What Makes the Best High-Yield Savings Accounts?
A high-yield savings account is a savings account with a significantly higher interest rate than your average account. This means your money grows faster so you can get a boost for your financial goals.
But what makes the best high-yield account? Consider these other features:
- Competitive APY: The rate your money earns annually is a big part of what makes a high-yield savings account so appealing. The higher the APY, the faster your money grows.
- Accessibility: Another reason you might choose a high-yield savings account is because your money is more accessible here than in something like a CD or money market account. Make sure the bank you choose offers convenient ways to access your cash, such as in-network ATMs or quick fund transfers.
- Low fees: Nothing kills your earnings faster than fees. The best accounts don’t have a monthly maintenance fee or other hidden charges.
- Dependable customer service: Make sure you’re able to access an agent during convenient times. Look for chat, email and phone support and excellent customer reviews.
- Low or no minimum balance: Many of the accounts on our list don’t require you to keep a minimum balance in order to get the best rates, but check that carefully before you commit.
- Transparency: If you have to sleuth out a bank’s terms and conditions to understand what you’re getting, you might want to look somewhere else or ask a lot of questions so you know exactly what you’re getting into.
- Stellar reputation: Look for a bank with a strong track record and a reputable brand name. It’s best to entrust your savings to a company that has stood the test of time and earned the trust of its customers.
Expert Tip
“Be wary of teaser introductory rates from less-established institutions, oftentimes their interest rates will plummet after a set number of months after the initial deposit.” – Thomas Schulte CFP, partner and director of financial planning at Napier Financial.
Best High-Yield Savings Accounts
We researched over 100 financial institutions to evaluate their account options, fees, rates, terms and customer experience to determine the top high-yield savings accounts. Our list includes these nine financial institutions, which all have APYs over 4%, minimal or no monthly fees and low or no deposit requirements. Our research team also conducted first-hand research by opening our own accounts at each bank. Read more on our findings about each bank below.
*APYs (Annual Percentage Yields) accurate as of March 22, 2024
What We Looked for in Our High-Yield Savings Account
We tracked more than 40 factors in each account we opened so that we could give you the best data possible. Here are just a few:
Factor | Description |
---|---|
APY (%) | Annual Percentage Yield – the interest rate on the savings account. |
Minimum Opening Deposit | Minimum amount required to open the savings account. |
Time to Apply | Approximate time it took us to complete the application process. |
# of Clicks to Open | Number of clicks or steps needed to open the account online. |
Speed of Deposits | How quickly deposits made into the account are processed and available for use. |
Steps to Transfer Funds | Number of steps required to transfer funds into or out of the account. |
Budgeting Tools | Availability of tools or features within the account to help with budgeting or financial planning. |
Customer Service | Speed and responsiveness of the bank’s customer service and what avenues it uses (chat or phone). |
Budgeting Tools | Does this bank have budgeting tools and how robust are they? |
Zelle Availability | Does the bank use Zelle for bank-to-bank transfers? |
What Is a High-Yield Savings Account?
High-yield savings accounts are deposit accounts with much higher interest rates than standard savings accounts. They’re most commonly found with online banks and credit unions because having lower overhead costs allows these financial institutions to offer better rates on deposits.
These accounts can offer a way for customers to earn more on their savings while still maintaining access to their funds. Another key feature of most high-yield savings accounts is their variable APY, which means the interest rate can fluctuate with the market.
Like traditional savings accounts, high-yield savings accounts may limit the number of withdrawals you can make each month. Each bank or credit union sets its own max. Many cap withdrawals at six per month, which was the Federal Reserve’s limit on some types of transfers until 2020.
Some banks offer high savings APYs but with certain condition. These might include needing to keep a high minimum balance, or paying monthly fees that can lower the interest you make.
Eric Croak, CFP and president of Croak Capital
Some savings accounts have different interest-earning balance levels, meaning only a portion of your deposited funds might get the highest APY. “You really need to understand the requirements to receive the rate that’s advertised,” Croak said.
How to Use a High-Yield Savings Account
Using a high-yield savings account strategically can help you effectively manage your savings and maximize its growth potential. Arguably the best use is to set up a high-yield savings account to hold your emergency fund. This is money you only want to use for emergencies – but when these emergencies arise, you’ll need the money quickly.
“We suggest creating an emergency fund with at least three months – three-to-six, if possible – of essential living expenses,” says Rob Williams, managing director of wealth management at Charles Schwab.
High-yield savings accounts can also be a useful part of a broader investment strategy, experts we spoke with said. These accounts offer a way to keep a portion of your money easily accessible while still earning a return.
They can be used alongside other investments, such as a retirement account like an IRA or 401(k), a college savings fund (529 account) and stocks and bonds.
Even with a high-yield savings account, keep investing a portion of your income in a diverse portfolio, said Anand Talwar, head of deposits and president of Ally Invest Group said.
“Consider housing additional savings in certificates of deposit or investing in stocks, bonds, ETFs or mutual funds, where your money has the potential to grow your wealth even more,” he said.
Online vs. Brick-and-Mortar Banks for High-Yield Savings Accounts
Most of the high-yield savings accounts offering the best rates are from banks and credit unions that operate exclusively online. Online banks are generally able to offer higher APYs than brick-and-mortar banks because they don’t have the overhead costs associated with branches and their staff.
While traditional brick-and-mortar banks don’t tend to offer high savings account rates, there are exceptions. For example, the Citi Accelerate Savings account has an APY over 4%* and no minimum opening deposit. It has a $4.50 monthly service fee, but there are options for getting the fee waived.
Another traditional bank with a high-yield savings account is PNC Bank, which also offers an APY above 4%*. PNC doesn’t require a minimum opening deposit, and it doesn’t charge monthly maintenance fees.
“Oftentimes, long-time, loyal customers at traditional financial institutions pay more for loans and earn less on savings than new customers,” Alia Dudum, millennial money expert at LendingClub, told MarketWatch Guides. “If you have money sitting idly, consider switching to a digital bank.”
Factor | Online Banks | Brick-and-Mortar Banks |
---|---|---|
Accessibility | Typically offer 24/7 online and mobile banking | Branch access for in-person transactions |
Account Fees | Often no monthly maintenance fees | May have monthly service fees, but can often be waived |
APY | Generally offer higher APYs | Rates may be lower, but exceptions exist |
Bank Bonuses | Commonly offer sign-up bonuses and promotions | Less common, but some banks do offer bonuses |
Customer Service | Relies heavily on online and phone support | In-person assistance available at branches |
Deposit Insurance | FDIC-insured up to $250,000 per depositor, per bank | FDIC-insured up to $250,000 per depositor, per bank |
Minimum Requirements | Often no minimum balance requirements | Minimum deposit may be required |
Withdrawal Limits | May have limitations on the number of withdrawals | Similar withdrawal limits to traditional savings |
When and Why Should You Open a High-Yield Savings Account?
HYSAs are powerful financial tools to help you grow your money without losing access to it, so there are a few scenarios where they make the most sense:
- Emergency fund: A high-yield savings account can be ideal for establishing an emergency fund that earns interest. If your car breaks down or you have a medical emergency, you’ll need immediate access to your money. On the other hand, if you’re fortunate enough not to need it for a while, it will be accruing interest until you do.
- Short-term goals: Whether you’re saving for a dream vacation, a wedding or a new car, a high-yield savings account can help you reach your short-term goals sooner than with a traditional savings account.
- College funding: Saving for your children’s education is an important goal for many families, but if you’ve had to start investing later in their lives, you may not have time to wait for a CD or money market account to mature.
Who Should Get a High-Yield Savings Account?
High-yield savings accounts can be beneficial for a broad range of customers, but they may be particularly well suited for savers with certain objectives:
- Maximize returns: With APYs often several times higher than those offered by traditional savings accounts, high-yield savings accounts can help balances grow faster.
- Build an emergency fund: High-yield savings accounts can be a good way ofbuilding emergency funds since you get both competitive rates and easy access to your money.
- Meet short-term goals: If you’re saving for a goal such as a vacation or wedding, a high-yield savings account can give you a higher APY than traditional savings accounts and let you withdraw money when you want, unlike typical CDs.
If you’re just starting to save for short-term goals or to establish an emergency fund, a savings account might be a good bet. It also makes sense if you’re planning to make a big purchase — such as a refrigerator, vacation or down payment on a car — within a year or so.
Mary Hines Droesch, head of Consumer and Small Business Products at Bank of America
How Much More Can You Earn With a High-Yield Savings Account?
While many financial institutions offer 4% to 5% APYs (or higher) on high-yield savings accounts, our recent consumer banking survey shows 62% of Americans earn less than 3% in interest on their savings or money market accounts.
Keeping your savings in a high-yield savings account can make a big difference in the long run. The chart below shows how much you can earn in interest over five years holding $10,000 in a traditional savings account compared to a high-yield savings account.
Because they give you a higher return, high-yield savings accounts are better than regular savings accounts for lowering the impact of inflation on your deposits. As the Fed has raised the federal funds rate in an attempt to reduce inflation, APYs on high-yield savings accounts have generally gone up.
A low-interest savings account typically offers APYs that may not keep pace with the rate of inflation, so the purchasing power of your money typically decreases over time. On top of providing better rates, high-yield savings accounts often don’t have monthly maintenance fees or minimum balance requirements.
Use our savings account calculator to see exactly how much you can earn with a high-yield savings account.
YOUR TOTAL SAVINGS$17,622.94
Initial Deposit$10,000
Total Contributions$6,000
Interest Earned$1,623
Alternatives to High-Yield Savings Accounts
Because high-yield savings accounts can have limitations, such as limited physical access and variable APYs, some customers prefer alternative ways to save.
Investors have several options when it comes to short-term savings. Do you need and want quick access to your money? If so, consider interest-bearing checking or savings accounts. If you can wait roughly a day, consider money market funds for competitive rates now. If your money is earmarked for longer-term savings or investment goals, consider CDs.
Rob Williams, managing director of wealth management at Charles Schwab
Comparison of Deposit Accounts
There are many ways to invest your savings and while a high-yield savings account may work for you, here are some other options to consider:
Factor | High-Yield Savings Accounts | Money Market Accounts | CDs | Savings Bonds | Checking Accounts |
---|---|---|---|---|---|
Accessibility | May offer ATM access or only electronic transfers | May offer check-writing capabilities and ATM access | Generally don’t allow access to funds until the term ends | No access for the first year | Unlimited transactions, providing easy access to funds |
APY | Variable rates that are usually higher than checking rates | Competitive, variable rates similar to high-yield savings accounts | Can offer competitive (often fixed) rates that tend to be higher than savings and money market rates | Typically competitive rates, but fluctuate every 6 months based on inflation | Typically don’t earn interest |
Minimum requirements | May require minimum balances or opening deposits | Often require substantial balances or initial deposits | May require high initial deposits | Bonds are purchased for $25 – $10,000 | May require minimum balances or opening deposits |
Risk | Generally low risk, but returns may vary | Generally low risk, but returns may vary | Low risk, with returns that are usually guaranteed upon maturity | Some risk: credit risk – the issuer could default; interest rate risk, market risk | Minimal risk, but they don’t tend to earn interest |
Withdrawal restrictions | May have monthly withdrawal limits | May have monthly withdrawal limits | Typically charge a penalty for withdrawing funds before the term ends | Can be withdrawn after 1 year | Generally allow unlimited transactions |
FAQ: High-Yield Savings Accounts
The amount of interest you can earn on $10,000 in a high-yield savings account will depend on the account’s APY and how often interest is compounded. For example, if the APY is 5.25% for the entire year and interest is compounded daily, you’ll earn about $525 in a year.
APYs on savings accounts are variable and can change without notice. The amount and frequency of change varies depending on the bank’s policies, competition and external economic factors such as the Fed’s changes to its benchmark rates.
Your bank sets the limit on the number of withdrawals you can make from your high-yield savings account each month. That number could be six times per month, since that used to be the federal limit. If you exceed your savings account’s withdrawal limit, you’ll likely be charged fees.
Yes, interest earned from a high-yield savings account is typically considered taxable income and must be reported when you file your taxes. If you earn at least $10 in interest in a calendar year, your bank will likely issue you Form 1099-INT, which details the amount of interest you received.
You’re unlikely to find an FDIC-insured savings product that will provide a 7% interest rate. However, many online CDs and high-yield savings accounts offer APYs in the range of 4% to 5% or more.
The best high-yield savings accounts right now offer above 5% APY. These are generally from online banks and credit unions.
The earnings for a high-yield savings account depend on the account’s APY and the time frame you’re considering. At 4.35% APY, $50,000 would earn about $2,176 in one year, assuming the rate doesn’t change and interest is compounded daily.
Our Methodology
Our team researched more than 100 of the country’s largest and most prominent financial institutions, collecting information on each provider’s account options, fees, rates, terms and customer experience. We then scored each firm based on the data points and metrics that matter most to potential customers. Read our full methodology.
Our list of the best high-yield savings accounts is made up of the nine banks, credit unions and fintech companies with the highest ratings in the savings account category of our reviews. The top accounts have APYs well over 4% and generally don’t charge monthly fees. These accounts also earned points for either having no minimum opening deposit or requiring less than $100.
*Rates accurate as of March 22, 2024. Rates may vary by location. APYs based on Houston for Citi and PNC Bank.
**Data accurate at time of publication
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
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