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Why are Savings Accounts Better?

Online savings accounts are very mainstream these days and have been around for about two decades now. There are many features about an online savings account that make banking so much easier than a traditional brick and mortar savings account. Plus, the interest rate earn on an online account is so much higher than an account offered by a brick and mortar bank.

Savings accounts in general earn a lower rate than certificate of deposit accounts but you have access to your money when you need it. You can access your money in a certificate of deposit but you will pay an early withdrawal penalty if you do so.

Savings accounts are a good way to save for unexpected expenses or can be used for an emergency account. Experts recommend having at least six months of expenses stashed away in an emergency account.

Savings Account Features

Federal law, Regulation D, only allows for 6 withdrawals from a savings account per billing cycle. If you constantly go over that amount your bank or credit unoin is allowed to switch your account to a checking account. Most checking accounts earn a lower rate than savings accounts.

We actually recommend having a savings account, checking account and also certificates of deposit, each is designed for a particular need.

Online savings accounts earn a much higher interest rate than regular savings accounts. The reason being, with traditional brick and mortar banking there are higher costs to maintain branch locations. If a bank only has an online presence the savings are tremendous and they can pass the savings onto depositors in the form of higher interest rates.

Why Use an Online Savings Account?

The ease and convenience of online banking is the second reason to stick with online accounts. You can access your accounts online to view balances, pay bills, transfer money between accounts. One of the greatest features is mobile deposit. You can take a photo of a check to deposit it into your account.

Traditional Savings Accounts vs. Online Savings Account

There are many reasons to choose an online savings account over a traditional savings account. Many reasons we mention above.

Right now, the best online savings rate is more than 10 times the best brick and mortar savings rate. We don't expect this to ever change because online banks have lower costs.

Compound Interest on a Savings Account

If you haven't heard of compound interest you really need to read this next paragraph. Compound interest is interest calculated on the savings account principal and interest already earned. Compound interest is the most powerful aspect of a savings account.

When you open a savings account make sure to see when a bank or credit union "compounds the interest." Finanical institutions greatly differ on when the compound interest. The more frequently interest is compounded the more money you make. Some finanical institutions will do it daily, some compound monthly, some compound quarterly or even annually.

Do you pay income tax on interest earned on a savings account?

The answer is yes, interest earned on a savings account is taxable. The finanical institution you have an account with will send you a 1099-INT with the amount of interest you earned. The tax rate you pay will depend on your tax rate which depends on how much income you had any given year.

How to Open a Savings Account

The best and easiest way to open a savings account is online. You will need several pieces of information to open an account. There are Federal laws designed to prevent money laundering which drive most of the process these days.

Information you will need to provide a bank or credit union to open a savings account include:

  • Full Name
  • Date of Birth
  • Social Security Number or EIN for businesses
  • Proof of Address
  • Phone number
  • Email address and tax identification number (such as a Social Security number)
  • Drivers License or Passport

Should I Designate Beneficiaries when I open a Savings Account?

Most banks or credit unions require you to designate a beneficiary when you open an account. The person(s) you name as the beneficiaries will inherit the money in the account.

Funding a Savings Account

If the savings account has a minimum deposit requirement, you’ll need to deposit at least that much money in the account. You can do this by initiating a bank transfer, sending or depositing a check or using a wire transfer.

Not all banks require a minimum deposit but for the banks that do you might also be able fund the account for some period after the account has been opened.

Updated: Marcus’ savings rate on the bank’s online savings account has hit a new high of 2.20% 2.50% APY thanks to an additional 1.00% referral bonus. Marcus just increased their savings rate, right before the Federal Reserve is expected to increase the fed funds rate by 75 basis points. This new savings rate at Marcus is now the best savings rate on our rate table.

Marcus Rates

Marcus Bank Best Savings Rate

  • Macus Savings Rate 2.20% APY

Marcus Bank Savings Account Summary

Besides having one of the best savings rates around, the online savings account at Marcus also has no minimum balance and no account fees. The account also has same day transfers from other banks, which means you can credit for a deposit the same day you make the transaction, up to $100k.

Author: Brian McKay
July 26th, 2022

CIT Bank savings rates on the bank’s savings account is on the higher end of savings rates currently available. The savings rates at CIT Bank are at 1.34 percent with a 1.35 percent annual percentage yield. CIT Bank’s savings rate is more than 16x the FDIC national average rate, plus you earn interest with a minimum of $100 balance.

CIT Bank Best Savings Rates

  • Savings Rate 1.35% APY

In addition to being 16 x the national average rate, CIT Bank savings rates are also better than most other online rates available.

CIT Bank Savings Account Summary

  • No minimum opening deposit
  • No monthly maintenance fees
  • Interest is compounded daily and paid monthly
  • Interest earned with $100 daily collected balance
  • Six preauthorized withdrawals/transfers permitted per calendar month
Author: Brian McKay
July 4th, 2022

UFB Direct Savings Rate is one of the best savings rates currently available from any online bank. The current savings rate at UFB Direct is at 1.65 percent with an APY of 1.66 percent. There is no minimum opening deposit to earn this high savings rate and yield.

UFB Direct Savings Account Summary

  • Account APY – 1.66%
  • No service fees
  • No maintenance fees
  • No minimum deposit
  • Free transfers between direct deposit accounts
  • Mobile deposit
  • SMS banking
  • Online banking

UFB Direct Best Savings Rate

The current savings rate from UFB Direct is more than twenty times the FDIC national average savings rate of 0.08 percent. UFB is a branchless bank, they only have an online presence, which allows the bank to offer higher savings rates than traditional brick and mortar banks.


UFB Direct is the online banking division of Axos Bank, all deposits are backed by the FDIC under Axos Bank’s FDIC Certificate 35546. Again, this online savings rate from UFB is one of the best rates available, you can compare this rate with other rates by using our rate list at

Author: Brian McKay
July 3rd, 2022

Marcus Bank savings rates on the bank’s online savings account is one of the best savings rates available right now. Current savings rates at Marcus Bank are at 1.19 percent with a 1.20 percent annual percentage yield. Marcus’ savings rate is four times the national average rate plus there is no minimum opening deposit.

Marcus Bank Best Savings Rates

  • Online Savings Rate – 1.20% APY

Besides being four times, the national average rate reported by Informars, Marcus Bank savings rates are also fifteen times the FDIC national average savings rate of 0.08 percent.

Marcus Bank Savings Account Summary

There are no fees with the Marcus high yield online savings account, there are same-day transfers from other banks when you transfer $100,000 or less. Customer service is available 24 hours a day, 7 days a week.

Author: Brian McKay
July 2nd, 2022

Checking on current savings rates online, the best savings rates available right now top out at 0.60 percent. Before the pandemic, we were scoffing at savings rates around 1.00 percent, now we would be happy to get a rate at 1.00 percent or higher.

Savings Rates October 5 2021Savings rates plummeted during the pandemic, haven’t recovered yet, and probably won’t until the Federal Reserve increases the fed funds rate. At the beginning pandemic, when there were record job losses, people just stop spending, not to mention the limited options people had to spend money.

The downward pressure on savings rates wasn’t only from the Fed lowering the fed funds rate, banks were flushed with deposits as well, driving savings rates even lower. Some national banks didn’t want your money, offering savings rates of 0.05 percent.

During this time, there was a really sharp increase in the personal savings rate (savings as a percentage of disposable personal income), increased from around 7.2 percent in December 2019 to a record high of almost 33.7 percent in April 2020. The rate is still elevated as of June 2021 at 9.4 percent.

Savings Rates – October 5 2021

The Fed isn’t expected to increase the fed funds rate until late 2022 or maybe not even until early 2023, whether that is the case remains to be seen. Inflation is the one thing that force savings rates higher sooner. Inflation is a big concern as of late, but most analysts see the increase as transitionary and will decrease in the coming months. If inflation accelerates, we might see the highest savings rates we have seen in years.

If you’re looking to open a savings account, your best bet is doing it online. You will definitely get higher savings rates online than you will at a traditional brick and mortar bank or credit union.

Author: Brian McKay
October 5th, 2021

Comenity Direct Savings Rates and ReviewComenity Direct savings rates have gone down, but the bank’s savings rates are still very competitive when compared with other online rates available. Savings rates at Comenity Direct are currently at 1.88 percent with an APY of 1.90 percent. That savings rate from Comenity Direct places the bank 5th on our rate table. The current national average savings rate is at 0.88 percent, less than half of the rate from Comenity Direct. You can easily compare current online savings rates available with Comenity Direct savings rates. If you do want to open an account with Comenity Direct, you can do so here:

Comenity Direct Rates

Comenity Direct Savings Summary

  • Open Now
  • Type of Account: Savings Account
  • Online Savings Deal APY: 1.90%
  • Opening Balance: $100
  • Maximum Balance: $10 Million

Other Rates:

  • 1-YEAR CD APY 2.10%
  • 2-YEAR CD APY 2.15%
  • 3-YEAR CD APY 2.20%
  • 4-YEAR CD APY 2.20%
  • 5-YEAR CD APY 2.20%

Availability: (Online)

Comenity Direct Best Savings Rates

The online savings account from Comenity Direct is overall one of the best savings rates and deal available right now. The minimum opening balance is only $100 and the maximum amount is $10 million but you probably want to stay below the FDIC insured limit of $250,000 for an account. If you deposit $25,000, keep that amount in the account for 12 months and the rate stays at 1.90 percent you will earn around $475 in interest. Since rates are always changing, you might want to compare rates online to make sure you are always getting the highest savings rates available.

Comenity Direct Savings Account Features and Benefits

You might not have heard of Comenity Direct since it’s a relativity new bank which was created in 2018. The online bank is a division of Comentiy Bank, which has been in business for more than 30 years.

  • Interest accrued and compounded daily
  • Interest credited and posted monthly
  • No hidden fees, so you save more
  • Free monthly maintenance
  • Free ACH transfers
  • Free online statements
  • Free incoming wire transfers
  • Unlimited deposits via mobile check capture and ACH transfer
  • $25 outgoing wire transfer fee
  • $15 per official check request
  • $5 per statement copy request


Comenity Direct offers a high yield savings account and many CD account terms to choose from. All accounts have high interest rates if you’re looking to open a new account. You can open a Comenity Direct savings account if you want access to your funds at anytime and still earn a higher rate than most savings rates available these days. If you don’t mind locking up your funds in a CD account, you can earn an even higher interest rate. Overall, with Comenity Direct you are getting higher rates than the current national average rates available. You also are getting great features and benefits one would expect these days with online account. If you’re looking for more options, you can browse our list of Best Savings Rates to get the best deal.

Author: Brian McKay
February 16th, 2020

First City Bank Savings RatesFirst City Bank savings rates listed here are current as of January 2020. Savings rates at First Savings Bank on the bank’s First Savings account are currently at 0.25 percent. Savings rates from First City Bank on the bank’s Relationship Savings account are at 0.50 percent. As the name suggests, to earn the higher savings rate you need to also have a First City Bank checking account. To get the best savings rates compare online rates with First City Bank savings rates.

First City Savings Bank Savings Rates

  • First Savings Account Rates 0.25%
  • Relationship Savings Account Rates 0.50%

First City Savings Bank First Savings Account Fine Print

  • $100 minimum to open
  • Interest compounded daily and credited quarterly (If receiving combined statements, interest will be credited monthly)
  • 2 free withdrawals per monthly cycle
  • More than 2 withdrawals per monthly cycle $5 each
  • $500 minimum daily balance to avoid $5 monthly service charge

First City Savings Bank Relationship Savings Account Fine Print

  • $25 minimum to open
  • Automatic checking-to-savings account transfers
  • Monthly combined statement
  • No monthly service charge
  • No minimum balance requirement
  • Interest compounded daily and credited monthly
  • 2 free withdrawals per monthly cycle
  • More than 2 withdrawals per monthly cycle $5 each

Always search for and compare online savings rates to get the best deal when opening a savings account.


Author: Brian McKay
January 28th, 2020

Northpointe Bank Money Market RatesNorthpointe Bank money market rates are very competitive right now when compared to other online rates. In fact, money market rates at Northpointe Bank are in the top five rates available on our rate list. Current money market rates from Northpointe Bank are at 1.94 percent with an annual percentage yield of 1.95 percent. The minimum opening deposit to earn this rate and yield is $25,000.

Money market account rates from Northpointe Bank are tiered and based on the deposit amount. Accounts between $25,000 and 1 million earn the 1.95 percent APY. Account balances between $2,500 and $24,999.99 earn a rate of 1.04 percent and a yield of 1.05 percent. Account balances over 1 million only earn a rate of 0.50 percent. The rate for account balances under $2,500 is zero percent.

To get the best rate available compare online money market rates with Northpointe Bank money market rates.

Author: Brian McKay
January 5th, 2020

MySavingsDirect Savings RatesMySavingsDirect savings rates are very competitive when compared to other online savings rates. Savings rates at MySavingsDirect also blow traditional brick-and-mortar savings banks’ rates out the water. Current savings rates from MySavingsDirect are at 1.88 percent with an APY of 1.90 percent. That rate is currently 21 times higher than the current FDIC national average savings rate of 0.09 percent. MySavingsDirect is a division of Emigrant Bank which has been in business since 1850. To get the best savings rate on a savings account be sure to compare online rates with MySavingsDirect savings rates.

MySavingsDirect Savings Account Fine Print

To Open a Savings Account at MySavingsDirect:

  • Be at least 18 years of age
  • Be a U.S. citizen or Resident Alien
  • Have a valid social security number
  • Have a residential address in the United States

MySavingsDirect Savings Account Fees

  • No minimum balance fees
  • Balance Confirmation Letter/Verification of Deposit Fee $ 30.00
  • Additional Copies Fee $5.00
  • Legal Fee (for processing Subpoenas, Levies, etc.) $100

You can open a MySavingsDirect High Interest Savings Account or search for and compare online savings rates with MySavingsDirect savings rates.

Author: Brian McKay
December 18th, 2019

Customers Bank Money Market RatesCustomers Bank money market rates are the best money market rates on our rate list right now. Money market rates from Customers Bank are currently at 2.23 percent with an APY of 2.25 percent. Money market rates at Customers Bank is 15 times the FDIC national average money market rate this week. The minimum opening account balance is $25,000. This high yield is guaranteed thru June 30, 2020 and is on Customers Bank’s Ascent Money Market Account. To see how high this rate is compare online rates with Customers Bank money market rates.

Customers Bank Money Market Account Fine Print

  • 2.25% available online only, not available at any branch locations
  • High yield guaranteed thru June 30, 2020
  • $25,000 minimum opening deposit
  • $25,000 minimum balance to earn high yield
  • No monthly minimum balance fees
  • Debit card and checks are not available on this account
  • New money only, money already on deposit at Customers Bank isn’t eligible for high yield
  • FDIC insured Cert # 34444
  • Interest compounded monthly
  • Interest credited to your account monthly
  • If you close your account before interest is credited accrued interest will be paid

To get the best money market rates compare rates online with Customers Bank money market rates.

Author: Brian McKay
December 17th, 2019