Online Savings Account vs Regular Savings Account: Which is Better?

The Federal Reserve has raised interest rates They did so again this week, the tenth time since March 2022. The move aims to fight persistent inflation. But success in that fight remains unknown, leaving many Americans wondering how to protect and grow their hard-earned savings.

While many adults keep their money in regular savings accounts, the interest rate environment is a boon High-yield accounts, many of which are offered online. But is an online savings account right for you or are you best served by keeping your money in a regular account? This is a question that many account holders are trying to answer. While the final decision will be a personal one, there are some significant benefits to opening a high-yield account now

Start by exploring your high-yield savings account options here to see how much more money you can earn

When online savings accounts are good

Many (though not all) high yield savings accounts offer Online Bank. Since these banks do not have to pay the cost of maintaining a private branch, they are usually able to pass those savings on to the account holder in the form of higher interest rates. Here are three times an online high-yield savings account might be better for you:

• When you want a higher interest rate: Online high yield savings accounts are booming High interest rates than a regular savings account. And They may be higher after the Fed’s recent rate hike. A regular savings account carries an interest rate of around 0.39% FDIC. Compare that to the 3.5% to 4.5% (or higher) currently being offered by online high-yield accounts, and it’s clear that You are losing money Instead of transferring your funds to one of these accounts.
• When you want to pay less fees: If you prefer to keep your money as intact as possible, an online account may be a good option. Many online high-yield savings accounts come with little to no fees. So you don’t have to worry about minimum balance or high withdrawals. new Apple Savings Account, for example, has none of these requirements Make sure to shop around to find an account with a good balance between rates and fees.
• When you are comfortable not having direct access: Online high yield savings accounts are just that – online. So they are not for everyone, especially those who want to do their banking in person. But if you’re comfortable keeping your money in an online account, where you can still access it with a debit card, then an online account may be a better choice for you.

Research your online high-yield savings account options here to find the best one for you

When a regular savings account is better

A regular savings account has some significant advantages, even in today’s climate. Here are three times when it might be more appropriate for you:

• When you choose Personal Banking: In an age where everything and everyone is seemingly online, you may prefer the personal touch that a physical bank branch can provide. You can talk face-to-face with a person and make real-time decisions about your account together. You can also deposit, withdraw or transfer to your local bank. In this case, you may want to keep your money in a regular account.
• When you want to keep all your banking under one umbrella: Many online banks do not have checking accounts, personal and auto loans or mortgages. So, if you prefer to meet all your banking needs simultaneously, you may want to continue using your current bank. In this case, it may be better for you to maintain a regular savings account.
• When you withdraw frequently: To get the most value from an online high-yield savings account you need to keep your baseline relatively intact. If you can’t, and are used to making one-by-one withdrawals from your account, you won’t be taking full advantage of the interest rates being offered. If this is how you currently use your savings account, you may be better served by keeping it as a regular account.

Bottom line

As with most financial decisions, the choice between an online savings account and a regular account is a personal one.

If you’re determined to secure a high interest rate with little (or no) fees, an online high-yield savings account is for you. Likewise, if you’re okay with not having as much access, this might be a better option. But if you prefer to do your banking in person and you want to keep all your accounts under one umbrella, a regular savings account is arguably the best fit. And if you’re used to making constant withdrawals that can eventually eat up the interest you’d earn with an online account, you’d be better served by keeping a regular account where you can access it more easily.

Not sure which is the best choice for you? Review your options and learn more here.