If you’re looking for the best possible return on your savings, there’s a good chance you’ll find it at an online bank. And the reason largely comes down to how they operate. Here’s why online banks can afford to pay more interest on your deposits — and where to find the best rates.

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Why do online banks consistently offer the best rates?

Every bank is different, but the reasons online banks typically pay higher savings rates often comes down to a combination of lower costs and more competition.

Lower overhead

Online banks typically face lower overhead costs than traditional banks. This is because they don’t maintain physical branches, which means they don’t have to pay to lease buildings, heat and cool them, pay people to clean at the end of the day, and so on. Simply put, there are far fewer expenses when banks aren’t paying to run hundreds or even thousands of branches five to six days a week.

Online banks don’t pocket the entirety of the cost savings they achieve through lower overhead. They often pass those savings on to consumers, which is one reason for the higher deposit rates and lower fees.

Attracting deposits

One of the primary ways banks make money is by using customer deposits to fund revenue-generating loans and investments.

For example, say customers deposit money into savings accounts at a bank that pays an average rate of 4% APY. The bank can use some of those available deposits to fund mortgages and charge borrowers an average rate of 7% APR. The difference between what the bank pays on savings accounts and what they earn back on loans contributes to the bank’s net interest income.

So, banks need to encourage customers to keep money in their accounts. However, online banks are often relatively newer companies without the brand loyalty of big banks, so they may need to pay higher interest rates to encourage new business.

Competition

Competition can be fierce in banking, which is only amplified with online banks. Customers can now use more than just a handful of banks near home; they can open an account with an online bank from anywhere, within minutes.

There are dozens of online banks, all vying for deposits from the same customers. As a result, there can be a race to the top. In theory, the bank that pays the highest rates can win over more customers from competing banks.

A look at the best online bank savings rates

The national average savings account rate is just 0.38%, according to the FDIC. However, many online banks pay interest rates upwards of 4% APY on high-yield savings accounts.

Here’s a look at some of today’s top savings account rates from online banks:

BEST HYSA RATES TODAY

ACCOUNT	RATE	NOTES
Forbright Bank Growth Savings Account	Up to 4.15% APY	New customers can earn a 0.30% APY boost on the standard 3.85% APY through 12/31, 2026. APY boost available only to those who have never had a Forbright Bank Growth Savings or Growth CD account.
Bask Interest Savings Account	Up to 4.10% APY	Earn up to 4.10% APY when you complete qualifying activities. For a limited time, new customers can earn a 0.10% APY Rate Boost when they open and fund a Bask Interest Savings Account. Both new and existing customers can unlock an additional 0.25% APY Rate Boost by completing qualifying activities.
CIT Bank Platinum Savings	Up to 4.10% APY	Accounts enrolled in the Platinum Savings earn up to 4.10% APY on balances of $5,000 or more. Enter promo code CITBOOST to receive a 0.35% APY bonus for six months from account opening.
Valley Bank Direct High-Yield Savings	4% APY	Minimum deposit of $1,000 is required. New customers only (current customers earn 3.4%).
Everbank	3.9% APY
SoFi High Yield Savings	Up to 3.8% APY	Open a new SoFi Checking and Savings account by 12/31/26, set up eligible direct deposit within 60 days, and maintain direct deposit for six months.
Western Alliance Bank	3.8%
Chime High-Yield Savings Account	3.75% APY	Earn a 3.75% APY as a Chime Prime member or a 2.75% APY as a Chime Plus member when you receive a qualifying direct deposit.
Barclays Bank Tiered Savings	3.65% APY	Applies to balances up to $249,999 (balances of $250,000 and up earn 3.75% APY).
CIT Bank Savings Connect	3.65% APY	Annual percentage yield (APY) is accurate as of the publish date. Interest rates and APYs are variable and may change without notice. Minimum to open account is $100. Fees could reduce earnings on the account. Member FDIC.
TAB Save	3.61% APY
Synchrony High-Yield Savings Account	3.3% APY
American Express HIgh-Yield Savings Account	3% APY
Capital One 360 Performance Savings	3% APY
Ally Savings Account	3% APY

Is an online bank right for you?

Online banks can offer many benefits, including high interest rates, few fees, and low minimum balance requirements. These perks can be attractive to consumers who want to get the most out of their money, especially if they already do most of their banking from a mobile device.

However, online banks can have drawbacks. For one, they don’t have physical branches, which means you can’t meet with someone in person if you need help (though many online banks offer 24/7 customer support via phone, email, or live chat). You may be able to find competitive savings account rates at your local community bank or credit union, where you’ll receive more personalized attention as well.

Many online banks also have a convenient mobile check deposit feature. However, it may be tougher to deposit cash. And when you can, you may need to pay a fee.

Similarly, while some online banks give you access to vast ATM networks, not all have this benefit. Those that don’t may reimburse you (up to a limit) for third-party ATM fees, but you still have to pay the fee up front.

Overall, online banks have several benefits and drawbacks to consider. If you feel the pros outweigh the cons, they can be a great place to keep your money. However, you can always keep your traditional bank account active alongside an online savings account. That way, you will still have access to in-person services should you need them, along with the benefits online savings accounts offer.