High interest rates get a lot of hype (including from us at CNBC Select), but they aren’t always the best choice for everyone.
In some situations, accepting a lower savings return, or annual percentage yield (APY), can actually make more sense. This might be the case if you need quick access to your cash, have a short savings timeline, struggle to meet account requirements, or you simply prefer banking with a well-known institution.
In these scenarios, flexibility can matter more than squeezing out a higher return. Here’s more on when flexibility trumps a higher APY.
When flexibility beats a savings yield
You need quick access to cash
If you rely on quick access to your savings for essentials like rent but your high-yield savings account makes you wait days for a transfer to your checking account, it’s not worth it. You’re better off with a savings account that offers instant transfers or a debit/ATM card linked to your savings. A savings account through a big-name bank will also have branches you can visit in person for immediate withdrawals. Even if these said savings accounts have lower APYs, the easy access to your cash, if you need it, is more important.
If you’re in this boat, consider the UFB Portfolio Savings Account, which offers a complimentary ATM card and free withdrawals at about 91,000 ATMs nationwide. The daily cash withdrawal limit from an ATM using an ATM card is $510. Even better, there’s a pretty solid APY, so you’re really not sacrificing much.
- Strong APY on savings balances
- No minimum deposit or balance required for savings
- No monthly fees
- Free ATM card with unlimited withdrawals
- Free transfers between direct deposit accounts
- Online and SMS banking available
- Mobile check deposits
- Security features include fraud and anti-virus protection, SSL encryption for connection, automatic logouts after inactivity
- Potential overdraft fee, though overdraft protection is offered
- Certain types of withdrawals and transfers may be limited
- $10 excessive transaction fee per transaction over 6/month
- No physical branch locations
The Synchrony Bank High Yield Savings also offers an ATM card that allows you to make withdrawals from any ATMs displaying the Plus or Accel logos in the U.S. and abroad, up to $1,000 per day. These ATMs are typically available at major retailers, convenience stores and bank branches. While Synchrony Bank doesn’t charge an ATM fee, ATM operators may. Synchrony refunds up to $5 per statement cycle in domestic ATM fees. And, similar to UFB, the APY earned on this account is pretty competitive.
Synchrony Bank High Yield Savings
Synchrony Bank is a Member FDIC.
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Annual Percentage Yield (APY)
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Minimum balance
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Monthly fee
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Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
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Excessive transactions fee
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Overdraft fee
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Offer checking account?
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Offer ATM card?
Pros
- Strong APY
- No minimum balance or deposit
- No monthly fees
- Easy ATM access
Cons
- No option to add a checking account
You’re saving for the short term
With a savings account that compounds interest daily or monthly, you’ll earn interest over just a couple months, but you have to leave your money in the account for a year to achieve its full APY.
If you’re only planning to keep your savings in an account for under a year, you’re not actually maximizing a high APY. You’d be better off with a short-term CD where you’re guaranteed a fixed rate of return after the CD’s term length is up. For instance, you can open and fund a three- or six-month CD that promises just as good a return and you don’t have to wait a year.
Some of the best short-term CDs are from Marcus by Goldman Sachs, Alliant Credit Union, Bask Bank and Quontic Bank and Dow Credit Union.
The high APY comes with more work
It may be the case that the savings account with the highest return comes with a lot more work to maintain. For instance, having to make a minimum deposit to open the account or meet a minimum daily balance to earn the high APY. Perhaps there are monthly fees if certain conditions aren’t met. There’s also the scenario where the user experience just isn’t great, whether that’s subpar customer service or a malfunctioning app.
If you’re finding yourself jumping through too many hoops, opt for a savings account that is simply easier, even if it has a lower APY. This can be especially helpful if your balance fluctuates a lot and it’s hard to keep up with meeting all the minimums.
Marcus by Goldman Sachs High Yield Online Savings
Goldman Sachs Bank USA is a Member FDIC.
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Annual Percentage Yield (APY)
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Minimum balance
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Monthly fee
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Maximum transactions
At this time, there is no limit to the number of withdrawals or transfers you can make from your online savings account
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Excessive transactions fee
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Overdraft fee
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Offer checking account?
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Offer ATM card?
Pros
- Strong APY
- No minimum balance or deposit
- No monthly fees
- No limit on withdrawals or transfers
- Easy-to-use mobile banking app
- Offers no-fee personal loans
Cons
- Higher APYs offered elsewhere
- No option to add a checking account
- No ATM access
The EverBank Savings Account is another solid no-fee option, with no monthly fees, no minimum balance requirements and no overdraft fees.
EverBank Performance℠ Savings
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Annual Percentage Yield (APY)
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Minimum balance
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Monthly fee
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Maximum transactions
You may conduct up to 20 external transfers per day, subject to a maximum of 10 transfers that pull deposit funds from a linked external account into your accounts at EverBank and a maximum of 10 transfers that send deposit funds from your accounts at EverBank to a linked external account, and up to 50 total external transfers per month.
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Excessive transactions fee
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Overdraft fees
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Offer checking account?
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Offer ATM card?
Pros
- Strong APY
- No minimum balance required
- No monthly fees
- Free ATM card and no ATM fees
Cons
- No physical branch locations
You want a trusted name
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.