The Top 5 Savings Account Alternatives at Banks

Savings Account

More and more people are looking for better-paying options because standard passbook savings accounts currently yield barely any interest.
Money market accounts, additional bank account choices, and peer-to-peer lending are a few of them. Here are the essential details.

Savings Account

1. Deposit certificates (CDs)

A certificate of deposit is a type of savings account with a defined withdrawal date and a fixed interest rate that accrues up to that date. CDs can last anywhere from one month to five years or more. Your money will earn a particular interest rate for the duration of that term; after that, you can withdraw it or use it to purchase another CD.


The majority of the time, CD interest rates are higher than those offered by conventional savings accounts at physical banks. CDs can also assist you in resisting the need to spend money that has been set aside for a long-term savings objective


Since there is typically a fee for early withdrawal, your money won’t be available to you until the design at the withdrawal date unless you agree to pay the price.

As of January 2021, the national average annual percentage yield (APY) for a one-year CD was 0.21 percent, and two-year CDs provide as high as 0.95 percent, according to The highest rates, with a $500 to $1,000 minimum, were paid by Quontic Bank and Delta Community Credit Union.
People can increase their liquidity in case they need to access some of their money by spreading their cash across CDs with different term lengths with a little forward planning. The FDIC insures CDs, which is much better.

To get the best deal on a CD, shop around because CD terms, like interest rates and early withdrawal fees, differ greatly between financial institutions.

2. Money Market Accounts with a Higher Yield

Unlike traditional savings accounts, money market accounts offer checks or debit cards, in addition, to too often high-interest rates.

Getting a money market account is among the easiest choices for funding a conventional passbook savings account. Like conventional savings or checking accounts, money market accounts are covered by the Federal Deposit Insurance Corporation (FDIC).


When compares to typical savings accounts at physical banks, MMAs can offer respectably high-interest rates. In contrast to CD or peer-to-peer lending, you will also have simple access to your money


Most MMAs have high minimum deposits and balance requirements, making them unaffordable for many people

Money market accounts typically include additional restrictions in addition to the monthly transaction cap, such as a minimum initial deposit requirement or a minimum balance that is maintained. Account holders may get the lower standard interest rate offered on normal savings accounts if there is a minimum balance requirement and their account falls below it; however, some banks may impose a penalty fee. Examine the fine print of your agreement carefully for any limits that apply to the account and for any fees that the account may incur before opening a money market or other type of account.

Money market accounts offer fewer checking account amenities and pay greater interest rates than typical savings accounts. The maximum amount of checks that a consumer can normally write on their account each month is often between five and ten. Money market account customers get a greater interest rate than those offers for conventional savings accounts in exchange for adhering to this restricted withdrawal behavior. For instance, a bank that only pays 0.10 percent interest on regular savings accounts might provide 0.25 percent interest on money market accounts.

3. Online banks and credit unions

With the advantages of high APYs and customer support that is accessible from a distance, online-only banks offer the majority (if not all) of the services that traditional brick-and-mortar banks do.

Frequently, switching a savings account to a different financial institution either one nearby or one accessible online will result in a greater interest rate. Although they often provide fewer financial services, credit unions function quite similarly to banks. Through the National Credit Union Share Insurance Fund (NCUSIF), which functions as the FDIC for credit unions, credit union accounts are federally guaranteed.


The fact that internet banks’ savings accounts typically have greater APYs is a considerable advantage. Although they can change, these interest rates are often 10–20 times higher than those found in brick-and-mortar locations.


Since internet banks often don’t offer in-person customer care, using their services requires a little more tech familiarity. Customers typically access their accounts via a computer or smartphone app, therefore these banks tend to prioritize usability and frequently offer online chat or round-the-clock phone hotlines.

Online banks like Ally Bank and American Express Bank offer higher interest rates on savings accounts. They are able to achieve this because they do not incur the overhead costs are associating with operating physical branch offices. In addition, these banks often provide CD rates that are more favorable than those of traditional brick-and-mortar banks.

Due to the fact that credit unions are nonprofit organizations, they frequently provide savings account interest rates that are much higher than those offered by banks. By opening a savings account at a credit union rather than a typical bank, for instance, a person could increase their earnings from 0.09 percent to 1.25 percent.

Online banks, however, vary from conventional ones in that they do not have a physical location or related expenses. Therefore, they have concentrates all of their efforts on giving their clients greater APY rates, financial tools, and services.

4. Services for peer-to-peer (P2P) lending

Personal loans that are funded by private investors rather than banks are known as peer-to-peer loans. Lending Club, Prosper, and other online lenders give investors and borrowers a platform to interact and manage their specific loans. You, the investor, put up a specific sum of money, which is then lent to one or more borrowers, who repay it with interest in recurring payments.

Even the most OK P2P lenders’ lending accounts are not FDIC-insured, so there is a chance that you could lose money.
The service screens potential borrowers, and most loans have restrictions that must be met.


Peer-to-peer lending typically benefits both borrowers and investors. Investors typically receive a higher rate of return on their capital than many banking products, and borrowers typically receive interest rates on their loans that are lower than those on bank-offered loans and credit cards.


If you require liquidity, peer-to-peer lending won’t allow you to access your money quickly. The loan’s conditions often stipulate that the borrower has a set period of time to pay it off; throughout that time, you’ll likely receive monthly installments. There is also a risk: It’s possible that you won’t get your money back if a borrower fails on the loan.

To assess credit risk and establish the interest rate to be charged for a loan, the lending service examines the borrower and the purpose of the loan. To choose the types of loans their money will use to fund, individual lender investors can set their level of risk. Because the investment is dispersed across so many different loans, lenders protect even if a single borrower occasionally defaults.

However, as of 2015, loan investors were able to get an overall return of between 5% and 9%. The National Bureau of Economic Research estimates that at the time, loans obtained through well-known peer-to-peer lending platforms had an average loan default rate of about 5%.

One benefit of investing money in a peer-to-peer lending account is that one can start a lending account for as little as $25 and decide to make monthly deposits to the account, just like one would with a savings account.

5. Checking accounts with a high yield

High-yield checking accounts provide interest rates that are higher than those of savings accounts. In contrast to lesser savings account rates, several of these checking accounts offer up to a 2 percent annual percentage income.

Customers often need to fulfill restrictions, such as maintaining a minimum balance, setting up direct deposit or bill pay, or carrying out a minimum number of monthly debit card transactions, in order to qualify for the higher interest rates. There is typically no penalty if account holders don’t fulfill the requirements to qualify for the higher rates. Frequently, the bank’s regular lower rate for checking accounts is all that is offered to them.

How might I benefit from a High Yield Checking account?

Savings Account

A CapEd High Yield Checking account will pay you 2.00 percent APY1 on your account balance up to $10,000 each qualification cycle if the requirements are satisfied. Direct deposits of dividends are made into your account. Additionally, if you use an ATM and are charged a fee, you can utilize your High Yield Checking account to receive ATM refunds2 for up to a maximum of $25.00.

Features and Advantages

  • No minimum balance is necessary.
  • No recurring monthly fees.
  • Refunds from nationwide ATMs2 on your CapEd High Yield Checking account, up to a maximum of $25.
  • Free banking online.
  • Overdraft defense.
  • Online Bill Pay is free.
  • NCUA federal insurance.

How to Pick a Checking Account with a High Return?

Checking accounts with high yields offer more than simply the APY. Before choosing, it’s crucial to consider all of the potential advantages and disadvantages of every account, rather than just opting for the one with the highest annual percentage yield (APY). Here are a few things to think about while choosing a high-yield checking account:

Requisites for an activity: For the majority of high-yield checking accounts, a number of requirements must be met in order to be eligible for the best rate. If you can’t meet these standards, you risk losing out on the interest. Make sure they align with your typical checking account activities. Or, in an effort to earn that interest, you can find yourself overpaying and opening pointless new accounts.

Fees and minimum balance specifications: Although none of the five accounts on our list have a minimum balance requirement or monthly maintenance fee, many high-yield checking accounts do.


What are the three most popular ways to save money?

Regular deposits, money markets, and CDs are the three most popular forms of savings accounts. Regarding accessibility and level of interest, each one functions slightly differently. In addition to these accounts, there are other ways to save money.

What is a savings account superior to?

Money market accounts with high yields (MMAs)

MMAs frequently offer respectably high-interest rates, which are typically superior to those of conventional savings accounts at physical banks. In contrast to CD or peer-to-peer lending, you will also have simple access to your money.

Do savings accounts offer any value?

So, do traditional savings accounts still make sense for you today? When applied appropriately, the answer is undoubted “yes.” The top savings accounts are: Select high-interest savings account from our list of top banks with rates that are 5X to 10X the national average and begin saving right away.

Is the Best Place To Store My Savings a Savings Account?

There are certain drawbacks even though opening a savings account at your bank is secure and practical. Savings account holders miss out on the higher interest rates that a high-yield savings account or certificate of deposit (CD) could offer.

Editor Recommended: Best Apps for Money Transfer

Open a Bank Account as a Non-Resident in the USA

Leave a Reply

Your email address will not be published. Required fields are marked *