Saving is crucial, it’ll help you get out of rough situations and stress a lot less. I shared how you can start and grow your emergency fund, something a lot of Americans barely have enough of.
Saving money is the first part of the formula. What if you could add a bit of firepower to that to have it grow constantly while you keep saving more?
The average American bank has a savings account rate of 0.20%, this is ridiculous!
Compare that with the bank I use (Capital One 360), which gives me over 1.5% interest.
Let’s say you save $2,000 your first year with your emergency fund goal. What would that get you at your local bank, and if you used one of the top 5 banks below?
At 0.20% interest:
Your $2,000 savings gets you $4 in interest that year.
At 1.50% interest:
Your $2,000 savings gets you $30 in interest that year.
That $26 difference might not seem enough, but for some people, $2,000 might only cover half of a month’s worth of emergency savings.
What if you saved up 6 months of emergency fund, and your monthly needs was $4,000?
That would mean, at 1.50% interest rate, you got..
- $48 return at 0.20% interest rate
- $360 return at 1.5% interest rate
See the huge difference now?
That number only gets even more drastically different as you save more and more.
I’ve urged any friends and family member who is saving at their local bank to first see what their interest rate is (to get a bit of a sticker shock), and then I share a few of my favorite places to start new savings account to get way more return.
So let’s get started right away with my top 5 best places to open up a savings account.
1. Capital One 360
Capital One 360 is where I opened up my first savings account and still have to this day.
I love how, over the years, I could quickly make new savings accounts for different goals, whether it’s saving for a car, a new house, or of course for an emergency fund.
It’s cool how you can set the number value of your goal and setting a deadline for it. Say you wanted to save $1,000 within 6 months.
After you plug that information in, you’ll get this thermometer type graphic in that account showing you where you’re at, and how much you’d want to save monthly in order to get to your goal. Awesome! I love the gaming aspect of that.
Tip: I noticed that the savings rate fluctuates, not often, but I have seen their interest promotion show 1.75% at times and then 1.50% other times. Make sure you do your due diligence and check out all the banks in this list to see which one is giving the best rate at the moment.
2. Ally Bank
No fees, no account minimums, and they’re clear about what they do charge for. Ally Bank is pretty up there when it comes to a highly reputed bank.
That’s why, even though I haven’t used this bank, I can tell from peers and online reviews that this is a very trustworthy place.
Just like Capital One 360, they have a 1.50% savings account interest rate.
3. Red Neck Bank
Weird name, and a very weird website, but I found out about Red Neck Bank from a Youtuber Graham Stephan, who did his own research and shared that you can get a whopping 2.25% interest rate up to $10,000.
Did you see what happened there?
If you don’t anticipate getting to or over $10,000 with your emergency fund anytime soon, then you might want to sign up with this bank, you’d get the highest rate possible.
Here’s the weird part, and please remember this. Once you go over $50,000 in your savings account, your interest rate goes to 0.50%, which is nothing special to talk about.
Takeaway: If you don’t think you’ll get over $10,000 in your savings account in the next year or so, I would say to set up your account here. If you think you’ll get over that soon, check out one of the other top 5 options.
Note: As of 5/4/20 update, their savings rate is down to 1.75% which is still solid.
4. Vio Bank
Another popular bank with a high savings interest rate at 1.60%.
The really nice thing here is that there is no minimum or maximum, you get 1.60% on whatever amount you deposit and save. Check out their current promotions to see what you can get.
5. Discover Bank
Discover bank has a solid 1.40% interest rate.
This is slightly below the others above, but Discover wants to be known as a zero fee company, so you can be sure that you’ll never have any general fees.
If you need your emergency fund money right away, they can do an expedited delivery for official bank checks, so you can get your money quicker.
The only fee that I saw here was for wire transfers, which is usually around $30.
Bonus: Review New Options
So here’s a list of some new online banks that I found with appealing interest rates, please also review them to see what they can offer. I’ll do the same and if any is appealing over the long term, I’ll add them to my updated top list.
- Simple Bank – 1.55% interest rate, no balance limit.
- Marcus by Goldman Sachs – 1.55% interest rate, no balance limit.
Start moving your savings money now if you’re not getting a good interest rate
Honestly, if you’re getting anything less than 1%, I would really put this on your urgent to-do list.
Making money is a game, saving money is a game.
Level 1 of the game was to plan how to can 5-10% of your monthly income by getting creative and delayed gratification.
Leven 2 of the game is now how to get more bang for your buck by housing your money at a savings account where you get the highest interest rate possible.
Let’s go! Take action today, thank me tomorrow.
PS: I’ve noticed some online-only banks getting competitive lately with better and better interest rates. If you find one with over 2% interest rate, and it’s not listed here, feel free to email me so I can review it and update this list.