No matter how you handle it, spend it or save it, all money ends up in a bank at some time or another.
Choosing the right bank not only makes good financial sense.
It can make a significant difference in the amount of interest earned over time, all thanks to the "magic" of compound interest.
Many people mistakenly think that all banks are the same and that all savings accounts have the same rate of return.
Nothing could be further from the truth.
When you work with the right bank, compound interest in a high-yield online savings account can generate some pretty impressive numbers.
Let's say you made an initial deposit of $1,000 into a high-yield savings account.
Then you deposited just $100 per month over a 10-year time-frame.
Let's also assume for the sake of simplicity that your savings account had an estimated rate of return of just 1% (many of the ones we'll share with you here have higher rates).
That $1,000 that you started with would ordinarily be $13,000 (because you've made deposits equaling $1,200 every year), but with interest compounded monthly, you've also earned an extra $730.62.
So not only are you earning interest on the money you've deposited, but you've also earned interest on the interest that has built up.
Now imagine if you were able to increase the original deposit amount or the amount you deposited each month.
Those numbers would be even higher.
If you choose the wrong type of bank, though, you won't earn nearly as much from your savings as you'd like.
Choosing the right bank and the right type of savings account will affect not only the interest rate but the rate at which the interest is compounded.
We've created a list of some of the best high-yield online savings accounts in 2018 to help you choose a savings account with confidence.
Even if you've tried to set up a savings account and haven't been consistent with it, or you're hesitant about working with an online-only bank, you'll be glad to know that times have changed.
High-yield savings accounts from online banks are one of the most popular and fastest-growing ways to enjoy better interest and compounding rates.
Because these banks have an online-only presence, they don't have the upkeep, maintenance, or organizational expenses of a traditional brick-and-mortar financial institution.
This, in turn, allows these banks to pass the savings onto their customers while still being beholden to the same financial laws and regulations that keep the banking process stable and secure.
When compared to traditional banks, which have meager savings account rates of 0.01–0.12% APY (annual percentage yield), you can easily see just how much more you can earn with an online savings account.
Check out our recommended list below, choose a bank that best reflects your savings goals and start saving for your next big goal — no matter how large or small it may be!
What To Know Before You Sign Up
Online banking is incredibly convenient and forward-thinking when it comes to customer service.
But by going with an online-only savings account, you may also be foregoing many of the common features that you get from your local community bank.
Here's what to know before you sign-up:
You may miss out on having ATM cards or checks. Depending on what the bank offers, you may need to link another bank account to your online bank account to add and withdraw funds as needed.
Read the fine print carefully before you sign up. Whether you sign up with one of the recommended high yield savings accounts below, or another one that catches your eye, it's important to read the fine print before you sign the dotted line.
In addition to the number of withdrawals you can make each month (see below), different banks may also have minimum deposit amounts, a monthly maintenance fee, or other charges that can nibble away at your savings.
Reading the fine print before you complete an application ensures that you know what to expect and can adjust your finances accordingly.
All banks have fine print, not just online ones.
In fact, the online ones promise less.
You have limited withdrawals and transfers. Federal law limits the types and number of withdrawals and transfers you can make to no more than 6 per statement cycle.
Going over this amount could subject you to an additional fee.
How We Picked These High-Yield Online Accounts
Beyond interest rates, we looked at a wide range of additional perks and benefits that came with signing up for an online savings account.
And while not all online banks share the same features, those that did earned a top place on our list.
Here are the main features we looked for:
No monthly fee or minimum balance requirements. When the goal is saving money, we crossed out any banks that would nibble away at those savings by charging monthly fees or requiring a high starting balance.
Additional conveniences such as checks or ATM cards. Although not all online banks offer these features, those that did stood out in our reviews.
FDIC insured up to $250,000. Many people mistakenly believe that online banks aren't subject to the same regulations, nor backed by the same securities and protections as traditional banks.
Nothing could be farther from the truth.
Online banks have to adhere to the same practices and processes as traditional banks, which includes providing FDIC insurance of up to $250,000 on each account.
All of the banks we've profiled meet this requirement, giving you added peace of mind and confidence when choosing a bank for your high-yield savings account.
Reliable customer service by phone. Being able to contact someone by phone when you have a problem or a question is one of the most important features of any bank, but doubly so when you have an online-only presence.
Apps available to make account management easier. We gave special consideration to any banks that have apps to make it easier to manage your funds.
Synchrony Bank is our top pick because of its great online savings interest rate of 1.45% APY and ATM card
Synchrony Bank offers one of the highest online savings account rates along with excellent and attentive customer service.
Strong financial backing. Synchrony Bank was originally part of the General Electric brand before it was spun off as its own separate company.
This gives it a reliable financial background that's supported by the strength and solidarity of the GE brand.
Access funds even faster with an ATM card. Most online-only banks require you to access your savings electronically, meaning that deposits and withdrawals can take a couple of days at most.
Synchrony gives every savings account customer an ATM card for faster access to funds.
Use your card at any ATM with the Plus or Accel logo.
You can also make withdrawals online or by phone.
Extra perks from the Synchrony Rewards Program. The rewards program includes various tiers that depend on your account balance and the age of your account.
Common rewards include ATM fee reimbursements, identity theft resolution services, and travel and leisure discounts (starting with Silver tier, which begins with a balance of $10,000 or more and a minimum tenure of one year).
Additional financial products to support your savings goals. In addition to some of the highest-yield online savings account rates, Synchrony Bank also offers competitive rates on related products and services including certificates of deposit, money market accounts, CD rates, store credit cards, and more.
But even though Synchrony Bank scored highest in our high-yield online savings account reviews, you should know that there are a couple of drawbacks to be mindful of.
Lackluster digital experience. Although Synchrony Bank is online, the online experience can be rather clunky and not nearly as fast or as easy to use as you might expect.
No app for mobile money management. Synchrony currently has no app available for managing bank accounts.
The company's MySynchrony app only lets you manage and make payments on credit card accounts.
How to open a Synchrony Bank online savings account
To get started, visit www.synchronybank.com and click the "Open a High Yield Savings" button.
If you already have a Synchrony bank account, you'll be asked to log in or register with the online service.
If you're a new customer, click the "Get Started" button.
You'll be asked some basic questions about the type of product you want.
You may also need your home address, phone number, email address, and social security number to complete the process.
It takes around 20 minutes to complete the application.
CIT Bank offers an excellent online savings account rate with interest that compounds daily
CIT is perhaps best known for its CD rates. Historically, the bank only offered CDs, but recently they've begun promoting high-yield online savings accounts as well.
Fantastic 1.55% APY with daily compounding interest. Although this rate is higher than Synchrony Bank, there is a $100 minimum opening deposit, which knocked CIT down to #2 on our list.
Easy and convenient fund transfers. While CIT Bank does not offer an ATM card, it does allow customers to transfer funds electronically, by check, mobile check deposit, or wire transfer.
No monthly fees, account opening fees, or minimum balance requirement. Save more of your money without extra fees draining your savings.
Mobile app lets you deposit checks into your savings account. The CIT Bank mobile app is available for both Apple and Android devices.
With all of these great features, it's easy to see how CIT Bank earned a spot on our list.
There are, however, a few points you should know of before you sign up:
Limited banking products available. CIT Bank only currently offers certificates of deposit (including regular CDs and IRA CDs) and high-yield online savings accounts, so it may not be the best choice if you are looking for a wide range of financial services.
Mobile app may be unresponsive for some users. Users often report having difficulties using the mobile app — particularly with regard to logging in or answering security questions.
How to open a CIT Bank online savings account
Visit CIT Bank's website and click the Personal Banking tab.
Choose Premier High Yield Savings from the drop-down options.
You'll then be taken to a page where you can see current rates.
Click the orange Open button next to Premier High Yield Savings under the Products column.
You will be asked to login if you have an existing CIT Bank account.
You can also choose to resume an application if you have one in progress.
You have 30 days to complete an in-progress application.
As with opening any type of bank account, some personal information is required including your address, phone number, and social security number.
Ally bank offers excellent 24/7 customer service as well as some of the best online savings account rates in the industry — currently 1.25% APY.
Flexible account management and deposits. Make deposits directly online, via mobile check, direct deposit, or by mail.
There's no minimum balance requirement.
Link other bank accounts to your savings account quickly and easily. Ally makes it easy to work toward your savings goals by letting you fund up to 20 external bank accounts to your online savings account.
Offers free checking accounts with no minimum balance. What makes this feature great is that you can transfer funds to and from your Ally savings account using your checking account and get access to them instantly through ATMs, checks, or debit cards.
Interest is compounded daily. This allows you to grow your savings even faster as opposed to interest that is compounded monthly or quarterly with traditional banks.
Transfer funds from other banks to Ally for free. Ally is unique in that it lets you set up unlimited links to other bank accounts for free.
Most only banks limit you to 2–3.
With low fees and competitive rates and flexible options to fund your high-yield online savings account, it may paint a picture that Ally is the perfect alternative to a brick-and-mortar online bank.
However, there are a few drawbacks to be aware of:
Ally reimburses ATM fees at a maximum of $10 per billing cycle. The bank used to offer unlimited ATM fee reimbursement, but it has changed this feature in an effort to save money.
The mobile app may be a bit more than you need in a banking app. Ally's mobile app lets you transfer and manage funds and schedule payments, but it also provides things like investing features, an ATM locator, tax forms, streaming stock quotes, and more.
It may be a bit much for customers looking for a simpler online banking experience.
If you want all of your banking and financial management products wrapped up in a single app though, it doesn't get much easier than the Ally mobile banking app.
How to open an Ally online savings account
Ally has a six-step process for opening a savings account.
Visit www.ally.com and click the Get Started button.
You'll be asked to select a product, enter your personal information, create your account and make an opening deposit.
You can also optionally enroll in online banking.
In order to complete your account enrollment, you'll need to provide your social security number, have a U.S. mailing address and be 18 years of age or older.
Over three centuries of banking history and a highly competitive savings account rate of 1.40% APY
Barclays is a household name in the U.K, but it isn't as popular in the U.S. just yet.
Fortunately, its highly attractive savings account rate of 1.40% could change that perception.
Although it is based in London, Barclays banks in the U.S. include FDIC insurance on every deposit.
Best for savings accounts and certificates of deposit. Although Barclays is an established banking institution, its best products are its CDs and savings accounts.
Helpful Savings Assistant included with your account. The Savings Assistant is an online tool that lets you choose a goal, enter your existing savings and monthly contribution, then calculate how long it will take to reach that goal.
In addition to giving you a concrete goal to aim for, it provides even more motivation to save.
Lower than average non-sufficient funds fee. In addition to attractive savings account yield rates, Barclays also charges just a $5 NSF (non-sufficient funds) fee for overdrafts.
Most banks charge $30 or more, which can lead to even more fees and charges that cause significant headaches, particularly for people with bad credit.
With Barclays, it's good to know that overdraft fees won't eat your savings alive if you slip up.
Make deposits to your savings account easily. Barclays lets you make deposits to your savings account by check, direct deposit, mobile check deposit, electronic transfer, or by mail.
These features helped set Barclays ahead of the competition, but it's worth noting that there are some points where Barclays could have performed better:
No local branches in the U.S. Barclays does not have a brick-and-mortar presence in the U.S., a prospect which may be off-putting if you want the flexibility of an online account with the customer service of a local community bank.
No mobile app for U.S. customers. The Barclays mobile app requires a U.K. phone number to complete the registration process, which may leave U.S. residents out in the cold when it comes to managing their savings.
No checking account products. In addition to being an online-only bank in the U.S., Barclays also does not offer checking account products in the States.
Compared to competitors like Ally, which offers free checking accounts, or Synchrony which provides convenient ATM access, the only real thing Barclays has going for it in the U.S. is an attractive savings account rate.
How to open a Barclays online savings account
Opening a Barclays online savings account is a five-step process and you can re-open an application in progress if you wish.
Go to www.barclaysus.com and click the Open an Account button.
If you want to re-open an application in progress, you'll need to enter the application number sent to you in an email.
Otherwise, the process is very straightforward and requires some personal information (name, address, email, phone number, social security number).
You'll also have the option to link another bank account, and you'll need to agree to the terms of service before your online savings account will be set up.
Discover Bank offers an attractive 1.30% APY plus a lucrative sign-on bonus — but there's a catch
From the people who brought you the Discover credit card comes the Discover savings account.
See how your traditional bank's savings account stacks up. Through Discover Bank's website, you can enter your local bank's savings account details and see how much you'd earn versus opening a savings account through Discover.
24/7 customer service makes it easy to get answers when you need them. Customer service is attentive and helpful, and being able to reach someone any time of the day or night is a definite benefit when managing your finances online.
Mobile app is user-friendly, reliable, and consistently updated. Unlike many online banking apps which are fraught with compatibility and log-in issues, Discover's mobile app is fast and easy to use while still keeping your information secure.
In addition to giving you easy ways to transfer, add, and withdraw funds, the app also allows you to locate nearby ATMs that accept Discover, making this app a robust choice if you already have other Discover products like credit or debit cards.
With no minimum opening deposit, no monthly fee and no minimum balance required, these features alone make the Discover savings account stand out.
But there's a reason why the Discover Bank card is last on our list of the best high-yield savings accounts, and it centers around just how much you have to deposit in order to get the sign-on bonus.
How to get the sign-up bonus
For a limited time, Discover Bank is offering a sign-up bonus to new account holders who sign-up for an online savings account.
In order to get the sign-on bonus, you'll need to open an account by March 14, 2018
The amount you get depends on how much you deposit.
You can earn a $150 bonus if you deposit at least $15,000 by March 14, 2018 or a $250 bonus if you deposit at least $25,000 by the same date.
Historically, Discover has only offered a $100 sign-on bonus for deposits of at least $15,000, so this is the best time to take action on opening a savings account with Discover if you want to get the largest bonus ever offered.
Discover is known for offering various sign-up bonuses, so keep your eye out for any new deals if you happened to miss this one.
And while this bonus amount may be out of reach for all but the most seasoned savers, it may be worthwhile if you're saving for a substantial purchase such as a home or college tuition.
How to open a Discover Bank online savings account
Visit Discover's website and click the Open Account button.
As with opening any type of bank account, you'll need to enter some personal information such as your name, address, phone, and social security number.
You can also choose to make an opening deposit during the application process.
If you want the sign-on bonuses, you'll need to apply before the stated deadline above and deposit the prerequisite amount to qualify.
Now that you know which online savings account give you the most for your money, the next question is, how do you know which one is best?
The best high-yield online savings account grows your wealth and makes banking easy
Whether you need flexible access to an account that gives you the convenience of ATM access and checks or you just want a solid rate for an emergency savings fund, an online savings account blends the best of great rates and superior flexibility in how you manage your funds.
It's important to note that there's no "one size fits all" in the world of online savings accounts.
You may just want a place to stash your savings with a more hands-off approach, or you might welcome the ability to contact customer service any time of the day or night.
No matter what your preferences, choosing a high-yield online savings account from these well-known banks will not only grow your savings but provide you with greater security and peace of mind while you save.
Do you have an online savings account with one of these companies?
How has it worked out for you?
Any great tips (or nightmares) to share with the rest of us?
Let us know in the comments below.