How can a bank that offers no physical branches, no ATMs, and no checking accounts gain footing in the American market?
By offering low fees and some of the best rates on money market savings accounts.
That’s the recipe Barclays Bank, a British bank with a history stretching back into the 17th century, has employed to grow its business since expanding into the U.S. market.
If you want to save money for the long term without accessing your money regularly, Barclays may be a great fit for you. Check out our Barclays Bank ratings and our Barclays Bank review for more reasons why Barclays Bank could be a worthwhile option for your savings account.
Barclays Bank Review
Product Name: Barclays Bank
Product Description: Barclays Bank does one thing well: high interest online savings. You can link multiple accounts and deposit checks online through the web app. Barclays requires no account minimums and no monthly fees. This account is best for those who want only a high-interest online savings account.
Products & Services
Fees & Charges
Website / App
When it comes to Products & Services, Barclays Bank offers a great high-yield savings account, as well as CDs. However, you won’t find any checking or money market accounts here. Barclays Bank’s Interest Rates are much higher than the national average. And its CD rates are far better than what you’ll find at a brick-and-mortar bank. However, we’ve seen even higher rates at other online-only banks. We’ve given Barclays Bank high marks for Fees & Charges because there are no fees to open or maintain an account. Barclays also charges an insufficient funds fee of only $5 – far better than the typical $30. Barclays’ Website/App accessibility is fine, but we’ve heard complaints about the mobile app. Customer Service isn’t around the clock, but it is available seven days a week.
Barclays: A Long History
Based in London, Barclays Bank offers financial services to nearly 50 million people around the globe.
The bank traces its history back to 1690. The world was a much different place then. The United States didn’t exist. The Industrial Revolution hadn’t begun. Capitalism itself was in its infancy.
Of course, Barclays Bank has changed with the times. It first expanded beyond the shores of Great Britain in 1836, during the height of the British Empire. However, Barclays Bank arrived in America relatively recently, in 2001.
Barclays operates its United States banking division from Delaware, where it holds $155 billion in assets for its American customers.
Financial ratings agencies such as Moody’s and Standard & Poor’s currently give Barclay’s stable and positive reviews. Plus, even though the bank is based in Britain, Americans’ deposits up to $250,000 are protected by the FDIC, just like at any other member bank.
Barclay Bank Features
|Banking Account Types||Savings Accounts, CDs|
|Other Account Types||Credit Cards, Personal Loans|
|Minimum Required Deposit to Open Account||$1|
|Number of Branches||Internet Only|
|ATM Network Size||No ATM Network; Reduced ATM Fees with Bank of America|
|App Availability||iOS, Android, and Mobile Optimized Website|
|Customer Service Types||Phone, Chat, Email|
|Customer Service Hours||Phone: 7 Days a Week; 8 AM to 8 PM ET|
|Member FDIC||FDIC Certificate #57203|
|Routing Number / ABA Number||031101321|
Barclays High-Yield Savings Rates
Although the bank provides global markets with diverse financial products, it offers American customers a simpler approach: high-yield, online-only savings accounts with no fees.
At the time of this writing, Barclays’ current annual savings rate is about 20 times higher than the national average.
How can Barclays afford to pay such a high rate on savings accounts?
Like many online-only banks, Barclays has eliminated huge overhead and infrastructure costs. You won’t find a Barclays Bank branch or ATM in your neighborhood — or anywhere else in the United States.
Without any brick-and-mortar locations, how do you deposit your money into your Barclays account?
There are two ways of going about this:
- You can use the Barclays mobile app to upload a photo of a check you wish to deposit, or
- You can deposit the money in an account at another bank and then transfer it to your Barclays Bank account.
That may seem like a lot of extra trouble when you could just put the money in a savings account at a bank with a branch down the street.
But if your local bank offers a paltry 0.01 percent annual interest rate, the extra steps will pay off.
In fact, at a rate of 0.01 percent, you’d earn only $2.50 in a year on a deposit of $25,000. If you deposit money into an online-only bank account that earns, say, 2.00%, you’d make $500.
To withdraw your savings from your Barclays account, you’d need to complete an electronic transfer to another bank. That makes Barclays Bank an inconvenient choice if you want easy access to your cash.
If you planned to withdraw that $25,000 next week to pay for the trip to Europe you’ve always wanted to take, opening a high-yield interest savings account through Barclays isn’t worth the extra trouble.
But Barclays Bank accounts really pay off for long-term savings. If you can leave your money alone for a few years, it’ll grow and grow, turning into a source of passive income that you can use any way you see fit.
CDs: An Even Higher Yield
Let’s say you’re in great shape financially. Your student loans are almost paid off. You have an affordable mortgage. You pay your credit card off every month.
Unless something catastrophic happens, such as losing your job, you won’t need to access your $25,000 in the near future.
Barclays Bank has an option that will let you earn interest at a rate that’s even higher than what you can get with its high-yield savings account: certificates of deposit (CDs).
The American banking arm of Barclays offers some of the highest rates out there for long-term certificates of deposit.
What Is a CD?
A CD is money in the bank, just like a savings account. However, with a CD, you agree not to withdraw from the funds for a specific period of time, usually ranging from three months up to five years.
If you withdraw your funds early, you’ll incur a penalty.
In exchange for leaving your money alone, the bank offers a higher interest rate.
For example, let’s say you deposit your $25,000 into a five-year CD with an annual rate of 2.20 percent.
After five years, you can withdraw your deposit along with an extra $2,873 that you earned along the way.
Or you can use that money to buy another CD that will yield even more money when it matures.
Some customers maintain an elaborate schedule of CD maturity dates so that every six months, or every year, they have a CD that matures, providing passive income or an opportunity to renew and set the clock ticking on another payout.
Barclays can help with this approach through its CD laddering program.
Generally, CDs earn a higher rate of return if they take longer to mature. A three-month CD, for example, may earn only 0.35 percent interest, while a five-year CD may earn something like 2.20 percent. (These are sample rates.)
It pays off if you can keep your hands off your money for a while.
Barclays Bank: An Apples-to-Apples Comparison
Of course, Barclays isn’t the only place to save money or get a certificate of deposit to save even more by earning at higher rates.
As you’ve gathered, the bank’s U.S. strategy focuses on offering high-yield savings opportunities. But there are several similar products on the market.
How does Barclays Bank rate against other great banks?
To answer that, let’s be sure we’re making a fair comparison.
Some banks offer high rates for savings accounts but also charge monthly fees or require account holders to maintain a sizable balance.
Barclays requires neither a minimum balance nor a monthly fee. So let’s limit our comparisons, for now, to banks that offer similar features.
Barclays Bank vs. Ally Bank
Ally Bank pays similar interest rates on savings accounts while also offering an array of banking products such as auto loans, home loans, credit cards, checking accounts, CDs, and a brokerage account – Ally Invest.
When would you choose Ally Bank over Barclays Bank? If you wanted a full-service bank that offers loans and checking accounts, as well as a higher-yield savings rate.
When would you choose Barclays Bank over Ally Bank? Keep an eye on CD rates. Sometimes Barclays offers higher rates than Ally Bank (and sometimes the opposite is the case). When you’re ready to deposit your money, choose the bank with the better rates.
In summary: If you want to move your money around more, consider Ally Bank instead of Barclays. If you want to earn passive income and don’t plan to regularly access your funds, check to see if Barclays’ CDs are a better fit for you.
Barclays Bank vs. Synchrony Bank
Synchrony Bank also offers a similar interest rate on its high-yield savings accounts, and like Barclays, Synchrony doesn’t offer a checking account.
However, with Synchrony Bank, you can access your savings via ATM machines with your Synchrony-issued ATM card.
While you’ll have to pay fees to use other banks’ ATMs, Synchrony offers up to $5 a month to reimburse this expense.
When would you choose Synchrony Bank over Barclays Bank? If you want a high-yield savings account but also want quick access to your money in case of an emergency, you’d prefer Synchrony because of its ATM access.
Note: Federal law limits you to six (6) withdrawals per month from a savings account, so you’d most likely make most of your withdrawals from a checking account.
Keep in mind that Synchrony Bank’s money market savings account rates are currently lower than the savings account interest rates. So be sure you’re going with the regular savings account.
When would you choose Barclays Bank over Synchrony Bank? If you don’t foresee needing to access your savings quickly and feel like having an ATM card might put your money at unnecessary risk — say, if your purse gets stolen — then you’ll be fine with a Barclays account.
In summary: There’s not a huge difference here. Both banks allow you to avoid monthly fees, and both offer a nice savings rate. The main difference is ATM access.
Barclays Bank vs. American Express Personal Savings
You’ve probably seen American Express’ credit card commercials all your life.
The financial institution also offers high-yield savings accounts and CDs that are similar to the products Barclays Bank offers.
American Express’ current rate is slightly higher on its high-yield savings accounts, meaning you’d earn at a slightly faster rate if you opened an account there.
When would you choose American Express over Barclays Bank? American Express and Barclays offer just about the same services, with American Express currently having a slightly higher interest rate on savings accounts.
If you plan to save money long term, that might make you lean more toward American Express, although the interest rates will change with the market.
If you plan to buy five-year CDs and want to use the same bank that holds your savings accounts, go with Barclays since its five-year CD rate is currently higher than those offered by American Express.
In summary: Sometimes it just comes down to personal preference. If you’re choosing between these two options, spend a little time on each bank’s website and read the fine print to see if any nuances matter in your individual situation.
Unlock Higher Savings Rates With Minimum Balance Accounts
If all the talk about passive income has you calculating interest in your head, you may have caught the fever of maximizing your money’s ability to work for you. There’s nothing wrong with that.
But if you want to unlock savings rates that are even higher than the interest rates offered by Barclays and its competitors, you may be ready for an account that requires a minimum balance.
Minimum balances range from $1 to $25,000.
CIT Bank, for example, requires only $100 as a minimum balance. EBSB Direct offers a higher rate but requires a $10,000 minimum.
If you know you’ll never fall below the minimum, there’s no reason to worry so much about these balances, and you may as well enjoy a higher interest rate.
However, if there’s a chance that your account will fall below the minimum, you stand to lose money, since your bank will decrease your interest rate for dropping below the minimum balance.
If your account doesn’t meet the minimum balance, you won’t earn any interest that month at most institutions, and you would have been much better off earning interest in an account without a minimum balance requirement.
Barclays Bank Advantages & Disadvantages
- Among Highest Interest Rates in Nation
- No Minimum Balance Requirements or Monthly Account Fees
- Insufficient Funds Fee Only $5; Many Banks Charge $25 or More
- Online Only
- No Dedicated ATM Network
- Savings and CDs Only; No Checking Account
One Rule About Savings Accounts: Rates Will Change
Saving money is a great way to take control of your personal finances. Instead of paying high interest rates on credit accounts, you can be earning interest on your own capital.
But, as you already know, interest rates are not set in stone.
We’ve mentioned several interest rates above. Keep in mind those are examples. Interest rates fluctuate with the market. Unless you lock in a rate with a CD, your savings account rate will be variable.
Still, a high-yield savings account such as Barclays’ online banking account should continue to offer a higher rate of return than a traditional savings account or local credit union.
Barclays is great at what it does. If you need a simple savings account or longer-term CD and not much else, go for it.
If you want ATM access and the ability to do all your banking in one place, you may be better off using another savings account.
Learn More About Barclays Bank
You can visit the Barclays Bank website to learn more about the products and services or to open an account.
Barclays Bank offers an excellent online savings account with high interest rates. Learn more at the Barclays Bank website.
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