Online banks, traditional banks, credit unions and prepaid debit cards offer the highest rates on savings accounts, claims Forbes. Savings accounts usually offer lower returns than riskier alternatives, such as stocks or bonds, reports the Houston Chronicle.
Online banks do not have the expenses associated with brick-and-mortar shops, explains Forbes. In addition, there is no need to manage a network of branches. As a result, the online banks pass the savings on to the customer. Online banking options include Ally Bank and Capital One 360. Traditional banks, such as Chase, aim to offer competitive rates compared to their online counterparts.
Credit unions offer competitive savings account rates, though they are usually difficult to find, mentions Forbes. In addition, membership requirements prevent many people from taking advantage of these deals. Credit union members must complete certain tasks, such as using a debit card, to be eligible for the desirable interest rates. Rates are also only available on certain balance amounts.
Finally, prepaid debit cards offer competitive savings account rates subject to certain limitations, notes Forbes. For instance, certain prepaid debit cards require cardholders to sign up for direct deposit. There is also a limit on the balance that is subject to the favorable interest rate.