Where to stash your cash: Brick-and-mortar vs. online savings accounts

Fans of brick-and-mortar banks might find it easier to maintain longer relationships with their financial institutions than most of their friends and coworkers.

In fact, a 2022 Bankrate survey found that the average U.S. adult has used the same bank account for 17 years — or longer than many people stay at their jobs.

There are certainly perks to building a long-term relationship with your local bank down the street. You might find it's easier to secure better loans, or that the customer service can't be beat. But the money in your savings account could be earning more interest if you shop around for an online alternative.

Online-only banks may not have physical locations, but the resulting low overhead costs mean they often offer higher interest rates and lower fees. And though you lose the face-to-face interaction, the convenience of apps and online banking portals could make up for it, even for the not-so-tech-savvy.

Below, CNBC Select breaks down the pros and cons of both brick-and-mortar and online savings accounts, along with our top recommendations, so you can decide which is best for you.

Brick-and-mortar banks are common among consumers because of their visibility. These are the traditional big banks that you see in most shopping plazas and on billboards, inside sports arenas and in commercials. Bank of America, Wells Fargo, Chase Bank, U.S. Bank and PNC Bank are all common examples.

You likely opened your first bank account with your local brick-and-mortar bank, but should you continue banking with them? Here are the pros and cons to consider.

Pros

• One-on-one attention when you can visit a branch in person and ask questions, complete transactions, etc.
• Broad ATM networks for convenience, with the biggest banks having over 4,000 non-fee ATMs in the U.S
• Access to other types of banking products in addition to deposit accounts, like auto and personal loans, mortgages, CDs, etc.
• Strong likelihood of having free overdraft protection when you link your checking account to a savings account (in case you spend more than you have in checking)

Cons

• Low interest rates on savings account balances
• Minimum deposit requirements to open a savings account (usually)
• Standard monthly maintenance fee, with a few options to waive

Consider our top recommendation: When it comes to opening a brick-and-mortar savings account, a lot has to do with what is in your local area. If you are looking for a big bank with plenty of physical branches across the U.S., Wells Fargo Bank is your best bet.

With about 5,400 physical locations and over 13,000 ATMs, Wells Fargo is the largest brick-and-mortar bank in the nation by number of branches. We rated the WellsFargo Way2Save® Savings as its top savings account because it has a low minimum daily balance requirement in order to avoid the monthly service fee ($5 per month).

Online-only banks are a smart choice for savers who don't mind doing all their banking online or over the phone. Though they often offer 24/7 customer service, the one-on-one attention is better with brick-and-mortar banks where you can go in and speak to someone directly rather than a chat robot.

Pros

• Typically offer higher interest rates through high-yield savings accounts
• Lower (or no) minimum balance requirements
• Lower monthly maintenance fees (if they even have them)
• Easy to open online
• Personal loan options as well (for some)

Cons

• Most don't have physical branch locations (less personal)
• Most online banks don't offer ATM cards (access to money might be limited)
• Online and mobile-only banks (require digital-savviness)
• Deposits and transfers may take longer

Consider our top recommendation: The best online savings accounts are high-yield ones that offer better interest and low (or no) fees. The Ally Online Savings Account has a strong annual percentage yield (APY) on all balance tiers, no minimum balance and no monthly fees.

Opening a savings account is a smart financial move, but whether you go to your local branch down the street or you go completely online is up to you.

If you really value a face-to-face customer experience and are willing to forfeit a higher return on your money for it, then a brick-and-mortar savings account is for you.

On the other hand, if you care most about high interest rates and low fees, an online (high-yield) savings account is the better choice.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every savings review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best savings products.

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