What is an online savings account? How it works and what to compare

Key takeaways

• An online savings account is a savings account you can open and manage through a website or mobile app.
• Many banks offer savings accounts with online and mobile banking features, including both online-only banks and banks with branch locations.
• Annual percentage yield (APY) helps you compare potential interest earnings across accounts.
• Deposits at FDIC-insured banks are protected up to applicable limits.
• Some people value digital convenience along with the option to visit a branch or speak with a banker when needed.

An online savings account is a savings account you can access and manage digitally. You can transfer money, monitor balances and earn interest without needing to visit a branch.

Some online savings accounts are offered by digital-only banks, while others are offered by full-service banks that combine digital banking tools with branch access and in-person support. When comparing accounts, look beyond the rate to evaluate fees, account access and customer support.

How does an online savings account work?

An online savings account works much like any other savings account, but most account activities can be completed digitally through online banking or a mobile app.

In general, you’ll:

• Open and fund the account.
• Deposit or transfer money into savings.
• Earn interest based on the account’s terms.
• Transfer funds when needed.
• Set up and manage recurring deposits through direct deposit or scheduled transfers.

For many consumers, the biggest difference is how support is delivered. Online-only institutions typically rely on digital channels, while full-service banks may combine digital tools with branch access and in-person assistance.

“Many people appreciate the convenience of managing savings online, but it’s also worth considering how you’ll access support if questions come up,” said Elizabeth Moody, interest-bearing deposits product manager at Regions Bank. “Think about both the digital tools available and whether access to bankers and branches is important to you.”

How do online savings accounts earn interest?

Savings accounts earn interest based on your balance and the account’s interest rate. Banks advertise the APY, which includes compounding and can help you compare accounts.

Many savings accounts have variable rates, meaning APYs can change over time.

To learn more, see the Regions article on APR vs. APY.

What are the benefits of an online savings account?

Benefits may include:

• Online and mobile access to your account.
• Automatic transfers that support savings goals, including recurring transfers and direct deposit options.
• Interest earnings on eligible balances.
• A dedicated place to save for future expenses.
• Digital tools to monitor balances and transactions, track spending and manage your finances.
• The flexibility to manage your money online while potentially having access to branch locations and in-person support, depending on the bank.

What should you compare before opening an online savings account?

When comparing accounts, review:

• APY: Is the rate variable?
• Fees: Are there monthly or transaction fees?
• Minimums: Is a minimum deposit or balance required?
• Access: Can you visit a branch for assistance if needed?
• Customer support: Can you get help online, by phone, via chat or in person?
• FDIC insurance: Is the institution FDIC-insured?

You can explore Regions savings accounts or compare savings account options.

Online savings account vs. traditional savings account

The distinction between online and traditional savings accounts is not always as clear as it once was.

Many traditional banks now offer savings accounts that can be opened and managed online while still providing branch access and in-person service. Online-only banks generally focus on digital banking and may not maintain physical branches.

When comparing options, consider:

• Rates and fees
• Online and mobile tools
• Transfer options
• Customer support
• Access to branch locations when needed

Some people prioritize digital convenience, while others value having the option to speak with a banker in person.

Are online savings accounts safe?

Online savings accounts can be safe when offered by a reputable financial institution and supported by strong security practices.

Before opening an account, verify the bank is FDIC-insured and review the account’s security features. Learn more about what FDIC insurance covers.

You can also help protect your account by using strong passwords, enabling multifactor authentication and monitoring account activity regularly.

How do you open an online savings account?

Customers follow a similar process at most banks:

1. Compare accounts.
2. Complete an application.
3. Verify your identity.
4. Fund the account.
5. Review disclosures.

Learn more about how to open a bank account online.

Is an online savings account right for you?

An online savings account may be a good fit if you want to earn interest while managing your money digitally.

Before choosing an account, consider:

• How often you’ll need access to your money.
• Whether digital tools meet your needs.
• Whether branch access is important to you.
• The account’s fees and requirements.
• Your savings goals.

Some people are comfortable handling all their banking online. Others prefer having access to a branch or banker when they have questions.

If you’re weighing savings options, you may also want to compare CDs vs. savings accounts and use the Regions Savings Goal Calculator.

Take the next step

Whether you prefer managing your savings online, through a mobile app or with support from a local banker, comparing your options can help you find the right fit for your goals.

• Explore Regions savings accounts.
• Compare Regions savings account options.
• Learn how to open a bank account online.
• Use the Regions Savings Goal Calculator.