Can you believe the national average interest rate for savings accounts is just 0.09%? Yes, you read that right, 0.09%, not 0.9%.
Leaving your money in a savings account is a terrible way to get decent returns on your investments when there are so many better options available. Many of these alternatives also won’t charge you a dime to manage your savings account, something traditional banks still inexplicably do.
If you’d like to start reaping the rewards of saving, then here are some alternatives you should ditch your current savings account for.
6 Alternatives to Low-Interest Savings Accounts
Betterment, one of the best robo-advisors out there, just launched its own Smart Saver account.
Similar to Betterment’s portfolio optimization strategies, the Smart Saver account allocates deposited cash into secure investments, which can bring in as much as 20x higher returns on your deposits compared to traditional savings accounts.
The present expected yield is 2.20%. There are no account minimums, no hidden fees, just a 0.25% fee in exchange for access to cutting-edge, algorithm-based savings account management.
Ally Savings Account
Similar to Betterment, Ally Bank savings accounts currently yield 2.20% on deposits, and there is no account maintenance fee.
Balances are FDIC-insured up to $250,000, you can deposit checks remotely with Ally eCheck Deposit, and there are barely any fees involved, just $7.50 for returned deposits, $25 for overdrafts, and $10 for excessive transactions.
With Ally, you also get access to 24/7 customer service and an emergency savings calculator to help you simplify your savings strategy.
The only downside is that you cannot deposit cash into an Ally Savings account, though you can deposit cash if you have an Ally Interest Checking account, which yields 0.10% annually.
Synchrony High-Yield Savings
With Synchrony Bank’s high yield savings account, you could be making as much as 2.20% on your deposits with no minimum balance. And, you could get access to 24/7 online and mobile banking.
You can access your money easily through fee-free, in-network ATMs, and there are seven different ways you can add money to your account.
Compared to other major banks, which offer interest rates of 0.01-0.10% for their savings accounts, Synchrony is definitely ahead of the game by offering consumers better opportunities to make their money work for them.
Discover doesn’t offer sky-high interest rates on its savings accounts, but its 2.10% annual yield is still much better than other major banks like Chase, Wells Fargo, and Bank of America.
There is no opening deposit amount required, no monthly fee, and no minimum balance required to waive the monthly fee, which ranges from $300-500 for the other major banks.
Mobile banking is also fully accessible and easy-to-use, with effortless check deposits and super-simple money transfers between accounts. If you’re currently a Discover customer or would prefer to keep your money with a bigger bank than Ally or Synchrony, then don’t hesitate to switch to Discover’s online savings account.
Wouldn’t it be great if you could just grow your savings automatically? This is the premise behind Chime’s banking app. They want to give consumers access to more banking options that benefit them.
A Chime savings account allows you to save money on hidden bank account fees, mobilize your finances, get direct deposits 1-2 days early, and withdraw cash from over 38,000 fee-free ATMs in its network.
There are no account management, overdraft, minimum balance, or transaction fees. The only fee is $2.50 for out-of-network ATM withdrawals.
While Chime doesn’t offer higher interest rates, it’s still an incredibly useful app for anyone who wants to stop paying fees on their savings accounts.
Certificates of Deposit (CDs)
Last but not least…certificates of deposit. They’re not as popular as they once were, but they still offer better returns than your average savings account. Some yield as much as 2.50-2.65%.
The main downside is that you cannot withdraw the funds before the set maturity date or you’ll incur penalties. That means you might not have access to your deposited funds for several months or even years.
If you have more than enough to cover emergency expenses and you’re simply looking for a low-risk way to increase your returns on your savings account, then certificates of deposit are likely a good pick for you.
Final Thoughts on Savings Accounts
None of the above savings accounts will help you earn as much as a regular investment account would, but these options are significantly less risky in comparison to traditional portfolios mixed with stocks and bonds.
You also get much quicker access to your funds in case you need cash at a moment’s notice.
Why would anyone continue paying monthly fees for a savings account making less than 0.10% interest when all of these great options are available with $0 account minimums?