only national banks or credit unions available.
You might think that smaller online banks may have lower fees, while small local banks are known for friendly and responsive customer service. But the national banks on this list blend the best of all worlds: low fees, high marks for customer satisfaction, ways to avoid overdraft fees, convenient ATM networks, and a variety of banking products.
16 Best National Banks
Here are the 16 best national banks that offer exceptional services, excellent customer support, and innovative banking solutions to meet all of your financial needs.
1. SoFi – Best for Digital Banking & High Yields
SoFi became a nationally chartered online bank in 2022, after acquiring Golden Pacific Bancorp, Member FDIC. Originally known for its vast array of loan products, including private student loans, today SoFi has a combination checking and savings account, or a cash management account, with no monthly service fee.
SoFi also has no minimum balance requirements, no overdraft fee, and overdraft protection up to $50 with qualifying direct deposits each month. You can bank for free at any of 55,000+ fee free Allpoint ATMs nationwide.
As an online bank, SoFi offers higher interest rates than you may find at brick and mortar banks. Earn up to 4.20% APY on your savings account balance and 1.20% on money in your checking account. When you use your SoFi debit card at select local businesses, you can earn up to 15% cash back.
SoFi offers two tiers of accounts: SoFi and SoFi Plus. To qualify for the “freemium” SoFi Plus membership, bank customers must have qualifying direct deposits. Plus, when you sign up before December 31, 2023, you can earn a cash bonus of $250 when you set up direct deposits of $5,000 or $50 with a direct deposit as low as $1,000.
SoFi Plus members receive loan rate discounts, bonus rewards, access to special entertainment events and more, making SoFi a unique company when it comes to online banks.
2. Discover Bank – Best for Cash Back
Discover may be best known for cashback and rewards credit cards. But its online banking products are some of the best you’ll find among national banks.
With no monthly fees and no minimum balance, your Discover Cashback checking account pays 1% cashback on up to $3,000 worth of debit card purchases monthly. You’ll never pay overdraft charges, and you can withdraw cash at a network of 60,000+ fee free ATMs.
You can qualify for overdraft protection by linking your Discover Bank savings account. Discover Savings pays a high 3.90% APY with no minimum deposit required.
Other Discover Bank deposit accounts include CDs with terms from 3 months to 10 years, and a money market account that pays 3.80% APY for balances under $100,000 and 3.85% on balances $100,000 and up.
For questions or help with your account, you can reach a U.S.-based customer service representative for Discover Bank by phone, 24/7/365.
3. Chase Bank – Best for Credit Card Rewards & Referral Bonuses
As the world’s largest national bank, JPMorgan Chase Bank doesn’t need to do much to entice customers. People will choose Chase based on its name, reputation, and more than 4,700 convenient branch locations across the U.S.
However, Chase happens to have one of the best bonuses for new customers and a generous referral bonus program when existing customers refer their friends. This, coupled with a robust and easy-to-use mobile app and a variety of checking, savings and investment services, puts Chase on our list of top national banks in the U.S.
Chase is currently offering new Chase Total Checking customers a $200 bonus when they open a new account and set up direct deposit within the first 90 days.
New or upgrading Chase Private Client customers can earn a $3,000 bonus with a deposit of $500,000 or more within the first 45 days of account opening. Deposits of $150,000 to $249,999 earn $1,000 and cash deposits of $250,000 to $499,999 earn $2,000. You must keep the money in your J.P. Morgan Wealth Management or JPMorgan Chase deposit accounts for 90 days to qualify.
In addition to Chase Total Checking, the bank’s most popular checking account, and Private Client services, Chase also offers other checking and savings accounts.
Chase Secure Banking has a $4.95 monthly fee and no overdraft fees. Chase Premier Plus Checking offers a few added benefits beyond Chase Total Checking, including ATM fee rebates up to four times per statement cycle, a linked personal checking account with no monthly fees, and a 0.01% interest rate on balances.
Chase also offers bank accounts for kids, teens, and college students, as well as CDs, savings and money market accounts, mortgages, loan products, and a full array of top-rated rewards credit cards.
If you have multiple Chase accounts, it’s easy to manage them all within the mobile app.
4. Chime – Best for Building Credit
Chime is a financial technology company backed by Stride Bank, Member FDIC, and Bancorp Bank, Member FDIC. It is not a bank, itself, but offers some of the same features, including online banking, a debit card, and direct deposit up to two days earlier than some other banks.
Chime has no monthly service fee, no overdraft fee, and no minimum balance requirements. For customers who need a little boost to make it from paycheck to paycheck, Chime offers fee-free overdraft up to $200 through the SpotMe5 program and a credit builder secured Visa credit card with no annual fees, interest or minimum security deposit.
Use your Chime debit card at any of 60,000+ fee free1 ATMs in the Allpoint, MoneyPass or Visa Plus Alliance ATM networks. Out of network ATM fees may apply, otherwise.
You can qualify for Chime’s SpotMe program with a single direct deposit of $200 or more during any monthly statement period. If you process a transaction that would put you into overdraft, Chime will accept the transaction even if it puts your balance into the negative by up to $200.
The Credit Builder Secured Visa card carries the same requirements of a $200 monthly minimum direct deposit. You can build your credit and raise your credit score with responsible use of the card.
5. Citi® – Best for Large Cash Deposits
The third of the four largest national banks in the U.S. based on assets, Citi, owned by Citigroup, is best for high net worth customers or those with large cash deposits divided among Citi checking, savings, and other accounts.
Currently, you can earn a generous cash bonus of $200 to $2,000 when you open a qualifying Citi checking account and meet specific minimum opening deposit requirements. Your bonus will be determined by your account balance on the 20th day after opening the account. Funds must remain in the account for an additional 60 days after the 21st day.
Citi offers multiple checking accounts to meet various customers’ financial needs, all with monthly fees that are easy to waive if you hold the required minimum balance. The bank accounts include:
Citibank
Citi Priority, which includes travel perks and access Citi Personal Wealth Management advisors
Citigold, relationship banking and investment services
Basic Banking and ATM access
Access Account, a debit account with no paper checks
For the Basic Checking account, you’ll need to maintain a $1,500 minimum balance to waive the fees. The other accounts have larger minimum balance requirements to avoid monthly maintenance fees and take advantage of other perks, up to $200,000 for a Citigold account.
All accounts provide access to personal banking at Citi branches and access to more than 65,000 fee free ATMs across the U.S. All accounts except for Basic and Access accounts also have no fees at ATMs outside the Citi network.
Like all the larger national banks on this list, Citi has a full gamut of rewards credit cards, savings and money market accounts, and high-yield CDs.
6. CIT Bank – Best for High Interest Rates
CIT Bank, a division of First Citizens Bank, has earned awards and accolades for customer satisfaction, rated by American Banker as #1 for “delivering the most humanized experience in banking.”
You should be aware that deposits in First Citizens Bank & Trust Company, Member FDIC, are not separately insured. This only matters if you hold more than $250,000 in any single account type, such as checking or savings, in both First Citizens Bank and in CIT Bank.
CIT is the online only banking arm of First Citizens Bank, with high-yield savings accounts, CDs, money markets, and eChecking, all with no monthly fees and no overdraft fees. You won’t pay any ATM fees at CIT Bank machines, and CIT Bank reimburses up to $30 per month when you use out-of-network ATMs.
CIT offers 0.25% APY on checking when you hold more than $25,000 in your account, and 0.10% APY on balances under $25,000. The bank has high interest rates for savings, offering customers a 4.85% APY on balances of $5,000 or more with the Platinum Savings account.
CIT Bank has two other savings accounts as well:
Savings Connect, with a 4.60% APY
Savings Builder, which requires a minimum balance of $25,000 or a $100 monthly deposit to earn 1.00% APY
You’ll need a $100 minimum deposit to open a checking or savings account at CIT Bank.
7. Bank of America – Best for College Students
As the second largest of the best national banks, behind Chase, Bank of America has the full gamut of banking products, with three checking accounts plus a student account, savings, CDs, and investment products.
It’s easy to waive monthly maintenance fees on a checking account with a minimum daily balance, direct deposits, combined balances across eligible linked Bank of America accounts, or by enrolling in their Preferred Rewards programs.
We like the Advantage SafeBalance banking for kids, teens, and college students under 25 years old. They have no monthly fee and no overdraft fees. Teens ages 16+ can have sole ownership of the account.
For everyone else, the bank offers Advantage Plus and Advantage Relationship checking accounts with easy ways to waive the monthly fees with direct deposit or a minimum daily balance.
When you open a new checking account, you can qualify for a $100 bonus when you receive qualifying direct deposits of at least $1,000 within 90 days of opening the account.
Of course, Bank of America also has CDs, and a savings and money market account. Plus you can invest with Merrill. All of these deposit accounts count toward your Preferred Rewards membership.
When you have a combined average daily balance of at least $20,000 for three months, you’ll qualify for the rewards program.
8. U.S. Bank – Best for Military Members & High Balance Savings
U.S. Bank offers the Bank Smartly checking account so you can earn interest on your money. The current interest rate is just 0.01% APY on all checking balances. You’ll pay a $6.95 maintenance fee, but this is waived if you meet minimum deposit requirements or if you are a member of the U.S. military.
You can link your Bank Smartly checking account to a standard savings account or Elite Money Market to earn even more. To avoid fees on your savings account, you’ll want to keep a $300 minimum daily balance or a $1,000 average monthly collected balance. If you are already a Bank Smartly customer, you can enroll in Smart Rewards to waive savings account fees.
The Elite account is better for those with high balances. You can earn up to 4% APY on balances from $25,000 up to just under $500,000.
The appeal of U.S. Bank is in its high ratings for banking satisfaction across the board from customers. U.S. Bank earned accolades for having the best mobile app, the best digital mortgage tools, the best customer service features, and best mobile check deposit capabilities. These factors all contribute to its ranking as a best national bank.
9. Axos Bank – Best Online Bank
Axos is an online only bank with a rewards checking account that delivers up to 3.30% APY, with no fees and unlimited ATM fee rebates for out-of-network ATMs.
To earn the maximum APY, you’ll need to set up direct deposit and Axos Bank’s free Personal Finance Manager for 0.70% interest. Then, open an investment account and take out an Axos personal loan or auto loan and earn another 2.60% annual percentage yield on your checking account balance.
Axos also offers an Essential Checking account with early direct deposit and no fees, and a Cashback Checking account, which gives you 1% cash back on debit card purchases, along with no maintenance fees and unlimited domestic ATM fee reimbursements.
Voted the best online bank by many top personal finance sites, Axos Bank offers more than just high interest, no fee checking.
Axos Bank offers CDs with terms between 3 and 60 months and a savings account with 0.61% annual percentage yield, with interest compounded daily. You can also find personal loans, car loans, mortgages, and investment products.
Like other national banks, Axos Bank provides FDIC insurance up to $250,000 or $500,000 for joint account holders. But you can expand your coverage up to $150 million with Axos Bank InsureGuard+ Savings from IntraFi Network Deposits.
Axos splits up your large deposit into multiple accounts across several banks, each covered up to $250,000. If you are dealing with a substantial amount of cash and want your savings protected at a single bank, Axos may be a good choice for you.
New customers can earn a $100 welcome bonus by opening an account with just a $50 minimum opening deposit.
10. Truist Bank – Best for Relationship Banking & Innovative Savings Perks
Truist Bank is one of the top 10 largest national banks, formed as a merger between BB&T and SunTrust in 2019. Called “the biggest bank you’ve never heard of” by CNN Business, Truist holds assets of $574 billion and has been growing steadily since the merger.
Truist offers checking and savings accounts, CDs, and credit cards. Truist checking and savings customers can earn perks and benefits. This includes access to Long Game, a savings game app that lets you earn cash when depositing into your Truist savings account. It also includes bonus rewards on your Truist credit cards.
Truist has four levels of relationship banking in its Truist One checking account. This means the more you deposit, the more perks you will receive, up to a 50% loyalty bonus on Truist credit cards, and a discounted annual fee for a Delta SkyMiles debit card. Benefits for relationship banking begin at $10,000 in combined average monthly balances for Truist deposit accounts.
Your Truist checking account has a $12 monthly fee, which is easy to waive with $500 or more in direct deposits each month or a $500 minimum balance across all Truist deposit accounts. Truist personal loan, mortgage or credit card customers also pay no fees on their Truist checking account.
You can also waive the monthly fee with a linked Small Business checking account or if you are a student under the age of 25. You’ll need a $25 minimum opening deposit for a Truist One checking.
Customers with lower income or just getting started establishing their finances can benefit from Truist Confidence checking and savings accounts. The account has just a $5 monthly maintenance fee, which is easily waived.
11. Capital One – Best for High Interest Rates at a Brick and Mortar Bank
Like Chase Bank, Capital One is well known for its top-rated rewards credit cards. The company is also one of the best national banks with a savings account and CDs offering interest rates higher than the national average.
Capital One Performance 360 savings has a 3.90% APY, no monthly maintenance fees, and no minimum deposit to open your account. A Capital One 360 Performance checking account, similarly, has no monthly maintenance fee, overdraft protection through your linked savings account, and early direct deposit.
You can bank with no fees at a network of 70,000+ ATMs nationwide, and can deposit cash easily at CVS retail locations. Although you must open your Capital One Performance account online, you can receive personalized service and deposit cash at any Capital One bank branches or Capital One Cafes.
12. PNC Bank – Best in East and Southwest
PNC Bank is a large, national bank with branch locations across 29 states. Most branches are in the east, south, and southwest, although you will also find branch locations in some Midwest states.
PNC Bank’s online checking account is called Spend and it links to the PNC VirtualWallet. You can add a savings account, called Reserve, or upgrade to the Performance Select product with two tiers of savings and double layer overdraft protection.
When you set up your VirtualWallet with PNC Bank and open your Spend account, you can earn a $50 bonus.
Combining your Spend account with a PNC Bank Reserve account yields even more benefits. Earn a $200 bonus when you qualify. Finally, if you open a Performance Select VirtualWallet, you could earn $400.
Each account comes with a low monthly fee that is easily waived through qualifying monthly direct deposits or by meeting minimum balance requirements.
13. Wells Fargo – Best for Checking Account Options
Wells Fargo, one of the “big four,” is the fourth largest of the best national banks in the U.S. It is known for having many convenient bank locations, with 4,700 branch locations.
The vast number of branches across the country puts it top on our list for in-person banking and customer satisfaction.
Plus, we also rated it best for various checking account choices for everyone from children to retail investors.
Like the other national banks on this list, Wells Fargo has checking, savings, and CD accounts. The bank has four checking account options for consumers at various stages of their financial lives:
Clear Access Banking, with no overdraft fee and a low $5 monthly fee, waived for teens and young adults ages 13 to 24
Everyday Checking, the most popular bank account, with optional overdraft protection
Prime Checking, offering discounted interest rates for loans and higher interest rates for linked CDs and savings accounts
Premier Checking, a relationship banking service with 24/7 support and discounts on investing services
It’s easy to waive the $10 fee on Everyday Checking with a $500 minimum daily balance or $500 in monthly direct deposits. Waive the $25 fee on your Prime checking with $20,000 in linked balances. Similarly, your Premier Checking account will be free with $250,000 in linked balances, including investments with the bank’s Advisors.
You’ll need a $25 minimum opening deposit to open your account.
14. Ally Bank – Best Online Only Bank for Savings
Ally Bank is widely recognized as one of the best national online banks. It has very few fees, including no maintenance fee, no overdraft fee, and no ACH fee (even on expedited transfers). Plus, you’ll earn interest of 0.25% in your checking account and 3.85% APY on savings, including money you have allocated into various buckets.
We rated Ally Bank as the best online only bank for savings, not just because of the high interest rate, but because it offers so many ways to manage your money and ramp up your savings efforts.
You can set up recurring transfers into your savings account for specific goals or just to build up your emergency coffers. You can choose to round up transactions made with your Ally Bank debit card, or even electronic payments and checks. When Ally Bank finds at least $5 in “round-up” savings, it will be transferred automatically to your checking account.
Finally, Ally Bank analyzes your checking account periodically to reveal extra funds that are “safe to save.” Ally Bank automatically transfers that money for you. But you can transfer it back whenever you’d like.
In addition to these savings benefits, Ally Bank lets you access your money with your debit card with no fees at any of 43,000+ Allpoint ATMs. The online bank also refunds up to $10 in fees charged by out-of-network ATMs.
You can avoid stress and overspending with the Overdraft Transfer Service, which automatically transfers money from your Ally Bank savings account into checking. If you exceed six transfers or six savings withdrawals per month, Ally Bank will reimburse those fees, too.
You can also apply for CoverDraft℠ Coverage, which will cover up to $250 in charges that would put your account in the negative. You’ll qualify 30 days after you deposit at least $100 into your checking account. If you receive qualifying direct deposits of at least $250 two months in a row, you can increase your coverage to $250.
15. TD Bank – Best for Overall Banking Satisfaction
TD Bank, deemed America’s most convenient bank for its number of branches, branch hours and excellent customer service, blends the best of brick and mortar banks with easy online banking.
Most TD Bank locations are open seven days a week, including Sundays, with extended hours beyond what most brick and mortar banks provide. Most TD Bank branches are located across the East Coast, with locations in 15 different states and Washington, D.C.
TD Bank is the 7th largest bank in the U.S. based on deposits, with 1,668 branch locations nationwide. You can also reach customer service by phone, 24/7/365, which earns TD Bank high marks for banking satisfaction.
TD Bank offers six checking accounts for customers in various life stages:
TD Essential Banking
TD Convenience Checking
TD Beyond Checking
TD Simple Checking
TD 60 Plus Checking
TD Student Checking (for ages 17 to 23)
Currently, TD Bank is offering sign-on bonuses for new customers who open a TD Beyond or TD Convenience bank account. You’ll need a qualifying direct deposit (or more than one) totaling $2,500 within the first 60 days to earn $300 with TD Beyond, and a direct deposit of just $500 within the first 60 days to earn $200 with TD Convenience.
16. Schwab Bank – Best for Investors
Schwab may be best known as an investment service, but the bank was rated highest in banking satisfaction with checking accounts from J.D. Power & Associates four years running.
If you have a Schwab investment account, or are considering opening one, Schwab could be the best choice in banking for you.
The Schwab Bank Investor checking account has no foreign transaction fees, no minimums, and unlimited ATM fee rebates. Plus, earn 0.45% annual percentage yield on checking. Schwab’s savings account offers 0.48% APY.
Schwab also offers exceptionally high interest rates for CDs, with up to 5.40% APY and terms as short as 30 days. You’ll receive FDIC protection exceeding the federal maximum because you can purchase CDs from multiple banks, all through Schwab investment.
Methodology: How We Chose the Best National Banks
We evaluated a variety of banks and credit cards, taking into consideration the:
Variety of products
Interest rates
Monthly fees
ATM fees and ATM fee reimbursement
Branch locations and number of branches
Minimum deposit requirements
Fraud protection and security
We also looked at consumer reviews, and drew on the general reputation of each bank to find the best national bank.
Finding the Best National Bank
Now that we’ve explored the specifics of the best online banks and brick and mortar banks nationwide, you probably still have questions about which one is really the best national bank.
Let’s compare the three largest in the U.S. based on number of branches, interest rates, and overall banking satisfaction.
Chase vs. Wells Fargo
For the largest nationwide bank, Chase offers excellent banking satisfaction with an A+ rating from the Better Business Bureau, 4,800 branch locations, and an easy and intuitive mobile app. If you are shopping for a bank credit card, Chase also offers some of the best rewards cards available today.
Wells Fargo rivals Chase when it comes to number of branches, with roughly 4,700 locations across the U.S. It’s somewhat easier to waive the checking account fees at Wells Fargo. Wells Fargo offers higher interest rates for savings, with a 0.15% APY compared to Chase’s 0.01%.
Both banks have lower interest rates than you might find at online banks. However, if you are looking for national banks with a solid reputation, many branches, and high marks in banking satisfaction, either Chase or Wells Fargo would be a good choice.
Wells Fargo vs. Bank of America
Bank of America and Wells Fargo are the second and third-largest banks in the U.S. based on assets. BofA only has 4,000 branches compared to Fargo’s 4,700, but BofA boasts more ATMs nationwide.
BofA stands out when you join the Preferred Rewards program because you can waive the fees on your bank account and enjoy perks, bonus rewards on BofA credit cards, and rate discounts on loans.
If you have a large balance or are looking for an investing platform through your bank, BofA may be your best choice. On the other hand, Wells Fargo offers high interest rates on savings and convenient branch locations nationwide.
Common Questions
People have many questions related to whether an online bank is better than a traditional bank or whether a local bank is better than one of the largest national banks. We break it all down here.
Which is better, an online bank or a brick-and-mortar bank?
If you are looking for the highest interest rates and generous rewards programs, you are highly likely to find them at online banks. However, there are some advantages to a brick and mortar bank, including in-person service at local branches, the availability of paper checks, and easy ways to deposit cash in person or at branch ATMs.
You should expect the best national online banks and the best brick and mortar banks to have robust mobile apps, easy-to-waive fees, and fraud protection.
Make sure whatever bank you choose is “Member FDIC,” which means your deposits are insured up to $250,000 per account holder, per account type. That means joint accounts have $500,000 worth of FDIC insurance protection.
Is my money safer in a national bank vs. a regional bank (or a national credit union vs. a regional credit union)?
All banks on this list are Member FDIC, which means they are insured to the maximum allowable limit of $250,000 per account holder, per account type. Credit unions are covered up to the same limits by the National Credit Union Administration.
Many online banks are insured up to $2 million or more. These financial institutions divide cash deposits among multiple partner banks. Each bank insures deposits up to the maximum limit allowed by the Federal Deposit Insurance Corp. Read the fine print to determine your coverage limits when you choose a bank.
Beyond that, your money should be equally safe in a national bank, a smaller bank, or a credit union of any size. Also look for features such as fraud protection, fraud alerts via text, email or in the mobile app, and enhanced website security measures. You should also be able to lock and unlock your debit card in the mobile app if you misplace it or believe it may have been stolen.
What makes big banks different from smaller banks?
By definition, big banks will have larger market capitalization, which represents the total value of a bank’s stocks. Big banks will also hold more assets. For instance, Chase, which is the world’s largest financial institution, holds $3.2 trillion in assets. The second-largest national bank, Bank of America, possesses $2.41 trillion in assets. Larger financial institutions may also have more bank branches.
In many other ways, big national banks and smaller banks are similar, especially today. Customers want specific features and are unwilling to compromise on things like fee-free ATMs, no monthly fees, early direct deposit, and an intuitive mobile app.
How much interest do the best big banks pay?
In general, some of the largest national banks do not have the highest interest rates for savings and very few offer interest earning checking accounts.
Capital One 360 and Discover are two of the best national banks that offer interest on checking. To earn a higher APY with one of the largest national banks, you might want to consider CDs.
Are national banks better than other kinds of banks?
National banks aren’t necessarily better or worse than other kinds of banks. They may have more convenient branch locations, a higher number of branches, and a greater variety of products, but they might also have higher fees. Decide what’s most important to you when you choose a bank.
If you’d prefer to trust your money with one of the largest national banks, with a large market capitalization, high value, and branches nationwide, consider opening your checking and savings accounts with one of the best national banks on this list.
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
The Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
5. Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.
It’s time to give yourself a 10-second financial check-up: are all of your hard-earned dollars earning interest? Even your short-term savings that you’ll need in two years or so?
Savvy investors know that every dollar deposited at a bank, brokerage, or financial institution should be making money — and that includes your short-term savings, cash investment balances, even your checking account. If not, you should be looking for somewhere else to store your dollars.
Let’s look at where best to stash your short-term savings.
What’s Ahead:
High-yield savings accounts
High-yield savings accounts pay up to 5x the national average savings rate and are convenient to open and manage. You can transfer money in and out electronically from your checking account or other bank accounts — a process that rarely takes more than two business days.
Most high-yield savings accounts have no fees or minimum balance requirements, so there’s no excuse for not using one for short-term cash reserves.
You can check out our full list of the best high-yield savings accounts, but here are three of our favorites that you may want to consider for short-term savings:
Aspiration Bank
Aspiration Bank is a great bank if you love earning rewards. And, because this bank plants trees for you with your rounded-up change, you can pride yourself on taking care of the environment through your banking.
You only need a minimum balance of $10 in the account and can earn up to 5.00% APR, depending on the account you have — they have a free account and a subscription account (Aspiration Plus) that gives you access to more of their products as well as a higher APY.
Given these easy terms and high returns, the Aspiration Plus Savings Account can be a very lucrative place to stash your short-term savings.
Learn more/apply or read our full Aspiration Bank review.
Citi Accelerate® Savings
The Citi Accelerate® Savings has one of the highest APYs when it comes to high-interest savings accounts, coming in at 2.20% APY. And their monthly fee is waived if you have at least $500 in your account, so it’s a great option if you have a larger short-term savings goal in mind.
And since there’s no minimum opening deposit, they’re great for just about anyone who wants to start socking away money every month.
Unfortunately, the Citi Accelerate® Savings is only available in certain U.S. markets. If you live in California, Connecticut, Maryland, Nevada, New Jersey, New York, Virginia, Washington, DC, or select markets in Florida or Illinois, you’ll need to go with an alternate account option.
Learn more/apply.
Capital One 360 Performance Savings
If you’re looking for a more full-service experience with your high-interest online savings account, consider Capital One 360 Performance Savings. They have plenty of services to help you out with your savings, and an APY of 3.00%. Plus, there are no minimums or monthly fees.
It’s a great option if you’re starting out with a low balance and you want to increase it until your short-term savings project is completed.
Read our full Capital One 360 Savings review.
Cash management accounts
A cash management account is an account that’s held by a robo-investor. It’s not a checking, savings, or investment account. Instead, the brokerage firm holds your money for you to use. They issue debit cards just like a checking account, but they have higher interest rates than those types of accounts.
These are a great option if you’re already using a robo-advisor for your long-term investments. You can find them at companies like Wealthfront, which has a cash account.
Short-term bonds
Short-term bonds are issued either by corporations or by the government. Each bond has different terms, so you’ll want to research what you’re signing up for before you make a purchase. But they’re overall low-risk investments.
But what is a bond? Good question. Bonds are basically IOUs that a company or government gives you on a debt. These groups are trying to fund something, but need capital, so they sell off bonds and tell you that after X amount of years, they’ll pay you Y in interest.
Read more: How does a bond work? A simple (and informative) guide
T-bills
Treasury bills, or T-bills, are another great short-term savings storage plan. They work similarly to bonds — you buy them from the treasury, and then you wait until they mature. Once they mature, you sell them and receive your money back, plus any interest.
You can buy them in intervals of 1, 4, 8, 13, 26, and 52 weeks, so they’re great for short-term projects that take about a year for you to save for.
Money market accounts
Money market accounts, also known as MMAs, are similar to both checking accounts and savings accounts.
How does that work? Well, you have interest rates that are higher than checking accounts and more on par with savings accounts, but you’re able to get a debit card to access your funds like a checking account. However, there is a limit to how many transactions you can make a month.
Money market accounts are good for short-term savings because they have higher accessibility than a savings account, but are low-risk. As long as you keep money in the account — and stay below the monthly withdrawals limit — you’ll earn interest on the account.
Read more: Best money market accounts
Certificates of deposit
Savers who are looking for the best return on their money on a slightly longer-term basis (minimum three months) should take a look at a certificate of deposit. CDs have terms that typically run from a period of three months to five years. Rates increase as the CD term gets longer.
You can get the best rate on a CD by shopping online, as these tend to change quite often. Most CDs will have minimum deposits of $500 or more, and patient investors can get a higher rate the longer their term.
Browse today’s best CD rates.
To reap the benefits of long-term CD rates with short-term savings, check out this article on CD laddering, which explains how to build your own.
Should you invest your short-term savings?
When you save money in an FDIC-insured bank account, your money is guaranteed not to lose value. When you invest money, you’re taking on risk for the chance at a greater return. You might very well earn a much better return on your money than you could with a bank, but you could also end up with less money than you put in.
In general, you want to save money you’ll need in the short term and invest money you won’t need for a long, long time. That’s because the risk of losing money on an investment diminishes the longer you’re able to hold that investment. We all know the stock market is volatile. If you put your money in the day before a crash, you could lose a big chunk of value overnight. If you leave that money invested for 30 years, however, you’ll likely come out way ahead (despite the initial crash!)
Risk tolerance is a personal thing, but my philosophy is that I never invest money I’ll need in the next two years. If don’t need the money in the next two years but will need it in the next five years (for example, money I’m saving for a future car purchase), I might invest the money, but very conservatively.
If you’re looking for a simple way to save money for a short-term goal, but you’d rather take your chances investing it rather than parking it at a bank, check out the Acorns app. You just download the app, link a bank account, answer a few questions, and you’re an investor. You can connect the app to any number of debit or credit cards, and Acorns automatically rounds up each of your purchases and invests that amount on your behalf. While this won’t make you rich, it can help any first-time investor make a little extra cash.
The bottom line
For most people, the best place to put short-term savings is an online savings account that pays a fair interest rate.
But other options, like certificates of deposits, money market accounts, short-term bonds, T-bills, and cash management accounts are all good alternatives you may not have considered for saving up for a short-term goal.
Featured image: Julia Sudnitskaya/Shutterstock.com
Georgia offers an affordable cost of living, top-notch schools and universities, and ample attractions, like the World of Coca-Cola, Forsyth Park, and Atlanta Botanical Garden. It’s also home to a diverse selection of reputable, member FDIC banks for individuals and small business owners.
No matter what your financial needs may be, you’re sure to find a good fit in the Peach State.
14 Best Banks in Georgia
We’ve made finding the best banks in Georgia effortless with our comprehensive list, so let’s dive straight into the options.
1. First Citizens Bank
Owned by First Citizens BancShares, First Citizens Bank has 56 branches across Georgia. As long as you sign up for paperless statements and make an initial opening deposit of at least $50, you won’t be on the hook for monthly maintenance fees.
With the First Citizens standard savings account, you’ll be able to earn interest without paying a monthly service fee or meeting a minimum balance requirement. The bank offers additional banking products, like credit cards, loans, retirement accounts, investment services, and insurance.
As a First Citizens customer, you can bank in-person at a local branch or perform account management online or via the robust mobile app.
2. Ally Bank
Ally Bank is a digital bank with a reputation for industry leading interest rates and low fees. While it doesn’t have a physical presence in Georgia, you can open and manage your accounts through Ally’s intuitive online and mobile banking tools. The Ally Interest Checking account online is a solid pick if you’d like to earn interest and don’t want to worry about annual fees or minimum balance requirements.
You can use the online portal or mobile app to pay bills online, deposit checks, and transfer funds. If you’d like to withdraw some cash, you’ll be able to do so at an Allpoint ATM for free with your Ally debit card.
Ally will also reimburse you if you make any out-of-network ATM reimbursements. In addition to the Ally interest bearing checking account, you might want to open the Ally Online Savings account, which comes with an impressive interest rate and savings bucket tools to help you meet your financial goals.
3. Axos Bank
Axos Bank is a digital bank that serves Georgians. If you’re in the market for checking accounts, you’ll have several options available to you. These include the Essential Checking, Rewards Checking, CashBack Checking, Golden Checking, and First Checking. Many of these accounts earn cash rewards or pay interest.
In addition to an Axos checking account, you might want to consider a high-yield savings account, high-yield money market, or a CD. You can also invest through Axos Invest, which is the bank’s free robo advisor. In addition, the bank offers 24/7 support for personal banking customers.
4. CIT Bank
CIT Bank is an online bank serving customers in all states, including Georgia. You can earn a competitive annual percentage yield or APY on various accounts without paying an arm and a leg for maintenance fees.
The CIT checking account requires a $100 minimum deposit but comes with interest and a free debit card. There’s also the Savings Builder account, which is a two-tiered savings account that requires a $25,000 balance or at least one monthly deposit of $100 or more.
Other options include the CIT Bank Money Market Account, certificates of deposit or CDs, home loans, and business accounts. You may download the CIT Bank app on your Android or IOS device to make mobile check deposits, pay bills, and use services like Zelle, Apple Pay, and Samsung Pay.
5. Renasant Bank
Headquartered in Mississippi, Renasant Bank has physical locations throughout Georgia. It’s a community bank with several checking account options. Each free checking account comes with perks like online bill pay, mobile banking, a debit card, and a switch kit so you can switch accounts without the hassle.
Renasant’s savings account lineup includes an interest bearing savings account, a savings account for children, a health savings account (HSA), and money market accounts.
If you’re interested in a loan, you can choose from personal loans, auto loans, and home equity lines of credit. In addition to personal banking services, Renasant provides mortgages and a plethora of business banking products. There’s also Renasant Rewards Extra, which gives you access to thousands of deals, cell phone insurance, identity theft protection, roadside assistance, and a health savings card.
6. United Community Bank
Based in Blairsville, United Community Bank is a regional bank with branch locations throughout Georgia, Alabama, Florida, Tennessee, South Carolina, and North Carolina. It’s insured by the Federal Deposit Insurance Corporation or FDIC and has been around since 1950. As a United customer, you can take advantage of more than 206 United ATMs and 1,260 Publix Presto! ATMs for free.
Its plethora of offerings include checking accounts, savings accounts, mortgages, credit cards, CDs, investing products, and business banking products. You can bank on the go via the convenient mobile app or use the online appointment scheduling tool to schedule an in-person appointment with a banker. If you have any questions or concerns, you can fill out a support form online and state whether you prefer an email or phone response.
7. Ameris Bank
Ameris Bank is a regional full-service bank with brick-and-mortar locations throughout Georgia in cities like Atlanta, Tucker, Woodstock, Marietta, and Oakwood. It offers three checking accounts with benefits such as a free Visa debit card, online banking access, e-statements, online bill pay, mobile banking, and Zelle transfers. In addition to checking accounts,
Ameris offers a plethora of savings accounts, including a personal savings account, personal money market account, minor savings account, health savings account, educational savings account, IRA, and CDs. You can also turn to Ameris for numerous mortgage options and down payment assistance. The bank provides personalized business banking solutions as well.
8. Bank of America
Bank of America is a well-known leader in the banking industry. Its financial centers and ATMs are present in various Georgia cities. From checking accounts, savings accounts, and credit cards to home loans, auto loans, and investing products, Bank of America offers it all.
The bank is also a great resource if you’re looking for small business banking products. Its Business Advantage Banking product is a business checking account with two settings to meet varying business needs.
While the Fundamentals setting has all the basic tools you need to manage your business, the Relationship setting is more robust and won’t charge you fees for wire transfers and electronic deposits. You can switch settings to accommodate your business needs at any time.
In addition to checking accounts, Bank of America offers small business loans, like SBA loans, commercial real estate loans, auto loans, and secured lines of credit.
9. Community Bank of Georgia
Based in Baxley, Community Bank of Georgia is a locally owned and operated bank with 24/7 ATM access. It aims to develop long-term relationships with account holders while offering a full suite of products and services.
The bank’s personal savings accounts include the regular savings account, Treasuresaver Club account for children ages zero to 13, a holiday savings account for holiday expenses, and a personal money market account for high interest savings opportunities.
Other personal banking products offered by Community Bank of Georgia include checking accounts and credit cards. The bank serves local business owners as well.
10. Chase Bank
The consumer banking arm of JPMorgan Chase, Chase is one of the largest national banks with a widespread presence in Atlanta. If you decide to open a deposit account at Chase with eligible Chase checking accounts, there’s a good chance you’ll qualify for a generous sign-up bonus.
You’ll also have access to a wide selection of products, including numerous checking accounts, two savings accounts, CDs with terms ranging from one month to 10 years, home mortgage loans, auto loans, home refinancing, and more. We can’t forget to mention that Chase offers Chase overdraft assist to help you avoid overdraft fees and inconveniences.
Thanks to Chase’s highly rated mobile banking app, you’ll be able to manage your account, make electronic transfers, deposit mobile checks, pill bays online, transfer money with Zelle, automate your savings, and set up account alerts. If you need assistance, you may reach out to Chase directly via phone or social media.
11. Morris Bank
Morris Bank is a local bank with branches in Georgia cities like Dublin, Gray, and Warner Robins. Regardless of which checking account you choose, you’ll enjoy access to free online banking, remote deposit services, online bill pay, and mobile banking.
When it comes to savings accounts, Morris offers the Savings Builder account, which will round up your purchases so you can save more money. In addition, the Blue Savings account allows for three free withdrawals per quarter.
The bank also serves small businesses in Georgia through checking accounts, savings accounts, business loans, treasury services, and merchant services. Even though it’s smaller than other banks on this list, Morris is technologically savvy and allows for online and mobile banking. Many residents believe Morris Bank is the best local bank.
12. Fifth Third Bank
Fifth Third Bank primarily serves the Midwest and has more than 33 banking centers and 80 ATMs at RaceTrac convenience stores. If you don’t want to visit a local branch, you can use the Fifth Third mobile app to transfer money, check balances and direct deposit transactions, and more.
While the bank’s most popular services are for individuals and small businesses, it also provides personalized wealth management solutions. These personalized wealth management solutions include private banking, wealth planning, trusts and estates, insurance, and investments.
As a wealth management customer, you can enjoy access to the Life360 site, which makes it easy to organize your finances and track your progress.
13. Truist Bank
Truist has physical locations in Georgia cities like Atlanta, Brunswick, Cartersville, and Pooler. Formerly known as BB&T, it offers a variety of personal and business banking products. You can select from five checking accounts, two savings accounts, one money market account, and CDs.
In addition to deposit accounts, Truist provides HSAs, prepaid cards, prepaid money account products, mortgages and home equity lines, personal loans, auto loans, investment products, retirement accounts, and personal insurance. Truist Mobile is the bank’s mobile app, which you may use to manage your account, deposit mobile checks, transfer money, locate branches, and pay bills.
14. Wells Fargo
Wells Fargo is a large national bank with more than 200 branches and over 600 ATMs in the Peach State. Just like most traditional banks, it offers a wide variety of banking products and services, such as savings and checking accounts, credit cards, home loans, personal loans, auto loan accounts, and investment accounts.
If you’re a small business owner in Georgia, you might want to consider Wells for business checking accounts, business savings accounts, business credit cards, small business loans, and merchant services.
The bank also offers a mobile app with LifeSync, a unique tool to monitor your spending habits and make smarter financial decisions. Additionally, Wells Fargo, which is considered the best national bank by many people, lets you automate your investing or work with a dedicated financial advisor.
Types of Banks in Georgia
There are several types of banks in the Peach State. Here’s an overview of the most common financial institutions you’ll find.
National Banks
National banks are banks with a presence across the country. Most of them have branches and ATMs in Georgia and other parts of the U.S.
These types of banks typically offer a diverse lineup of products and may be a solid choice if you have varying financial needs as an individual or small business owner.
Community Banks
Community banks serve specific geographic areas. They’re similar to credit unions in that they prioritize personalized customer attention. In Georgia, you may choose from numerous community banks like Ameris Bank, United Community Bank, and Morris Bank.
Online Banks
Also known as virtual banks or neobanks, online banks are tech forward and make it easy to perform various banking needs online or via mobile devices. While they don’t have physical locations in Georgia, they do offer many perks that you might not be able elsewhere.
Some examples of online banks that serve Georgia residents are Ally Bank, CIT Bank, and Axos Bank. With these financial institutions, you may be able to avoid a monthly fee and secure a competitive annual percentage yield or APY.
Common Banking Products
It’s wise to figure out what types of banking products meet your particular banking needs. Several of these products include:
Checking Accounts
Checking accounts are ideal for everyday purchases. You can also use them to make deposits, pay bills, and more. Some checking accounts might charge monthly service fees or impose minimum opening deposits. However, they might waive them if you take certain actions, like enroll in autopay or sign up for paperless statements. To access your checking account funds, you can visit a local branch or ATM. Depending on the bank, you may even find a checking account that pays interest.
Savings Accounts
Savings accounts are places to store your cash for various personal finance goals, like a house down payment, new car, or even a dream vacation. It’s also a great place for an emergency fund, which features three to six months worth of expenses. In general, online savings accounts pay out higher interest rates than traditional savings accounts. You’ll likely be able to make six free withdrawals per month.
High-Yield Savings Accounts
Compared to traditional savings accounts, high-yield savings accounts offer much higher interest rates. Typically, they don’t charge monthly or annual fees. If you’d like to open a high-yield savings account, consider an online bank as they’re not always available at traditional banks.
Certificates of Deposit
Certificates of deposit (CD) allow you to store your money for a certain amount of time while you earn interest. With a CD, you’ll usually be required to make a minimum initial deposit and choose a term. Typically, the longer the CD term, the higher interest rate you earn. If you’re looking for guaranteed returns, a CD is a solid choice.
Credit Cards
Credit cards are a suitable option if you’d like to earn rewards, like cash back, travel points, gift cards, and merchandise. While some are free, others come with annual fees. Do the math and make sure an annual fee is worth the benefits before you go ahead and move forward with it.
Loans
These days, many financial institutions offer loans. Some loans are for personal use, such as personal loans, mortgages, and car loans. Other loan options are designed for businesses, like SBA loans, commercial real estate loans, and business lines of credit. Before you commit to a loan, review the interest rates and terms to ensure you can pay it back on time.
How to Choose a Bank in Georgia
As you can see, not all Georgia banks are created equal. In fact, there are many options at your disposal. To help you hone in on the right bank for your unique needs, we encourage you to consider these factors.
Accessibility
Most traditional banks have local branches throughout the Peach State. If you prefer an in-person banking experience, this is great news. However, you’ll likely be able to lock in better interest rates and lower fees if you opt for an online bank with less overhead costs. Fortunately, traditional and online banks usually both have mobile apps so you can bank from just about anywhere.
Fees
Some examples of common banking fees you might come across include monthly maintenance fees, ATM fees, overdraft fees, wire transfer fees, account closing fees, and dormancy fees. When you shop around for the perfect bank in Georgia, you’ll notice that larger banks with physical branches tend to charge more fees and higher fees than online banks.
Minimum Balance Requirements
Depending on the bank and accounts you choose, you might have to maintain a minimum balance. If you don’t, you’ll likely be on the hook for fees. Before you pursue a certain account, make sure you can comfortably afford the minimum balance requirement. The minimum balance may be thousands of dollars, so this is an important factor to consider.
Product Options
Before you look for a Georgia bank, ask yourself what products and services you need. Maybe you’re seeking a personal checking account and savings account. Or perhaps you’re a Georgia business owner and in the market for business credit cards or business loans. Typically, national banks offer a greater selection of products and services than regional banks and credit unions.
Customer Service
There’s a good chance you’ll have questions or concerns once you decide on a bank. For this reason, it’s important to choose a financial institution with high customer service ratings and easy access to customer support. While some banks offer 24/7 customer service via phone, email, and live chat, others will only help you during select business hours.
Reviews
Be sure to read reviews from real customers on reputable review sites. If you notice many negative reviews about the same topics, you may want to be cautious and look to other banking institutions. It’s also a good idea to check out ratings on websites, like Better Business Bureau (BBB) and Consumer Affairs. In addition, don’t be afraid to ask family and friends for their recommendations on banks.
FDIC Insurance
FDIC insurance will keep your money safe in the event your bank fails. The FDIC usually insures up to $250,000 per depositor. In addition to deposit accounts, it covers money orders, cashier’s checks, and other official products. Before you open an account at a bank, make sure it’s FDIC insured. Most banks have the FDIC insurance logo on their websites.
Extras
Some banks go above and beyond and offer more than traditional banking products and services, like checking accounts and savings accounts. You may want to look for extra perks like overdraft protection or assist credit monitoring services, introductory offers, foreign currency exchange accounts, robo advising, and credit cards with impressive rewards.
Values
If you visit a bank’s website, you’ll know what it values. One bank might prioritize long standing customer relationships while another one is a socially responsible bank. If you’re debating between two banks, consider each institution’s values to help you make a decision.
Bottom Line
The Peach State has no shortage of banks. However, the right one for you depends on numerous factors, like your preferred products and services, the types of fees you can afford and are willing to pay, and whether you’d like to bank online or in-person.
If you’re unsure of which bank makes the most sense for your situation, don’t hesitate to open accounts in a few of them. From there, you can hone in on the best option. Good luck with your search for the ideal bank in Georgia.
Frequently Asked Questions
What are the largest banks in Georgia?
The largest banks in Georgia have the most branches throughout the state. These include Bank of America, Truist Bank, Ameris Bank, Fifth Third Bank, and Wells Fargo. All of these institutions are known for their extensive ATM networks and diverse product lineup.
How do I open a bank account in Georgia?
In most cases, you can open a bank account on the bank’s website or mobile app. You’ll likely need to submit a government-issued ID, like a driver’s license or passport, as well as personal information, such as your Social Security number.
What are some community banks in Georgia?
The Peach State has many community banks. The most popular options are Community Bank of Georgia, United Community Bank, Mountain Valley Community Bank, and Gwinnett Community Bank. Community banks are a solid choice if in-person service is important to you.
How can I avoid bank fees in Georgia?
If you don’t mind online or mobile banking, you’ll likely find fewer fees at an online bank. Also, some traditional banks may allow you to waive their fees. Since fees can eat into your savings and financial goals, you should do your best to avoid or reduce them.
Should I open an account at different banks in Georgia?
If you have large amounts of cash, you might want to open accounts at different banks. This is because the FDIC usually insures up to $250,000 per depositor and bank. This holds true even if you have several accounts with the same bank. You may also want to open different accounts if you want to take advantage of different benefits.
Is it better to choose a small bank or a large bank in Georgia?
Big banks offer a greater selection of products and services than small banks. But you might have to pay a monthly maintenance fee or make a minimum opening deposit. Small banks, on the other hand, take the time to get to know their customers and provide more personalized service. The ideal banking size depends on your particular priorities.
How can I easily switch bank accounts in Georgia?
First, gather basic information like your Social Security number or Tax Identification Number. Then, start the application process, fund your new accounts, and transfer funds from older accounts. Don’t forget to set up direct deposits and automate recurring payments. Some banks offer switch kits to simplify this process.
Back in the day, if you wanted a loan to pay off your car or credit cards, you’d go to a bank or a credit union, sit down with a loan officer, and wait for them to tell you yes or no as they “crunched the numbers.”
But now peer-to-peer (P2P) lending has come onto the market, offering loans to borrowers directly from individuals — and usually carrying more favorable terms for those without a great credit profile. Borrowers can access up to $50,000 (or more) from lenders, with fixed term repayment scheduled and reasonable interest rates. Investors can also become lenders on P2P platforms, earning interest collected on loans as a passive form of investment income.
Let’s break down some of the best peer-to-peer lending sites for both borrowers and investors, so you can determine which option is best for you.
What’s Ahead:
Overview of the best peer-to-peer lending sites
Best for those with high credit scores: Prosper
Best for crypto-backed loans: BlockFi
Best for young people: Upstart
Best for a payday loan alternative: SoLo Funds
Best for small businesses: FundingCircle
Best for first-time borrowers: Kiva
Prosper: Best for those with high credit scores
APR: 6.99% to 35.99%
Term: 2 to 5 years
Prosper is the OG peer-to-peer lender in the market. It was founded in 2005 as the very first peer-to-peer lending marketplace in the U.S. According to their website, they’ve coordinated over $22 billion in loans.
Borrowing with Prosper
If you’re a borrower, you can get personal loans up to $50,000 with a fixed rate and a fixed term from two to five years in length. Your monthly payment is fixed for the duration of the loan. There are no prepayment penalties, either, so if you can pay it off early, you won’t be penalized.
You can get an instant look at what your rate would be and, once approved, the money gets deposited directly into your bank account.
Investing with Prosper
As an investor, you have many options on loans to choose from. There are seven different “risk” categories that you can select from, each with their own estimated return and level of risk. Here’s a look at the risk levels and the estimated potential loss, according to Prosper:
AA – 0.00 – 1.99%
A – 2.00 – 3.99%
B – 4.00 – 5.99%
C – 6.00 – 8.99%
D – 9.00 – 11.99%
E – 12.00 – 14.99%
HR (High Risk) – ≥ 15.00%
As you can see, the lower the letter, the greater the risk of default, hence a higher estimated potential loss. With just a $25 minimum investment, you can spread your risk out across all seven categories to provide your portfolio some balance.
The borrowers that you’re lending to are also above U.S. averages regarding their FICO score and average annual income.
Learn more about Prosper or read our full review.
BlockFi: Best for crypto-backed loans
APR: 4.5% – 9.75%
Term: 12 months
BlockFi is a popular crypto lending platform that offers crypto-backed loans to borrowers and pays out interest to lenders. BlockFi offers instant loans and requires no credit checks for borrowers. All loans are collateralized, meaning borrowers will need to lock in their crypto to borrow against it.
Borrowing with BlockFi
If you’re a borrower, you can get a crypto loan for up to 50% of the value of your crypto, with rates ranging from 4.5% to 9.75% APR, depending on the amount of collateral. Payments are made monthly and are fixed for the duration of the loan.
Interest rates are determined by the amount of collateral deposited and the loan-to-value (LTV) of the overall loan. There is a 2% origination fee on all loans.
Loan rate – 9.75% (50% LTV)
Loan rate – 7.9% (35% LTV)
Loan rate – 4.5% (20% LTV)
Bitcoin (BTC), Ether (ETH), Paxos Gold (PAXG), or Litecoin (LTC) can be used as collateral for the loan, and can be liquidated if the LTV goes above the original LTV of the loan.
Investing with BlockFi
BlockFi offers interest accounts for users who deposit crypto. The funds are used for crypto lending, and interest is paid out in the native crypto deposited. Interest rates vary by cryptocurrency, and range from 0.10% APY up to 7.50% APY. Stablecoins (such as USDC) pay out the highest rates.
Crypto interest accounts are not available to U.S. investors, as BlockFi was sued by the SEC for violating securities laws.
Read our full review.
BlockFi Bankruptcy Notice -On November 10, 2022, BlockFi announced that it had to suspend withdrawals from its platform due to the FTX liquidity crisis. As a result, consumers should not be using the BlockFi platform. As of November 28, 2022, BlockFi officially declared bankruptcy.
Upstart: Best for young people
APR: 5.6% – 35.99%
Term: 3 or 5 years
Upstart is an innovative peer-to-peer lending company that was founded by three ex-Google employees. In addition to being a P2P lending platform, they’ve also created intuitive software for banks and financial institutions.
What’s unique about Upstart is the way they determine risk. Where most creditors will look at a lender’s FICO score, Upstart has created a system that uses AI/ML (artificial intelligence/machine learning) to assess the risk of a borrower. This has led to significantly lower loss rates than some of its peer companies. Combine that with an excellent TrustPilot rating, and this company is certainly making waves in the P2P marketplace.
Borrowing with Upstart
Borrowers can get loans from $1,000 up to $50,000 with rates as low as 5.6%. Terms are either three or five years, but there’s no prepayment penalty.
Using their AI/ML technology, Upstart looks at not only your FICO score and years of credit history, but also factors in your education, area of study, and job history before determining your creditworthiness. Their site claims that their borrowers save an estimated 43% compared to other credit card rates.
Investing with Upstart
Investing with Upstart is also pretty intuitive. Unlike other P2P platforms, you can set up a self-directed IRA using the investments from peer-to-peer lending. This is a unique feature that many investors should be attracted to.
Like other platforms, you can set up automated investing by choosing a specific strategy and automatically depositing funds.
Upstart claims to have tripled their growth in the last three years due heavily to their proprietary underwriting model, so it might be worth a shot to consider this option.
Learn more about Upstart or read our Upstart review.
SoLo Funds: Best for a payday loan alternative
APR: 0% (tipping optional)
Term: Up to 35 days
SoLo Funds is a peer-to-peer platform that functions as a short-term lender, similar to payday loans. With term lengths only lasting for up to 35 days, loans must be paid back in a narrow timeframe. But instead of charging fees, borrowers can leave an optional tip instead.
SoLo Funds is an affordable option for clients who are in a pinch and need an advance on payday, but there are hefty fees if loans are not paid back within 35 days. Users will need to pay a 10% penalty plus a third-party transaction fee if late.
Borrowing with SoLo Funds
Borrowers can take out loans up to $575 for a maximum of 35 days. Loans do not charge fees, but allow borrowers to select an optional tip amount to lenders.
Loan applications only take a few minutes, and while most loans post within a few days, some may be instantly approved, offering same-day funding with money transferred to borrowers within a few hours.
Loans must be paid back in full within 35 days, or there is a 10% penalty plus other transaction fees. There is no option to roll the loan over.
Investing with SoLo Funds
Lending is fairly straightforward, with a simple sign-up process and no pre-qualifications needed. Since the loans are smaller amounts (up to $575), there are no minimums required for lending.
SoLo Funds has a marketplace of loan requests from borrowers, with details specified on each. Each loan request shows the amount needed plus the tip given by the borrower for the loan. Each borrower also has a SoLo Score, on a scale from 40 to 99, with higher scores showing more “worthiness” for paying back a loan. Loans can go into default, and if needed, to collections through a third party. There is a risk of total loss with SoLo Funds investing, though the platform does offer insurance against loss for a fee.
Learn more about SoLo Funds.
FundingCircle: Best for small businesses
APR: 11.29% to 30.12%
Term: 6 months to 7 years
FundingCircle is a small business peer-to-peer platform. The company was founded with the goal of helping small business owners reach their dreams by providing them the funds necessary to grow.
So far, they’ve helped 130,000 small businesses across the world through investment funds by 71,000 investors across the globe. FundingCircle is different in that it focuses on more substantial dollar amounts for companies that are ready for massive growth. They also have an excellent TrustPilot rating.
Borrowing with FundingCircle
As a borrower, the minimum loan is $25,000 and can go all the way up to $500,000. Rates come as low as 5.99%, and terms can be anywhere from six months to seven years. There are no prepayment penalties, and you can use the funds however you deem necessary — as long as they are for your business.
You will pay an origination fee, but unlike other small business loans, funding is much quicker (you can be fully funded as quickly as 1 business day).
Investing with FundingCircle
As an investor, you’ll need to shell out a minimum of $25,000. If that didn’t knock you out of the race, then read on.
According to FundingCircle, you’ll “Invest in American small businesses (not start-ups) that have established operating history, cash flow, and a strategic plan for growth.” While the risk is still there, you’re funding established businesses looking for extra growth.
You can manage your investments and pick individual loans or set up an automated strategy, similar to Betterment, where you’ll set your investment criteria and get a portfolio designed for you.
Learn more about FundingCircle.
Kiva: Best for first-time borrowers
APR: 0%
Term: Up to 3 years
If you want to do some good in the world, you’ll find an entirely different experience in P2P with Kiva. Kiva is a San Francisco-based non-profit that helps people across the world fund their businesses at no interest. They were founded in 2005 with a “mission to connect people through lending to alleviate poverty.”
Borrowing with Kiva
If you’d like to borrow money to grow your business, you can get up to $15,000 with no interest. That’s right, no interest. After making an application and getting pre-qualified, you’ll have the option to invite friends and family to lend to you.
During that same time, you can take your loan public by making your loan visible to over 1.6 million people across the world. Like Kickstarter, you’ll tell a story about yourself and your business, and why you need the money. People can then contribute to your cause until your loan is 100% funded. After that, you can use the funds for business purposes and work on repaying your loan with terms up to three years.
Investing with Kiva
As a lender, you can choose to lend money to people in a variety of categories, including loans for single parents, people in conflict zones, or businesses that focus on food or health. Kiva has various filters set up so you can narrow down exactly the type of person and business you want to lend your money to. You can lend as little as $25, and remember, you won’t get anything but satisfaction in return — there’s no interest.
You can pick from a variety of loans and add them to your “basket,” then check out with one simple process. You’ll then receive payments over time, based on the repayment schedule chosen by the borrower and their ability to repay. The money will go right back into your Kiva account so you can use it again or withdraw it. There are risks to lending, of course, but Kiva claims to have a 96% repayment rate for their loans. Just remember, you’re not doing this as an investment, you’re doing it to help out another person.
Learn more about Kiva.
What is peer-to-peer lending?
As the name suggests, peer-to-peer lending involves private individuals making loans to other individuals. The system runs contrary to the traditional model of banks and credit unions providing financial services because it cuts out the middleman.
While peer-to-peer lending had a surge in users over the past decade, in the past few years, some P2P lending companies have shuttered their services, including StreetShares, Peerform, and LendingClub.
How does peer-to-peer lending work?
Peer-to-peer lending shares many similarities with traditional lending:
You fill out an application with your financial and personal information, including the loan’s size, tax returns, and government-issued identification.
The lender will review your application before posting it on the site for investors.
Investors get to play the part of a loan officer, reviewing a list of applications and deciding where they might want to contribute.
The platform will indicate how risky the loan is and the potential return on investment.
Funding takes anywhere from one day up to two weeks.
Is peer-to-peer lending safe?
No one would say that peer-to-peer lending is 100% safe. No form of investing is. Many of the best peer-to-peer lending sites vet borrowers and investors to mitigate risk. The review process helps eliminate untrustworthy candidates, so borrowers can receive their loan and investors can earn interest.
Read more: Should you invest in peer-to-peer loans?
Pros & cons of P2P lending for investors
Pros
An attractive alternative to more traditional investments — You can round out your portfolio that might exclusively include stocks, bonds, and mutual funds. Some platforms merge private and public equities, so you can make all your investments in one place.
Most lending platforms let you select multiple loans at once — The variation enables you to reduce your risk exposure while potentially earning higher yields than a CD or savings account.
Feel good about your contribution — With sites like Kiva, you know that your money is going toward a humanitarian purpose.
Cons
Risk of default — When you lend money to individuals, you risk them defaulting. Peer-to-peer lending sites don’t come with FDIC insurance like a CD or savings account.
P2P loans lack the liquidity of stocks or bonds — Most loans are for three to five years, so you would have to wait until then to withdraw money.
Inequality — Some platforms, such as Funding Circle, only give access to accredited investors, so not everyone has equal access to lending opportunities.
Pros & cons of P2P lending for borrowers
Pros
You can circumvent the traditional bureaucracy of brick-and-mortar banks — Instead of waiting in line and negotiating with a loan officer, you have access to a fast, online experience. Because online platforms don’t have to worry about physical overhead, many can give borrowers competitive interest rates.
P2P loans typically aren’t as strict as banks or credit unions — The lax approach makes it easier to secure a loan if you have fair or poor credit history.
Often no prepayment penalties — You don’t have to worry about prepayment penalties in many cases.
Cons
Borrowers face more hurdles if they have a low credit score — Interest rates can go as high as 36% for those with lower scores, while some platforms don’t offer financial services to anyone with a credit score below 630.
Possibly high fees — Some sites have origination fees of 6%.
Impersonal — If you want the old-fashioned face-to-face borrowing experience, peer-to-peer lending isn’t for you. You don’t have a chance to sit down with your lender and hash out terms.
Loan caps around $50,000 — If you need more money, you’ll likely have to go to a bank or credit union.
Summary
Peer-to-peer lending is a great option for borrowers with less-than-stellar credit who want access to capital with reasonable terms and rates. P2P lending is ideal for small businesses and individuals who are looking for a personal loan that does not require mountains of paperwork, and that is funded quickly (usually within a few days).
But not all P2P lending platforms operate the same, and some can charge high origination fees and interest rates. Others require high minimum loan amounts to borrow as well, making them less accessible to some borrowers.
Investors can earn decent returns with P2P lending, but there is also the risk of default and the mess of going through collections agencies occasionally. Finding a solid platform with detailed risk mitigation strategies (such as borrower scores), and insurance against default can help alleviate these concerns, but it may eat into your profits.
While peer-to-peer lending is not seeing the massive growth of a few years ago, it is still a solid option for borrowers and investors alike.
If you have a savings account, how much interest does it earn? Probably not enough. And if you don’t have a savings account, why not?
A savings account isn’t meant to make you rich. It’s a safe, if not very sexy, way to plan for your future and protect your money. But things get more interesting when you choose a high-yield savings account instead of a traditional savings account. A traditional account will pay pennies on your balance, but a high-yield savings account can help you earn extra money you’ll actually notice.
But how do you choose a savings account when there are so many out there? We did the research for you. These are the top high-yield savings accounts with the best interest rates, features, and benefits.
What’s Ahead:
Best high-yield savings accounts
The Ally Online Savings Account is our top pick for the best high-yield savings account overall because it consistently offers a competitive interest rate and includes features to help you save. For beginners, the Discover Online Savings Account might be a better option thanks to its simple platform and above-average support. The CIT Savings Account is our second runner-up because it has the highest APY of the bunch but does come with a minimum deposit requirement.
We also considered the Axos Bank High-Yield Savings Account, High-Yield Chime® Savings Account, Capital One 360 Performance Savings Account, and Marcus Online Savings Account for our list. Even though these didn’t make our top three, they’re all good choices well worth checking out.
Best overall: Ally Online Savings Account
Pros
No fees
No minimums
Boosters to help you save faster
Cons
No branch locations
Features
Minimum balance: $0
Minimum deposit: $0
APY: 2.50%
Monthly fee: $0
The Ally Online Savings Account is the best high-yield savings account overall offering a generous interest rate and tons of free features to help you save. And speaking of free, this account really is. There are no monthly maintenance fees, overdraft fees, or transfer fees to deplete your earnings.
This high-yield savings account supports you to save by giving you the option to create buckets for different goals and use boosters to save faster. The boosters are:
Recurring Transfers – schedules automatic transfers from a linked account
Round Ups – rounds up your Ally debit card purchases to the nearest dollar and sends the extra to your savings
Surprise Savings – points out money in your checking account that isn’t being used for anything and moves it to your savings
This account is easy to open. There are no minimum balance requirements to earn interest and you can fund it with as little as $0.01. While Ally technically uses balance tiers (<$5,000, $5000 – $24,999.99, and >$25,000), all positive balances currently earn the same rate.
For help with any issues you might have, Ally offers 24/7 live customer support via chat or phone.
Learn more about the Ally Online Savings Account or read our full review.
Best for beginners: Discover Online Savings Account
Pros
No fees
No minimums
Instant transfers between Discover accounts
Cons
Very few branch locations
No advanced savings features like buckets or round-ups
Features
Minimum balance: $0
Minimum deposit: $0
APY: 4.00%
Monthly fee: $0
The Discover Online Savings Account gets pretty much everything right, from the competitive interest rate to the lack of account fees. We love this high-yield savings account for beginners because it’s easy to use and doesn’t have minimums.
There is no minimum deposit to open or minimum balance required to earn interest or avoid having your account shut down, making this the perfect option for you even if you only have a few bucks to put away right now. You can even open an account with nothing and come back later to fund it.
Although this is a pretty basic account with few bells and whistles, there’s no monthly maintenance fee to worry about and you’ll earn interest on any balance. Plus, the Discover mobile app is notoriously solid, and ditto for customer service.
Interest is compounded daily and credited monthly into your account. If you have a Discover checking account and debit card, you can easily transfer money between this and your savings account. You can also schedule automatic recurring transfers to put your saving on autopilot.
Discover does have some branch locations, but they’re really limited, so you might not have the option to manage your account in person. This account also lacks features to help organize and simplify your saving such as buckets and round-ups.
Learn more about the Discover Online Savings Account or read our full review.
Best for long-term saving: CIT Savings Connect Account
Pros
No fees
No minimum balance
Cons
Minimum deposit required
No branch locations
Features
Minimum balance: $0
Minimum deposit: $100
APY: 4.50%
Monthly fee: $0
For high-interest saving, the CIT Savings Connect Account is an excellent choice. This is a newer account with a really competitive APY of 4.50%. There are no minimum balance requirements to earn this rate and you only need to deposit $100 to open. Plus, there are no monthly fees. See details here.
CIT Bank also reimburses up to $30 in third-party ATM fees per statement period and supports free mobile check deposits and external transfers.
The CIT Savings Connect account currently pays the same interest rate on all balance tiers, so you don’t have to worry about maintaining a certain balance or making regular deposits to avoid fees and earn more (although automating your saving is never a bad idea).
This basic account would be a good fit for most people, especially those looking for a fee-free option with no balance requirements. It has one of the best rates and is one of the most straightforward to open and use, so it could make a great primary or secondary savings bucket. Choose the CIT Savings Connect account if getting the best interest rate is your top priority.
CIT Bank offers a number of other savings products including stand-out money market accounts and CDs, so keep this bank in mind if you have a few different savings goals and want to make sure you’re getting the highest rates.
Learn more about the CIT Savings Connect account.
CIT Bank. Member FDIC.
CIT Savings Builder Account
And if you’re looking for another option from this online bank, you can do worse than the CIT Savings Builder Account. This high-yield savings account offers an interest rate of up to 1.00% with a low minimum initial deposit requirement of $100. There is no minimum balance required to keep your account, but your balance will determine your interest rate. See details here.
The CIT Savings Builder Account uses a tiered rate structure with a loophole. The balance tiers and interest rates are:
<$25,000 – 0.40% APY
<$25,000 – 1.00% APY if you make a monthly deposit of $100 or more
>$25,000 – 1.00% APY
If you can’t afford to put away more than $25,000, no worries. Just schedule an automatic transfer of at least $100 from a linked bank account to get yourself into the higher tier. This can also help you make saving a priority.
Because of the tiered interest rate structure, this high-yield savings account is ideal for people who plan to keep high balances and/or make regular contributions to their savings.
Learn more about the CIT Savings Builder Account or read our full review.
CIT Bank. Member FDIC.
Great alternatives
These accounts didn’t make our top three, but they still have a lot to offer, especially if you’re looking for an online savings account.
Axos Bank High-Yield Savings Account
Features
Minimum balance: $0
Minimum deposit: $250
APY: Up to 0.61%
Monthly fees: None
An Axos Bank High-Yield Savings Account is the right high-yield savings account for anyone looking to keep a low balance. There is a minimum deposit requirement of $250 to open an account, but any amount you save will earn interest. Axos uses a tiered rate structure but actually pays the highest rates on the lowest balances. You’ll earn 0.61% as long as your account stays below $24,999.99.
Each account comes with a free ATM card upon request for easy withdrawals. Plus, you can earn a referral bonus of $20 for every friend who opens an Essential Checking account using your unique link.
Open an Axos savings account or read our full review.
High-Yield Chime® Savings Account
Features
Minimum balance: $0
Minimum deposit: $0
APY:2.00%7
Monthly fees: None2
The High-Yield Chime Savings Account is a great online savings account that does your saving for you. With the Round Up Transfer and Save When I Get Paid features, you can completely forget about your saving and still make progress toward your goals. Round Ups will send the spare change from your purchases right to your savings^ and Save When I Get Paid lets you transfer up to 10% of each direct deposit of $500 or more to your savings account 1. A Chime Checking Account is required to be eligible for a Savings Account.
This account charges no maintenance fees and has no minimum deposit or balance requirements. Check out Chime checking if you like the idea of saving and banking in one place with a platform that’s easy to use*.
Read our full review.
* Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. ^ Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account. 1 Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account. 2 There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account. 7 The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of November 17, 2022. No minimum balance required. Must have $0.01 in savings to earn interest.
Capital One 360 Performance Savings Account
Features
Minimum balance: $0
Minimum deposit: $0
APY:3.00%
Monthly fees: None
Opening a Capital One 360 Performance Savings account might be the way to go if you’re looking to automate your saving with a familiar consumer bank. This account pays the same interest rate of 3.00% on all balances and doesn’t costanything to open. To stay on track with your saving, you can schedule recurring transfers from a Capital One or external account.
If you already have an account with Capital One, you’ll be able to make quick transfers from the app. Finally, there are Capital One branches and ATMs all over the country if you like the option of banking in person.
Open a Capital One savings account or read our full review.
Marcus Online Savings Account
Features
Minimum balance: $0
Minimum deposit: $0
APY:2.50%
Monthly fees: None
Marcus by Goldman Sachs is an online-only bank owned by investment company Goldman Sachs. A Marcus Online Savings Account is ideal for people who want control over their savings and like to strategize different ways to grow their money. This account offers a variety of tools and extensive research to help you make informed decisions with your savings and track your progress. You can even see exactly how much interest you’ve earned from the app.
You’ll earn 2.50% regardless of your balance and there’s no minimum deposit.
Open a Marcus savings account or read our full review.
What is a high-yield savings account?
A high-yield savings account offers a higher yield than traditional savings accounts. How much higher completely depends on the market and the institution, but may be as much as ten or fifteen times the average. You might also hear the term high-interest savings account used — this is the same thing.
Right now, the national average interest rate on a savings account is 0.37%, according to the Federal Deposit Insurance Corporation or FDIC. The FDIC determines rate caps each month using the average interest rates for savings accounts, checking accounts, money market accounts, and certificates of deposit across all banks and credit unions.
How savings account interest works
There are two different ways interest can work with high-yield accounts. The first is to earn a variable interest rate and the second is to earn a tiered interest rate.
A high-yield savings account with a variable rate will pay the same interest rate on any balance. A savings account that uses a tiered interest structure will determine your rate based on your average balance and pay you according to which balance tier you fall into.
With a tiered interest rate, you often earn more interest the higher your balance is. This is to incentivize people to keep more money in their accounts. With a variable interest rate, it doesn’t matter what your balance is as long as you meet the minimum balance requirements (if there are any).
To make things a little more confusing, sometimes a bank or credit union will use a tiered interest rate structure but make the interest rate the same for every balance tier. All interest rates for online savings accounts are subject to change at any time.
Before you apply for an account, find out what rate you’ll qualify for with your balance and activity. Don’t get tricked into opening a high-yield savings account for the great interest rate unless you know you’ll actually earn that rate.
For example, a bank may advertise a high-yield savings account with an interest rate of 3.00% APY, but this rate only applies to balances over $15,000. The difference between the highest and lowest interest rates can be significant, so make sure you don’t get stuck with a lousy rate.
Read more: How to get the best savings account interest rate
What is the annual percentage yield (APY)?
Annual percentage yield is the rate of return you will earn calculated as a percentage of your savings account balance. You’ve probably noticed that the APY on an account is very slightly different from the interest rate. This is because the interest rate only shows simple interest.
The annual percentage yield or APY shows how much interest you can earn each year if you don’t take any of your money out. We like to look at the annual percentage yield rather than just the interest rate because it factors in compounding interest.
To estimate how much you can earn on a high-interest savings account, multiply the APY by your balance to see how much your account will grow if you don’t touch it.
When is interest calculated?
Interest may be calculated daily, weekly, or monthly for a savings account. This is how often your balance is used to determine how much interest you’ve earned.
This frequency can affect your earnings, and daily calculation is the best-case scenario. This is because the more frequently interest is calculated, the higher your balance will be each time it happens thanks to the interest you’ve already been paid. Interest you earn on interest is referred to as compound interest.
For example, a $1,000 balance earning a 1% interest rate pays you $10 in simple interest over a year. If interest is calculated daily, that $10 becomes $10.05 a year.
Read more: Savings interest calculator
Is interest taxed?
Yes, the interest you earn from your savings account will be taxed alongside your income, no matter how much money you bring in.
How to open a high-yield savings account
The basic process for opening a savings account is pretty much the same anywhere you go.
First, you’re going to provide some personal details including your basic contact information. Once your account has been approved, you’ll choose a funding option. Your options might be:
ACH transfer
Wire transfer
Direct deposit
Check deposit (paper or mobile)
Cash deposit
You need to meet minimum opening deposit requirements for your account when funding. Some banks will let you open a savings account without making a deposit right away. Just make sure you know the rules for your chosen account.
If you already have an account with the bank or credit union you’ve chosen, you can link this with your new savings account either before or after funding. This will allow for easy transfers in the future.
How to use a high-yield savings account
There’s a difference between just having a high-yield savings account and using it for all its worth. Here are some ways to make the most of high-interest savings.
Emergency fund
A high-yield savings account is the perfect place to keep your emergency fund. We recommend you have one savings account where you keep at least six months of your monthly living expenses, completely separate from the rest of your cash. You can take the money out if you get sick, lose your income, or face a large unexpected expense, and your balance will grow until then.
Short-term saving
A high-interest savings account is also a great place to save for short-term goals when you don’t want to put your money on the line with higher-risk investments. These accounts are safe and liquid, so your money is there when you’re ready for it and earning interest when you’re not.
For example, if you’re saving money to buy a new car or for your wedding in the next couple of years, you may be able to get a higher rate of return by investing in a mutual fund or other securities. But in such a short period of time, you may lose money. Investments are best for savings goals more than a few years away. For shorter-term goals, savings accounts are safer.
No matter what you’re saving for, a good rule of thumb is to save as often as possible and think about it as little as possible. If you rely on yourself to remember or feel like putting away money to save, you might have more trouble meeting your goals and start feeling frustrated when you don’t see your balance go up. Instead, take advantage of features that do the work for you. To save automatically, you can:
Set recurring transfers
Split your paycheck
Use booster features like roundups
Read more: The best place for short-term savings
What is the withdrawal limit for savings accounts?
Most savings accounts limit the number of withdrawals you’re allowed to make. This started with Federal Regulation D.
Federal Regulation D was a rule that limited the number of withdrawals or transfers that could be made from a savings account to six per month. This included withdrawals made in person, by phone, online, or through any other type of electronic transfer. If you made more than six transfers or withdrawals in a month, your bank might have charged you an excessive withdrawal fee or closed your account.
In April 2020, Regulation D was suspended, but many banks still choose to restrict transactions and enforce the same penalties.
What to look for in a high-yield savings account
There are certain standout features that can immediately make or break a high-yield savings account.
Here are the main things to pay attention to when shopping for a savings account.
Minimum balance requirements
How much do you realistically plan to save? This is the first question you should ask yourself before signing up for an account. Many savings accounts have minimum balance requirements, and you won’t be doing yourself any favors if you open an account and can’t meet these.
If your account does have balance requirements, you must meet them in order to:
Avoid monthly maintenance fees
Earn interest
Keep your account
Your balance at the end of each day is used to determine if you’re meeting requirements. If you’re not, you might be penalized.
Not all high-yield savings accounts have minimum balance requirements. Especially for online savings accounts, it’s becoming more common to not have any.
Read more: How much money should you save each month?
Minimum deposit requirements
Some banks may require you to make a certain minimum deposit when signing up for your account. Failure to do so may disqualify you from opening an account or result in a fee.
A minimum deposit requirement could be anywhere from $5 to $500. Sometimes minimum deposit and minimum balance requirements are the same, and sometimes not. It’s not uncommon for a bank to have a minimum deposit requirement but no minimum balance requirement or vice versa.
Many high-yield online savings accounts have very low or no minimum deposit requirements.
Interest and APY
You’re naturally going to gravitate toward accounts with the highest interest rates, right? That’s free money that you don’t have to work for. But be sure to pay attention to the requirements to earn interest too, not just the annual percentage yield.
For example, if a bank requires you to maintain a balance you can’t maintain to earn interest, it’s probably not the right bank for you. For your first savings account, you might prefer a variable interest rate over a tiered interest rate so you don’t have to worry about if your balance is high enough to earn interest.
Some banks also reserve their best interest rates for preferred customers. This might mean you need to have another account such as a checking account or loan to qualify for the highest APY, and that might be more trouble than it’s worth.
Monthly fees
Some banks still charge monthly maintenance fees on savings accounts, but many don’t. When your goal is to earn money on your savings, monthly fees you get charged just for having an account can really get in the way.
While you should generally look for accounts that don’t charge fees, you might make an exception if a bank offers a waiver. For example, the fee may be waived if you maintain a certain minimum balance in your account for each statement cycle or make a recurring transfer from another account.
If you feel like you can easily meet the requirements to waive a fee and an account is otherwise a perfect fit, go for it.
Cash access
Most people try to ignore the money in their high-yield savings account when they can to take advantage of compound interest.
But life happens, and sometimes you need to dip into your savings. When that happens, you should have convenient access to your money. You might be able to make a withdrawal via:
ACH transfer
Cash withdrawal
ATM withdrawal
Most savings accounts give you the option to make a transfer from your savings to a linked checking account. This checking account can either be with the same bank or another one entirely. If with the same bank, transfers may be instant.
Some banks also offer ATM cards with high-yield savings accounts, though you may incur a fee for ATM transactions. You can also make cash withdrawals at branch locations.
Any transfers or withdrawals you make will count toward your monthly transaction limit.
Mobile apps
Almost every bank out there offers a mobile app today, but some are far better than others. As you’re researching the features of an account, always look into the app too.
Saving from your phone only works when an app does what it’s supposed to, so functionality and convenience are important. You should be able to easily access your savings account, initiate transfers, and see your balance at any time. Those are the basics. You might also want an app that will let you make mobile check deposits, create savings goals, and chat with customer support when there’s an issue.
As a rule, online banks and larger institutions tend to have the best mobile apps. But while you might be looking for an app that’s simple and straightforward to use, someone else might prefer a robust app with educational resources, features, and a variety of notifications. Check out some customer reviews to see what real users have to say about their experiences.
Sign-up bonus
Many banks and credit unions offer sign-up bonuses when you open a high-yield savings account. These offers change all the time and can be quite enticing. For example, bonuses up to $200 are not uncommon. But while sign-up bonuses are nice, they’re not more important than interest rates, fees, and minimums.
Also, be aware that sign-up bonuses come with restrictions. Typically, you’ll need to maintain a certain minimum balance for a set amount of time to qualify. This may be six months or even longer. If your account balance drops below the minimum requirement at any time during the first six months, you may forfeit the bonus. Many bonuses also come with direct deposit requirements.
If you do qualify, you probably won’t get the bonus right away and may have to wait several weeks. All this to say that sign-up bonuses aren’t a good option for getting quick cash. Consider these after all of the other features we’ve outlined.
Are high-yield savings accounts safe?
Your money can’t get a lot safer than it is when it’s in a savings account.
Almost all savings accounts with banks are protected by the Federal Deposit Insurance Corporation (FDIC) and insured for up to $250,000 per depositor. This insurance coverage protects your money in the event that your bank loses money and is unable to repay its deposits. Almost all savings accounts with credit unions are protected by the National Credit Union Administration (NCUA) for up to $250,000 per depositor. This provides the same protections.
If a bank or credit union is not FDIC- or NCUA-insured, you may qualify for private deposit insurance.
Benefits of online savings accounts
High-yield savings accounts and online savings accounts are often one and the same. Here are some of the top benefits you can expect from an online savings account.
Higher interest
A traditional savings account with your bank or credit union might seem like the best choice, but you can do a lot better. Compared to traditional accounts, online savings accounts tend to offer much better interest rates, plus benefits like fewer fees, extra savings features, and the convenience of opening and managing your account completely online (or from your phone).
Online savings accounts can pay higher interest rates because digital accounts are cheaper to operate, lowering a bank’s costs and passing on the savings to you in the form of better interest.
Fewer fees
Online savings accounts almost always have lower fees than traditional savings accounts for the same reasons they can offer better rates. Many charge no monthly fees at all.
Avoiding monthly fees like maintenance fees, low balance fees, and inactivity fees can save you serious money in the long run. Plus, let you actually keep the interest you’ve earned.
Convenience
Online savings accounts are much more convenient to open and use. You can open your account online and fund it by just transferring the money from another account. Usually, all of this takes less than five minutes.
An online account lets you make deposits, transfer money, pay bills, and see your account activity at any time without the need for a phone call or visit to the bank. You can even view your account statements and track your progress. If you’re not a fan of brick-and-mortar branches, an online savings account either with a fully-digital bank or a hybrid bank could be perfect for you.
Perks and benefits
Online savings accounts tend to come with a lot of great, free features. Automatic transfers into your savings account from your checking account, mobile check deposit, and account alerts are just a few common ones.
Some online savings accounts go above and beyond this. They might offer savings support like boosters and automated tools, help you create a saving strategy with resources and insights, or the option to organize your savings into separate buckets or categories.
Read more: Best online savings accounts
Disadvantages of savings accounts
Although a great tool for saving for your future and protecting your finances, savings accounts in general do have limitations. Let’s talk about some of those here.
Limited withdrawals
One of the main disadvantages of high-yield savings accounts is limited cash access. A lot of this has to do with withdrawal restrictions.
Remember, you’re often restricted to just six transactions per statement period with a savings account. This is a limit that was originally set by the federal government that many accounts still stick to. You shouldn’t use your savings account as a secondary spending account because when you hit that limit, you risk losing the account. This is why savings accounts should be for money you don’t immediately need.
If you’re looking for a place to set aside some extra money you do plan to dip into regularly, consider a high-yield checking account instead of a savings account. While the rates for high-yield checking accounts aren’t usually as good as the rates for high-yield savings accounts, you’ll have more flexibility to spend your money.
Read more: Best high-yield checking accounts compared
Rates can change at any time
Another downside to savings accounts is that the interest rates are always variable. This means the rate you earn on your balance can change at any time, and it definitely will as the market fluctuates. It’s important to remember that you’re not locked into the annual percentage yield you sign up for when you open a high-yield savings account.
And if the rate does change, your bank doesn’t have to give you any sort of warning. Although competitive high-yield savings accounts will, for the most part, stay competitive and continue offering the highest yields compared to other accounts, there’s no telling how much you’ll earn in dividends a year from now.
You should choose a high interest rate but know that it can change and don’t rely on the dividends for income.
Security risks
With any type of financial account, there are going to be certain safety concerns. While these are really minimal with an insured savings account, you can take steps to maximize your personal security.
If an account offers multi-factor authentication, set it up (it’s free anyway). If you have the option to enroll in fraud protection, do it. Set up account alerts to notify you about suspicious activity and check your balance often to make sure everything looks good.
FDIC and NCUA protection will keep you safe from losing all of your money if your bank goes bankrupt, but it’s your responsibility to make sure your account is as safe as it can be from hackers.
Read more: How to make online banking more secure
Are high-yield savings accounts worth it?
The answer to this question is probably, but it really depends on what kind of account you choose. We’ll say it again, we always prefer an online savings account with no minimums and no fees. Even if you can’t yet afford to set much money aside, you can start earning a small amount of interest on your balance and setting those good savings habits with free accounts.
But if you open a savings account that charges monthly maintenance fees, overdraft fees, low balance fees, etc., you’re going to have to work harder to make the account worth it. Keep in mind that all of these fees can eat into and even exceed your interest earnings, causing you to lose money in the long run.
So basically, as long as you don’t make the mistake of choosing the wrong account and letting it drain your earnings, you have nothing to lose.
High-yield savings accounts vs. money market accounts (MMAs)
Which is the better option for your money right now: a high-yield savings account or a money market account?
A money market account or MMA is a special type of savings account. They typically have higher balance requirements to earn interest but may offer better interest rates than high-yield savings accounts. Usually, MMAs pay tiered variable interest rates so the more you save, the more you earn.
MMAs often come with higher fees, higher deposit requirements, and higher balance requirements than savings accounts. While they can earn more depending on the interest rate environment, right now the best rates are really comparable between high-yield savings accounts and MMAs.
Savings accounts and money market accounts have the same transaction limit of six per statement period.
Read more: 9 best money market accounts
High-yield savings accounts vs. certificates of deposit (CDs)
A certificate of deposit or CD is a type of deposit account that usually offers a fixed interest rate for a fixed term. This means that the amount of money you earn on your deposits is guaranteed for the length of the CD term.
CD terms can range from as little as one month to as much as 10 or even 20 years. During the term of the CD, you agree not to withdraw any of the money you’ve deposited. If you do need to access your money before the end of the term, you’ll pay an early withdrawal penalty fee.
Early withdrawal fees are equal to the interest you earn for a set number of days or months. For example, you may pay three months’ interest for taking money out of a one-year CD early.
Because of early withdrawal fees, you risk losing your interest in a CD, so you should only deposit money you’re absolutely certain you won’t need until the term is up.
Stick with a savings account until you have an emergency fund built up before you consider a CD. CDs can be better vehicles for long-term saving but they should not replace your emergency savings account.