Best Banks for Savings Accounts of November 2019

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Savings accounts are an essential part of your finances. But the best banks for savings accounts allow you to do more than park your money somewhere safe—they also allow you to earn a decent amount of interest on your balance. Choosing the right account helps you grow your savings and avoid fees, maximizing the amount you have for spending.

We teamed up with QuinStreet to bring you the savings account offers in the following table. Below, you'll find our editors' picks for best banks for savings accounts.

So, where should you open an account? Lots of banks have excellent savings accounts, and we’ve highlighted some of the best offerings below. The banks on this list pay competitive rates, keep fees low, and provide FDIC insurance on your deposits.

The 5 Best Banks for Savings Accounts of November 2019

  • Best for All-in-One Banking: Discover Bank
  • Best for High Rates: TAB Bank
  • Best for Kids: Capital One
  • Best for Managing Your Finances: Simple
  • Best for Customer Service: Ally Bank

Best for All-in-One Banking: Discover Bank

Discover Bank offers a wide variety of accounts, including an Online Savings Account that pays 1.80% APY. There’s no minimum deposit required, and you pay no monthly fees with that account. In fact, the only fee you should pay is an outgoing wire fee, if you choose to wire money. Official checks, returned deposits, and excess withdrawals are all fee-free.

While you can potentially earn more elsewhere, higher rates only matter when you have a substantial account balance. If you don’t keep a large amount in your savings account, you might prefer having access to a robust set of features.

Discover has a lot more than a good savings account. Its Cashback Debit account provides a rare opportunity to earn rewards on debit card spending, and its money market and CD accounts have good rates, too. Discover also offers credit cards, free FICO credit scores, home equity loans, personal loans, and other financial services.

Best for High Rates: TAB Bank

TAB Bank pays an attractive 2.10% APY, and there’s no minimum balance required to open an account. As a result, it’s a great place to build up savings, and there are no monthly fees that cause you to lose ground on reaching your savings goals. To keep tabs on your growing savings, you can set up text and email alerts that notify you of any deposits, withdrawals, and more. 

In addition to a high-yield savings account, TAB Bank offers checking accounts, CDs, and accounts for businesses.

Best for Kids: Capital One

Capital One offers an online savings account to minors (under age 18). The Kids Savings Account pays 1.00% APY, and there is no minimum to open the account. You pay no monthly maintenance fees, and you can earn that rate with any account balance. 

The account requires an adult as a joint account owner, and kids are not allowed to transfer money in or out of the account on their own. But minors can use a mobile app to view the account and deposit checks.

This is an excellent way to teach children about money. They can see how interest helps their account grow, and they can practice saving for specific goals while watching their progress.

Best for Managing Your Finances: Simple

Simple lives up to its name by providing the essential features you need to manage your money on a day-to-day basis. Simple is not strictly a savings account, but you can earn 2.02% APY on money you set aside for your goals, and there’s no minimum balance required to earn that rate. If you keep a balance of $10,000 or more, you earn 2.15% APY.

What makes Simple stand out is the built-in money management tools. This account is designed to help you manage spending and reach specific goals. After you create spending categories and financial goals, you allocate a set amount each month to each category. Also known as zero-sum budgeting, this approach ensures that every dollar in your budget has a job and that you treat saving like a required expense.

Best for Customer Service: Ally Bank

There’s nothing worse than dealing with bank errors and trying to get access to cash when you need it. Ally Bank scores high in the J.D. Power 2019 Direct Banking Satisfaction Study, and the bank has competitive rates, as well. Ally Bank pays 1.70% APY with no minimum balance requirement and no monthly fees.

Customer service is available by phone 24/7, and Ally displays an estimated wait time online so you know what to expect. You can also use Ally for online checking, CDs, and more.

Are Online Banks Safe?

Online bank accounts can be as safe as brick-and-mortar accounts. That’s true for deposit insurance and other forms of security. The most popular banks (including those listed here) benefit from FDIC insurance (for banks) or NCUSIF coverage (for credit unions) up to $250,000 per depositor, per account. When banking online, you might face unique risks associated with cybersecurity—but your brick-and-mortar accounts are probably online as well.

Here’s how to reduce risk:

  • Keep your browser and mobile apps up-to-date.
  • Use caution when clicking on links—or avoid clicking any links in email altogether.
  • Use a strong, unique password, and store your passwords securely.
  • Never respond to email, phone, or text message requests for your personal information or password.
  • Use two-factor authentication to make it harder for thieves to log into your accounts.

If you notice any signs of fraud, contact your bank immediately. You may be protected from fraud and errors in your account, but you need to act quickly for the highest levels of protection. Banks also monitor your accounts and employ sophisticated analytics to help detect fraud, regardless of whether you bank online or in a branch.

What Makes a Good Savings Account?

  • The interest rate: A competitive rate is helpful, but it’s not necessarily the most important thing. The interest you earn becomes increasingly important as your account balance grows. But if you keep a relatively small amount in savings, it’s potentially more important to select accounts that do not charge fees and make it easy to add to your savings.
  • No monthly fees: This is crucial, especially as you’re getting started. Monthly fees can wipe out any interest you earn and even cause your account balance to fall each month.
  • Deposit insurance: Verify that your funds are protected from bank failures. FDIC insurance and NCUSIF coverage are equally safe, so don’t be afraid to work with federally-insured credit unions.
  • Electronic transfers: The best accounts make it easy to move money in and out of savings. Setting up direct deposit from your employer helps to automate your savings and avoid temptation. Quick, free transfers by ACH help you keep your money in savings and earn interest for as long as possible before you need to take withdrawals.
  • Mobile deposit: If you receive paper checks, be sure your bank allows you to deposit checks with your mobile device. Doing so saves you time, as you can avoid trips to a branch and time preparing a deposit by mail. Plus, you can speed up deposits and start earning interest as soon as possible.

Is the Savings Account Interest Taxable?

Interest you earn in your savings account is generally taxable as income. Your bank typically reports your earnings on Form 1099-INT, and you should provide that information to your tax preparer or include it with your tax filings.

Keep an eye out for a 1099-INT in the mail during tax season. You may also be able to see the form through your online banking portal.

With individual accounts, joint accounts, and other taxable accounts, you pay interest for the year you receive the income. But if your account is part of a retirement account like an IRA, you may be able to postpone or avoid taxation on that interest. 

In many cases, banks do not provide a 1099-INT unless you earn at least $10 during the year.

Why Interest Rates Are Important

Your rate determines how quickly your account grows. The higher the rate, the better, because you earn more on your savings with a higher rate. In addition to the stated interest rate, an account’s APY is useful for comparing accounts. That number illustrates how much you earn in your account over the course of a year when you allow your earnings to compound (see below).

Do I Need the Highest Interest Rate?

Not necessarily. Run the numbers to determine how much you gain by choosing a bank with a higher interest rate—it might not be worth the trouble of moving your money. The more money you have in savings, the more it matters. But most people keep only a modest amount in savings, so high rates aren’t as important as banks might lead you to believe.

For example, if you keep $2,500 in savings, how much higher does the rate need to be for you to care? Assume you’re choosing between two banks, with all other things being equal:

  • If you earn an extra 0.25% at one bank, that translates to roughly $6.25 per year
  • A rate that’s 0.50% higher returns an additional $12.50 per year
  • Earning an extra 1% would yield about $25 per year

See how to calculate interest earnings with numbers that you choose.

Do Savings Account Rates Change?

The interest rate on your savings account changes over time. In some cases, the rate remains the same over extended periods. But when rates in the broad economy change, banks typically move in sync with those changes. If the Fed cuts rates, there’s a good chance that your savings account rates will remain stagnant or fall. When rates rise, banks tend to increase rates, but not necessarily as quickly as you’d like.

Savings accounts rates have been declining since the Fed started cutting benchmark rates in August 2019.

CDs enable you to lock in a rate that doesn’t change, but there are pros and cons of using CDs.

Can I Have More Than One Savings Account?

Yes, you can open as many savings accounts as you want. Multiple savings accounts can help you separate money for certain goals, stay below deposit insurance limits, or move your money where it serves you best. However, it might not make sense to keep multiple accounts if you have to pay fees for each account. Also, keeping track of numerous accounts can cause confusion, but there’s nothing wrong with having a manageable number of savings accounts.

Key Terms

Interest: The amount your bank pays you based on your account balance. This is typically expressed as an annual rate, but may be paid monthly. For example, if your bank pays a 1.2% annual interest rate, you would receive 0.1% per month. On a balance of $100, that translates to $1.20 per year, although the amount could be higher due to compounding.

Compounding: When you earn interest in a savings account, you might leave those interest earnings in the account. Your bank adds money to your account, and that new money generates additional interest earnings. In other words, you earn interest on the interest you previously earned. That process, known as compounding (or earning compound interest), helps your account balance grow at an increasing rate.

Annual percentage yield (APY): APY is the amount you earn on your savings when you take compounding into account. If your bank pays interest more often than yearly (banks often calculate interest daily), you earn more than the stated annual interest rate. That higher amount, known as the APY, is a more accurate way of understanding how much banks pay. Learn more about APY.

Excess withdrawals: Savings accounts are designed to hold your funds for extended periods. You can withdraw money occasionally, but frequent withdrawals are problematic. Federal law limits certain types of withdrawals to no more than 6 per month, and banks can set even lower limits. When your withdrawals exceed those maximums, you may have to pay fees, and your bank might close your account if you make a habit of it.

Minimum balance: As you compare accounts, note any minimums (some banks do not set minimum balance requirements). You may see several different types:

  1. Minimum initial deposit: The amount you need to deposit to open an account. Unless you meet that requirement, you can’t open an account.
  2. Minimum to earn interest: Banks may pay different rates at different levels. Pay attention to how much you need to keep in your account to earn the highest rates.
  3. Minimum to avoid fees: You may be able to prevent monthly fees in your account by keeping your balance above a certain level.