If you’re looking for a way to earn more interest on your savings (and who wouldn’t?!), then it’s totally worth looking into online banks.
I used to keep my savings account with the local bank that I also have my checking account with. That was a mistake. For years, I was making just 0.10% APR. 0.10% APR! That means for every $1,000 in an account, only $1 of interest is made IN AN ENTIRE YEAR. One dollar. That’s ridiculous.
Then I learned about online high-yield savings accounts, and I jumped to make the switch. Compare that 0.10% APR that I was making, with the 2%+ APR that online banks are now offering.
Online banks are able to provide much higher interest rates and lower fees because of their lower overhead costs. They don’t have physical branches with thousands of employees to pay for, so they pass the savings on to us consumers. By switching my savings account to an online bank, I now make over 20 TIMES what my local bank was offering. I still keep my checking account with my local bank (for convenience purposes), and just transfer money between that account and my online savings account as needed. It’s quick, hassle-free, and I recommend it to everyone!
Some of the best online high-yield savings accounts are offered by banks such as Ally, Barclays, Synchrony, American Express, Discover, Alliant, and a few more. Nerdwallet.com regularly updates their list of the best high-yield online savings accounts, and you can check that list out here.