You can earn 20 times more interest with the right savings account, says wealth manager

David Bach, Contributor

Welcome to Asking for a Friend, Grow's money advice column. Got a question for one of our money experts? Email us at

Dear Asking for a Friend,

What are your thoughts on online vs. brick-and-mortar banks? I've read that online banks average about 2% interest on savings accounts, and the average brick-and-mortar bank is paying .09%. My current bank pays .05%, so I should move somewhere anyway.

I'd love to earn more interest on my account, but I'm wondering if there's any reason to keep the account in a regular bank as opposed to moving online.

I do like having actual physical people to talk to if I have an issue, rather than trying to handle things via phone or email. Other than that, is there any reason to not move my funds into an online savings account?

Do you have any tips about when to hold off and when to make the move? What specific things I should know about online savings accounts, especially regarding the ease of contributing to or taking money out of my account?

Thank you,
Interested in More Interest

Dear Interested in More Interest,

I love your question more than you know. It gets me fired up. When I wrote my #1 New York Times bestseller "The Automatic Millionaire," I railed about this issue: I literally wrote on page 149, "Shop for a rate like you would for a car."

In 2004, when the book originally came out, I went on "Oprah" to share its principles and I talked about what was then a brand new online bank, the first major online one to come to America, which offered rates that were 20 times that of the average bank. It went on to raise billions and ultimately get bought.

What I find amazing is that so many people are still, 15 years later, letting their bank get rich off their savings. Instead, use your savings to help you get richer.

There is truly no reason to keep anything beyond your checking account and minimal savings at a brick-and-mortar bank unless they offer a competitive rate on the savings. Many national banks offer higher interest rate savings accounts to new customers online but don't promote it to their core customers who are currently earning very little, so do your research.

The bottom line is, I love and recommend online savings accounts.

The bottom line is, I love and recommend online savings accounts.
David Bach
cofounder of AE Wealth Management

Today you can find online savings accounts from the largest financial services companies in the world and most are paying 15-20 times what the average bank account does, as you so wisely point out in your question. So how do you pick the best one?

Here are my three simple recommendations to find an online savings account.

Go big

You can pick an online savings account from a major financial service company you have heard of or from one you haven't. Go look online and you will find great options. As of right now, you should be able to get a 1.7% interest rate.

Rates change constantly, though, so you have to shop and stay on top of them.

You can shop online for an account that offers a competitive rate in minutes. Consumers Advocate is a great website that ranks the top savings accounts and has done over 200 hours of research from 70 sources, and has vetted 21 companies to get down to six top picks.

What is a high yield savings account?

Get insured

Make sure the account is insured. You're looking for the FDIC insurance notification displayed on their website for the online account you choose.

Get flexibility

Find an online account with no minimums, assuming you need that, and no fees. You also want to be able to transfer the money easily and make sure they have a call center you can reach out to. I want to talk to my bank even if they are online.

I hope this was helpful. Good luck on that search — and celebrate your transfer with a loud "KA-CHING!" once it's complete. Finally, stay on top of your rate once you switch. Rates change constantly and better offers may come along at any time, so watch out for them.

Good luck,


David Bach is one of America's favorite financial experts and a 10x New York Times bestselling author. His latest bestseller is "The Latte Factor: Why You Don't Have to Be Rich to Live Rich." He's the cofounder of AE Wealth Management, one of America's fastest growing RIAs.

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