Checking accounts and savings accounts are the two most common products offered by credit unions and banks. They are similar in some ways but different in others. Each one is guaranteed by the federal government up to $250,000. The difference is in how the accounts are intended to be used.
A checking account provides ready access to your money. You can deposit and withdraw funds on a regular basis, plus you can write checks. With a checking account, you can pay bills, gas up your car or buy groceries.
On the other hand, a savings account is intended for longer-term storage of your money. It has more restrictions than a checking account, which can work in your favor if you tend to spend money impulsively. In addition to saving money for a rainy day, you can grow your principal balance by earning interest. While some checking accounts pay interest, the percentage rate is typically less than what can be obtained with a savings account.
If you already have a checking or savings account that pays interest, but you would like to earn a higher rate, here is some information about five accounts that offer a better interest rate than your current account.
1. CIT Bank
With a savings account from CIT Bank, you can earn as much as 2.2 percent annual percentage yield (APY). This bank is headquartered in Pasadena, California, and is not to be confused with Citigroup and its various holdings. CIT Bank is rated five stars and is listed among the 20 best online banks of 2018. You can probably find a savings account that fits your goals, as CIT offers several different options. Its Savings Builder account is a tiered-interest type of account, which means that the interest rate varies with the amount of funds deposited.
With a balance of less than $25,000, you will earn an interest rate of 0.995 percent and an APY of 1.55 percent. If you maintain a balance of more than $25,000, you will earn an interest rate of 2.127 percent and an APY of 2.2 percent. If your balance is below $25,000, but you make regular monthly deposits of $100 or more, you can earn the higher rate. However, this only applies during an introductory period.
One of the pros with this account is that there are no maintenance fees. Also, you only need $100 to open an account. A con is that you can only earn the higher interest rate during the introductory period unless you maintain a balance of $25,000 or more.
2. Citizens Access
Citizens Access, an online bank, has a savings account that pays an APY of two percent. To open an account, you will need to deposit at least $5,000. There are no promotional periods to worry about, and your account will not be charged any transaction fees. To open an account, you will need to sign up online, as Citizens Access has no physical bank branches. To fund your account, you can do an online transfer or deposit a check.
If you choose Citizens Access, you will want to make sure that you maintain a balance of $5,000 or more. If your balance falls below that amount, the interest rate you earn may be reduced. If your balance remains below $5,000 for an extended period of time, your account may be closed.
The pros with this account include a relatively high-interest rate and the ease of banking online. A con is that you cannot visit a local branch to resolve a problem.
3. Marcus, by Goldman Sachs
The savings account offered by Marcus pays an APY of two percent. There are no minimum deposits and no transaction fees. You can begin to earn interest with a deposit of only $1.00. The name of the bank is taken from the first name of Marcus Goldman, the founder of Goldman Sachs. Marcus is a fairly new financial institution that was started in 2018 with the backing of Goldman Sachs. Marcus is strictly an online bank. You can withdraw funds from your account via electronic fund transfers, phone transactions, and wire transfers. You can deposit funds by check, wire transfers, and direct deposits.
One pro of banking with Marcus is that the bank is highly rated. One con is that the bank does not have a large ATM network. Another con is the fact that the bank does not offer checking accounts. If you open a savings account with Marcus and also want to have a checking account, you will have to bank at two different organizations. However, Marcus does offer other services, such as personal loans and home improvement loans.
4. Capital One
With Capital One’s 360 Money Market savings account, you can earn an APY of 1.9 percent on balances of $10,000 or more. Like some of the other banks on this list, Capital One is an online bank. However, banking can be done at almost any ATM in the United States and many ATMs in other countries. Capital One also has some local branches and cafes in certain states. Capital One is probably better known for its credit cards than it is for its savings accounts.
One of the pros of banking with Capital One is the top-rated mobile app that it offers. With this app, you can do all of your banking using your smartphone. You can transfer money, check your balances, manage multiple accounts, pay bills, and make mobile deposits. You can even send money to another person almost anywhere in the world. Additionally, you can pay for items and services using Google Pay, Apple Pay, and Samsung Pay. Plus, there are no monthly transaction fees. One con is that there no local branches in most states.
5. Barclays
Barclays’ savings account pays an APY of two percent. This rate applies to all balances with no minimum, and there are no introductory periods. Additionally, there are no monthly maintenance fees and no minimum balances to maintain. Barclays is an old and established financial institution headquartered in London.
You can withdraw money from your account up to six times per statement cycle. Withdrawals can be made by telephone or online. One of the pros of this account is that Barclays’ fees are relatively low for such things as non-sufficient funds. Barclays also has an excellent app, which is available for both iOS and Android, that makes mobile banking extremely easy. Cons include the fact that there are no local branches and no ATMs.