Best Online Banks for Savings
Best online bank for savings - Revolut
Best online banks for savings:
In the past few years, online banks have been actively increasing their presence in the traditional banking services market for retail customers. Online banks differ from traditional ones in that registration and account management take place online through an app installed on any mobile device. If you are in the region where an online bank operates, opening an account takes a few minutes, and you get 24h access to your account. In this review, Traders Union discusses the most popular digital banking service – savings accounts – and provides a list of online banks with the best APYs.
What are digital savings accounts?
A digital savings account is a type of account for nearly all types of transactions, with an annual percentage yield (APY) accrued on the balance. It differs from a traditional bank account in that you open it on the platform of an online bank and have access to your money anytime and anywhere. All you need is to install a digital bank’s mobile app.
Advantages of digital savings accounts:
Simple registration. You open an account while being at home, in transport, on vacation, literally anywhere. Digital banks are not attached to physical offices or your location. This is convenient for those who often travel abroad, go on business trips to other countries, etc. Some online banks register clients depending on the region but, in most cases, you can open an account while being, for example, in India, although you live in Europe.
Higher APYs. Digital banks do not have administrative expenses, expenses on circulation of documents, etc. That is why they can afford to offer more favorable conditions to their clients.
Flexible financial monitoring. Traditional banks may have various restrictions in place: limits on withdrawals abroad, limits on transactions with foreign currency, etc. Online banks rarely have such restrictions. Online banks are financial intermediaries that charge fees for services. They do not restrict clients in using their own money, as long as transactions are legal.
A savings account at an online bank is your digital wallet, which you always have at hand in your smartphone.
Best Crypto-Friendly Banks You Should KnowDisadvantages of digital savings accounts:
No physical contact with representatives of an online bank. For some people, it’s an important psychological aspect.
Risks. Some people do not trust digital banks because they think that a platform may disappear and turn off its support any moment or deny a withdrawal. Theoretically, such situations are possible but, practically, they have not occurred with licensed platforms yet. Besides that, digital banks have independent insurance funds for unforeseen situations.
These drawbacks are insignificant compared to the benefits that users get from using digital financial technologies.
Top 4 Online Banks for Savings with Highest APYs
In this section, you will discover the best savings accounts offered by online banks that have earned a reputation of reliable and responsible platforms for retail customers and businesses.
Revolut
Revolut is one of the best online banks licensed by the FCA (UK). Savings accounts for teens are one of the interesting offers. They allow young people to save money on education, for example. Starting from the age of 13, people can open such accounts by themselves. Those who are under 13 can open an account with their parents’ permission. The annual equivalent rate (AER) on savings accounts depends on the plan and account currency and is accrued daily. The average AER is 0.9%-2.75%.
👍 Advantages of Revolut bank:
•This is an all-purpose online bank offering all types of products to active users and investors. Revolut is one of the most popular platforms in Europe and Asia.
•Flexible plans. No fees on small payments. Favorable prices for freelancers who use the bank exclusively for rare transit payments.
•Access to investing in cryptocurrencies, commodities, and stocks.
•Multi-purpose solutions for businesses, including payment gateways for online stores.
👎 Cons
•The bank uses a wide range of banking products and payment solutions to incentivize clients to buy subscriptions.
•Support is available only in an in-app chat. There are no phone contacts.
The bank offers a customizable app featuring notifications about expenses, settings for limits, transaction history, etc.
CIT Bank
CIT Bank is intended for users with small deposits. The bank’s advantage is a wide range of savings accounts with flexible approach to interest accrual. For example, the APY on the Savings Connect account is up to 3.25%, and the minimum deposit is $100. Users that choose a different type of savings accounts make obligatory monthly deposits of $100 and get a higher APY for that. The maximum APY of 4.5% is valid for deposits starting at $1,000. The deposit term is 18 months.
👍 Advantages of CIT Bank:
•Client money is insured by the FDIC. The coverage for all client deposits isup to $250,000.
•One of the highest APYs on long-term deposits.
Relatively high fees on withdrawals at partner banks are one of the significant downsides. But CIT Bank tries to compensate active clients for such fees.
Axos Bank
Axos Bank, which launched its online platform in 2000, is one of the oldest digital banks. It offers several types of investment programs: classic savings accounts with APYs up to 0.61% and certificates of deposit in amounts starting at $1,000 at 0.2% APY.
👍 Advantages of Axos Bank:
•Daily accrual of interest on the balance.
•Savings accounts are insured by the FDIC.
•A wide range of retail banking products.
•This is a reliable bank with stocks quoted on NYSE exchange.
👎 Disadvantages of Axos Bank:
•Relatively low APYs on savings accounts.
SoFi Bank
SoFi is another interesting online bank that specializes mostly in retail loan products. The bank is interested in client deposits because it has a license for loan transactions. That is why it offers some of the most favorable APYs on savings accounts. On one of the account types, the APY is 3%.
👍 Advantages of SoFi bank:
•No paid subscriptions or monthly fees.
•Several types of retirement accounts.
•Accounts and portfolios for active and automated investing in certain assets, including cryptocurrencies.
The only considerable drawback is that the bank opens accounts only in the US. You can ask the support service whether you need to be a U.S. citizen.
| Digital Bank | APY | Minimum deposit | Account fee |
|---|---|---|---|
Revolut (Standard) |
Up to 0.9% (compound interest) for EUR accounts |
No |
No |
Revolut (Premium) |
1.0%-2.34% (compound interest) depending on deposit currency |
No |
Yes |
Revolut (Metal) |
1.15%-2.75% (compound interest) depending on deposit currency |
No |
Yes |
SoFi |
Up to 3% |
No requirements (starting at $1) |
No |
CIT Bank (Long-term Solution (18 months)) |
Up to 4.5% |
$1,000 |
No |
CIT Bank (Flexible Solution) |
Up to 3.25% |
$100 |
No |
Axos Bank |
Up to 0.61% |
No |
No |
Types of savings accounts at digital banks
Online banks offer various types of savings accounts to meet client demands. The most common types are as follows:
A standard savings account at an online bank where you hold your money. You use the money at your own discretion and get a small APY on the balance (0.03-0.06%).
High-yield savings account. The APY on it is higher (0.5-0.6%), but there is a monthly fee. Plans with paid subscription have other benefits, in addition to a higher APY, for example, lower fees on international payments. This option is suitable for active users of online banks.
Savings account with compound interest.
Deposit (it may be called differently). Money is “frozen” for a fixed term, after which a client gets an interest. This option is suitable for those who want to at least protect their money from inflation. This account may have the form of a certificate of deposit with requirements for minimum deposit and minimum money locking period.
Some banks have individual offers. For instance, Axos Bank offers 1.25% APY if a client uses overdrafts, invests money through Axos Invest platform and makes at least 10 debit card transactions per month.
How to choose a savings account at a digital bank
When choosing a savings account at an online bank, consider at the following aspects:
Fees and APY. Fees for currency exchange and transactions with various payment systems, and account fees.
Additional services. For example, some online banks offer proprietary software for account management: budgeting, automated monthly utility payments, expenses analysis based on artificial intelligence tools, etc. Sometimes, such features prove to be useful.
Personal comfort. First of all, account management should be convenient for you: user-friendly interface, features, etc. Some people value instant responses from tech support.
Payment methods are another important aspect. See what payment systems you can use to deposit or withdraw money, what ATMs or payment kiosks are supported, and what physical banks accept cards from your online bank, in case you urgently need to withdraw money.
Best International Banks For Active TravelersHow to open a savings account at a digital bank
The procedure is as follows:
On a digital bank’s website, review the conditions for opening a savings account. Click the “Open account” button (“Register” or “Sign up”).
Download the app to your mobile device. You will need to do it before or after registration. The registration procedure is established by the bank.
Register. Include your city and phone number, and email to which your account will be linked.
Get verified. Verification includes sending photos of documents that confirm your identity and place of residence. You may also need to complete visual verification with a camera. Deposit funds into your savings account. You can do it using a bank card, payment kiosk, or bank transfer. The methods depend on the online bank.
Your account is ready for operation. Using the app, you can make money transfers in a few taps, receive money from counteragents, and earn interest on your account balance.
Conclusion. In the past few years, online banks have been actively competing with traditional banks. Their products for retail customers are almost the same as what banks with physical offices offer. Absence of administrative expenses that allows digital banks to offer more favorable conditions. And most importantly, with digital banks your money is at hand around the clock wherever you are. Savings accounts at digital banks are a convenient tool for everyday financial transactions that allows you to earn extra income. Use the latest technologies, become a client of digital banks and enjoy comfortable management of your money!
FAQs
Is a savings account the same as a bank deposit?
In a way, it is. But this is a much more convenient and flexible tool compared to a classic bank deposit. A savings account at an online bank is an account in the digital space, which you can access 24 hours a day from anywhere in the world using a digital app. Unlike a bank deposit, you can use the money at your own discretion any time without an early termination of deposit agreement, without visiting physical branches and without any limits or forced conversions. The money in your savings account is your money. You can transfer it to other wallets, use it to shop online and pay for services rendered, or convert it and earn income on differences in exchange rates in a few clicks. In addition, there is an APY or AER (annual equivalent rate) that accrues on your account balance.
How do I choose an online bank for a savings account?
It depends on your goals. If you want to protect your money from inflation, consider licensed digital banks with the highest APYs. An insurance fund for force majeure cases is an important aspect. If you need a convenient bank for everyday transactions, pay attention to the number of the platform’s partners, fees for transactions and conversions, additional features, and quality of support.
Who can open a savings account at an online bank?
The conditions depend on the digital bank and its licenses. Some banks only operate within their jurisdiction. For example, many banks licensed by U.S. regulators open accounts only for U.S. residents. Opening an account requires you to confirm your place of residence. Some digital banks open accounts for almost anyone regardless of their current location or registration. There are also age limits: at most banks, one can open an account only after they turn 18 (in some cases, 16).
What should I do if my savings account at an online bank is blocked?
You should contact the bank’s support immediately. Digital banks comply with the law. If you try to make an unacceptable transaction, the bank may block it or block the entire account. The same goes for questionable transfers to your account. Also, your account may get blocked if the bank detects unauthorized access attempts. If you cannot resolve the issue with the bank, refer to its regulator. If you see signs of fraud, refer to local authorities.
Team that worked on the article
Oleg Tkachenko is an economic analyst and risk manager having more than 14 years of experience in working with systemically important banks, investment companies, and analytical platforms. He has been a Traders Union analyst since 2018. His primary specialties are analysis and prediction of price tendencies in the Forex, stock, commodity, and cryptocurrency markets, as well as the development of trading strategies and individual risk management systems. He also analyzes nonstandard investing markets and studies trading psychology.
Olga Shendetskaya has been a part of the Traders Union team as an author, editor and proofreader since 2017. Since 2020, Shendetskaya has been the assistant chief editor of the website of Traders Union, an international association of traders. She has over 10 years of experience of working with economic and financial texts. In the period of 2017-2020, Olga has worked as a journalist and editor of laftNews news agency, economic and financial news sections. At the moment, Olga is a part of the team of top industry experts involved in creation of educational articles in finance and investment, overseeing their writing and publication on the Traders Union website.
Olga has extensive experience in writing and editing articles about the specifics of working in the Forex market, cryptocurrency market, stock exchanges and also in the segment of financial investment in general. This level of expertise allows Olga to create unique and comprehensive articles, describing complex investment mechanisms in a simple and accessible way for traders of any level.
Olga’s motto: Do well and you’ll be well!
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.