A high-yield savings account is a promising alternative for anyone looking to establish an emergency fund or save for other financial goals. Savings accounts with high yields might help you increase your money faster than standard savings accounts.
As of December 18, 2023, the national average savings account rate is 0.46%, according to the Federal Deposit Insurance Corporation (FDIC). The finest high-yield savings accounts provide significantly higher rates. We studied accounts at 53 banks and credit unions across the United States to help you locate the best place for your funds. The following accounts are the best of the best in terms of interest rates, fees, and other variables.
To find the top high-yield savings accounts, we analyzed 73 online savings accounts at 53 nationally available banks and credit unions.
Annual percentage yield (APY) was a major consideration, but not the only one, in compiling our ranking of the best accounts. Here’s a list of our top accounts, grouped by the highest APY available.
Milli’s savings account is ideal for folks with different savings goals. Milli Savings Jars allow you to create and personalize up to five distinct savings goals. You’ll also benefit from one of the highest savings rates available.
Please keep in mind that this rate is guaranteed for 180 days from the date the account is opened.
Although the name “money market” suggests otherwise, this account does not allow for check writing and instead functions as a savings account.
This account should be on your radar if you value ease of use and high interest over a plethora of options. The Interest Savings account from Bask Bank is a simple account with no monthly fees, no minimum balance requirements, and a reasonable interest return on any balance.
Customers who intend to hold a large sum in their savings account can consider M1’s High-Yield Savings Account. Typical FDIC insurance covers $250,000 per institution, however M1 provides FDIC coverage of up to $5 million through its network of insured institutions.
UFB Secure Savings is ideal for users who frequently withdraw cash. While ATM cards aren’t commonly associated with savings accounts, UFB provides a free card as well as access to over 91,000 fee-free ATMs.
The Bread Savings High-Yield Savings Account is ideal for those who need to deposit funds into their savings accounts on a regular basis. While some banks have a monthly deposit limit, Bread allows unlimited mobile check deposits and ACH transfers. In addition, there is no fee for incoming wire transactions.
SoFi Checking and Savings is ideal for clients who want to handle all of their banking in one place, from spending to saving. Those who enjoy the ease of a single account will appreciate the easily accessible checking capabilities and high-yield interest earnings.
Citizens Access Savings is ideal for anyone looking for a no-fee savings account. Many online savings accounts do not carry monthly fees, but they do charge fees for excessive transactions, ATM use, or other services. Citizens Access has no fees or hidden expenditures, so you may be confident that this account is absolutely free.
The greatest high-yield savings account for ATM reimbursements is Synchrony High Yield Savings. Not only does the account include an ATM card for easy access to your funds, but Synchrony will reimburse you up to $5 per month for out-of-network ATM fees.
The Online Savings account from BMO Alto is ideal for making limitless transfers and withdrawals. This account may be a good option if you frequently move money in and out of savings or need limitless access to your cash.
The APYs on this list are among the best available. They also rate highly in our overall Best Savings Accounts Of 2023 ranking.
Forbes Advisor reviewed 73 online savings accounts at 53 financial institutions, including a mix of traditional brick-and-mortar banks, online banks, and credit unions, to compile a list of the top savings accounts. Each account was scored based on 12 data points in the categories of APY, fees, minimum requirements, customer experience, and digital experience. All of the accounts on our list are online-only.
The weighting applied to each category of high-yield savings accounts is as follows:
We also assessed whether there were complicated tier systems or requirements to obtain the APY, as well as other conditions. Minimum deposit requirements of $10,000 or more had a detrimental impact on scores, as did high minimum balance requirements to avoid penalties. To be on this list, the savings account must be available nationwide.
Check out our article on How Forbes Advisor Reviews Banks to discover more about our rating and review methodology and editorial process.
The highest savings account interest rate available today is 5.84%. High-yield savings rates are trending in the same direction as other deposit accounts, such as money market and certificate of deposit accounts. Online banks typically provide the highest rates on high-yielding savings accounts.
Rates on high-yield savings accounts were steadily rising through 2022 and 2023. This is due in large part to the Federal Open Market Committee’s efforts to combat inflation by progressively raising the federal funds rate, which is the interest rate at which banks lend money to one another overnight.
When the federal funds rate changes, banks often modify the rates on savings and other deposit accounts to match. Rate increases frequently result in banks paying higher interest rates on deposit accounts. According to the FDIC, the national average savings rate grew consistently alongside the federal funds rate throughout 2023, rising from 0.33% in January to 0.46% in December.
However, interest rates are leveling off and may possibly begin to fall in 2024. Rate cuts by the Federal Reserve may result in future reductions in savings account APYs.
A high-yield savings account is a type of savings account with higher interest rates than a standard savings account. High-yield savings accounts are typically available at online banks and credit unions. Because these financial institutions typically do not have the overhead costs or profit margin requirements of a traditional brick-and-mortar bank, they can pass those savings on to customers in the form of higher rates and reduced fees.
Interest rates vary depending on a variety of criteria, but it’s not uncommon to find high-yield savings accounts with APYs of 4.00% or higher. A high-yield savings account can earn up to ten times the national average interest on traditional savings accounts.
A high-yield savings account operates in the same way as a standard savings account. The fundamental distinction is that high-yield savings accounts outperform ordinary savings accounts significantly. Online banks, which often have reduced overhead costs, are more likely than traditional brick-and-mortar banks to offer high-yield savings accounts.
Traditional and high-yield savings accounts both keep your money secure while earning interest. Some accounts have monthly fees or a minimum balance requirement to earn interest, but the best ones do not. In general, you can withdraw and deposit money whenever you want, however some banks may restrict your monthly transactions. Other than electronic transactions, online banks may allow ATM withdrawals and cash deposits at third-party retailers.
Certain terms are likely to appear when investigating high-yield savings accounts. Understanding what they signify might assist you in locating the best savings choice.
When compounding interest is taken into account, the annual percentage yield (APY) on a savings account represents the interest you could receive on your funds over the course of a year.
Compound interest is interest generated on interest already accrued. It is calculated using your principal deposits and the interest you collect over time.
A savings account with a high yield pays a higher-than-average interest rate.
A high-yield savings account’s minimum deposit requirement is the amount you must deposit to open the account. Depending on the bank, this might be as little as $1 or as much as $0.
A monthly maintenance fee is a price charged by some banks to keep your account open. The benefit of creating a high-yield savings account with an online bank is that there are no monthly maintenance costs.
Online banks operate solely through the internet and do not often have physical locations. Instead, you use web browsers or mobile banking apps to access your money. Some online banks also provide ATM services.
High-yield savings accounts are often seen as secure ways to save your money. When you deposit money into a high-yield savings account, it is kept in an FDIC-insured bank or a credit union with NCUA insurance to protect your deposit.
Banks and other financial institutions that provide high-yield savings accounts implement a number of security procedures to protect your personal and financial information. Multifactor authentication, data encryption, and safe data storage are examples of such procedures.
If you save with an FDIC-insured bank or an insured credit union, you cannot lose money in a savings account.
Accounts at member banks are insured by the FDIC up to $250,000 per depositor, per account ownership type, and per financial institution. Deposit accounts at member credit unions are also covered by the National Credit Union Administration (NCUA).
If your bank or credit union collapses and is insured, you cannot lose money in your savings up to the permissible limitations. Given the rarity of bank collapses, the chance of ever losing money is quite low.
However, if interest rates fail to keep pace with inflation, you may lose part of the value of your savings. When prices rise due to inflation, your real savings balance remains unchanged, but your money loses some of its purchasing power.
Online savings accounts, on average, have less and cheaper fees than traditional savings accounts. There are no monthly maintenance fees or minimum account balance requirements with many online savings accounts.
Each of our best online savings accounts has no monthly maintenance cost (or the option to forgo it by signing up for e-statements). However, this does not imply that these accounts are completely free of charges. They may levy fees for items such as printed statements and excessive transactions. Before creating an account, like with any other account or financial instrument, read the fine print to ensure you are informed of any fees.
Choosing the greatest high-yield savings account isn’t always easy, so compare accounts to find the finest option. Here are some things to think about before opening an account.
The interest rate is perhaps the most essential consideration when selecting a high-yield account. Earning a higher interest rate will help you maximize your funds faster.
A minimum beginning deposit is required for some accounts when opening a new account. You may also be required to keep a certain amount in order to earn interest or avoid monthly fees.
Fees might offset the interest you earn on your savings. Check the pricing schedule for the account to see if you’ll be charged a monthly service fee or other expenses. If you keep a specific amount in your account, several banks will waive fees.
Depending on the bank, interest on a savings account might accrue daily, weekly, monthly, quarterly, or annually. Interest on interest is earned when interest compounds. Choosing a more regularly compounding account can help you earn more interest over time.
A high-yield savings account can be opened rapidly. Once you’ve selected an account that meets your requirements, you’ll need to complete an online application. During the application process, the bank may request the following information to verify your identity:
Both partners must give personal and financial information when opening a joint account.
Once accepted, you can fund the account with a linked bank account or another acceptable means.
High-yield savings accounts are ideal for meeting savings goals due to their earning potential. Having a separate savings account helps you to keep those monies distinct from your regular spending account. A high-yield savings account can be used to save for a variety of purposes, including:
High-yield savings accounts are excellent for short-term financial goals, but they are not suitable for storing retirement funds. A tax-advantaged retirement or investing account often provides higher returns and greater tax savings than high-yield savings accounts.
High-yield savings accounts can be used to save for a wide range of major expenses, including:
You might also keep your emergency savings in a high-yield account. In general, emergency funds should be held in a liquid and immediately accessible account in case you need money quickly.
If you want to save money for college, you should consider opening a high-yield savings account. You could save money for the following expenses:
If you want to save particularly for college, a 529 savings plan may be preferable to a high-yield savings account. You can invest money for college in a 529 plan and withdraw it tax-free for approved education expenditures.
High-yield savings accounts are also a good location to put money down for vacations or travel. You could utilize a high-yield account to save for the following:
You might pay for those expenses using a travel rewards credit card and perhaps receive money back in the form of travel miles or points. However, if you end up carrying a load from month to month, the APR on your credit card could negate the value of whatever points you receive.
If you’d rather earn interest than pay it, a high-yield savings account may be a better option for saving for vacation plans.
If you want to save money for short-term financial objectives or requirements, a high-yield savings account is a good option. It is not a substitute for a retirement or tax-advantaged investing account, but it is an excellent solution for specific savings objectives.
A high-yield savings account, for example, is a fantastic place to keep your emergency cash. The funds are conveniently accessible, but they earn more interest than a regular savings account. On the other hand, if you have a decade or more to invest, it’s not worth maintaining your child’s college earnings in a high-yield savings account.
Savings accounts with high yields aren’t the only place to put your money. You could think about the following alternatives:
Money market accounts are deposit accounts that combine checking and savings characteristics. You might earn interest in the same way that you would with a savings account. However, you may be able to issue checks or make transactions using a linked debit card from your account. These are benefits that most savings accounts do not provide.
So, which is preferable: a money market account or a high-yield savings account?
The answer is determined by what you need the account to accomplish for you, how much you’re willing to spend for it, and the APY you’re hoping to earn. Money market accounts may provide more flexibility and access to your money, but you may still be restricted to a set number of withdrawals and transfers each month. High-yield savings accounts, on the other hand, may offer higher interest rates.
Certificates of deposit (CDs) are similar to savings accounts in that interest is earned on the balance. The main distinction is that money deposited into a CD is locked up for a set length of time, such as three months or a year. You may lose part or all of the money collected if you remove your savings before the CD matures.
The primary advantages of CDs over high-yield savings accounts are higher rates and guaranteed profits, as your rate will not fluctuate during the period of your CD. Although CDs allow you to lock in a rate for a set length of time, accessing your money is not as simple (or inexpensive). As a result, CDs make sense if you are certain you will not need to access your money before the maturity date.
Your checking account is the most convenient place to hold excess funds. While this method is the most convenient, it has two significant drawbacks. For starters, money in your ordinary checking account is very easy to spend, making it tough to set aside as savings—and leave alone. Second, checking accounts rarely pay interest, and if they do, the rate is pitiful. A high-yield savings account allows you to earn a decent return on your money.
There are two sorts of savings accounts: ordinary ones that give a modest interest rate and high-yield savings accounts that pay an interest rate well beyond the national average. However, there is no precise definition of what constitutes a “high yield” rate. In short, any institution is free to name their savings accounts whatever they like.
regular banks and credit unions often offer regular savings accounts, whereas online banks frequently offer high-yield accounts. But, once again, they are generalizations rather than hard and fast rules.
The United States Treasury issues I Series savings bonds, sometimes known as I bonds, whose interest rate is tied to current inflation rates. Although I bonds can offer very appealing rates at times, your return is unpredictable because the interest rate is revised every May and November. Other benefits of I bonds include tax flexibility, but they also require your cash to be totally locked for the first 12 months, without exception. I bonds, like savings, money market, or CD accounts, offer compound interest.
Another approach to make a return on your money is to lend it to the government of the United States. This can be accomplished by purchasing a T-bill, which is a Treasury note with a term of one year or fewer. Treasuries are regarded as one of the world’s safest assets, although their yields are not necessarily as high as the greatest high-yield bank accounts. One advantage of T-bill earnings over savings account earnings is that Treasury earnings are only taxed at the federal level and are not subject to state or local taxes.
Although it is impossible to thoroughly examine individual corporate or municipal bond issues, you can invest in a bond ETF, which is a collection of numerous bonds. Though bond ETFs are simple to enter and exit, bond returns are not guaranteed, and value losses may erode your main investment.
The greatest CDs can offer excellent rates, but you must lock up your money for a set period of time. You may lose part or all of the money collected if you remove your savings before the CD matures.
Cash accounts are typically connected with taxable brokerage accounts, and they are designed to hold money that you want to invest later or that you will get after selling investments you own. A cash account can serve as a checking account while also earning interest, frequently at competitive rates.
These accounts are intended for financial market investing. A brokerage account may provide a significantly higher return than a savings account, but you risk losing your money.
In a Forbes Advisor study performed by OnePoll, participants were asked which three qualities they consider most important when looking for a new savings account.
If you want to keep your money safe while receiving a high rate of return, opening a high-yield savings account may be a suitable alternative. Comparing the finest high-yield savings accounts offered by online banks, traditional banks, and credit unions will help you select the ideal account for your needs.
In our search for the greatest high-yield savings account rates, we considered the following institutions:
Affirm, Alliant Credit Union, Ally Bank, American Express, Axos Bank, Bank of America, Bank5 Connect, BankDirect, BankPurely, Barclays, Bask Bank, BrioDirect Banking, Capital One, Charles Schwab Bank, Chase, Chime®, CIBC Bank, CIT Bank, Citibank, Citizens Access, Colorado Federal Savings Bank, Bread Financial, Connexus Credit Union, Consumers Credit Union, Discover, Dollar Savings Direct, E*Trade Bank, Fitness Bank, FNBO Direct, HSBC, HSBC Direct, iGoBanking, Incredible Bank, Live Oak Bank, Marcus by Goldman Sachs, My eBanc, MySavingsDirect, Navy Federal Credit Union, nbkc Bank, PNC Bank, Popular Direct, Purepoint Financial, Quontic, Rising Bank, SalemFiveDirect, Sallie Mae Bank, SFGI Direct, SmartyPig Bank, Synchrony Bank, U.S. Bank, UFB Direct, Varo Bank and VIO Bank.
Once you’ve decided to open a new high-yield savings account, do your research to ensure you’re selecting the ideal one for your needs. When looking for a high-yield savings account, look for the highest annual percentage yield (APY), as you’ll want to earn a competitive rate.
Though interest rates fluctuate, it makes sense to select an account that pays one of the highest rates in the country, because the higher your rate, the more interest you’ll earn each month and year. You may also earn interest on your interest by using the power of compounding, and the greater the APY on your account, the better.
Aside from the interest rate, you’ll want to make sure the account has no minimum balance requirement or one that you’re certain you can meet on a regular basis. Also, check to see if there is a minimum balance required to obtain the highest APY.
You should also look into the account’s conditions, such as if it limits the number of withdrawals you can make in a month and whether there is a monthly maintenance cost. Finally, be sure the bank is FDIC-insured (or an NCUA member if it’s a credit union) so that your savings are federally safeguarded (up to $250,000 per depositor) if the bank or credit union fails. Online customer service reviews for a bank may also be valuable.
Every workday, Investopedia compiles savings account rates from over 100 banks and credit unions. When rating high-yield savings account rates, we consider aspects that will assist readers in selecting the best savings account, such as the minimum beginning deposit. We also conduct research on banks and credit unions in order to give unbiased, detailed reviews that help our users make the best decisions for their specific circumstances. Since 2019, Investopedia has been assisting users in locating the finest high-yield savings account rates.
A high-interest savings account is one that earns significantly more interest than a standard savings account. Online banks and credit unions are common places to find high-yield accounts.
A compound interest calculator is the quickest way to calculate compound interest. If you prefer to do the arithmetic yourself, this compound interest calculator contains a formula and examples.
The finest high-yield savings accounts offer competitive interest rates, have no fees, and are tailored to your specific needs. The optimum account is determined by your banking needs and varies from person to person.
Interest rates on high-yield savings accounts have fallen in recent years, in part because interest rates on loans fell during the Covid-19 epidemic. To preserve profitability, banks often keep APYs lower than rates on lending products. However, now that the Fed has hiked interest rates several times to combat inflation, APYs are swiftly climbing.
Interest payments on high-yield savings accounts are normally made monthly, however this might vary depending on the financial institution.
You can open as many high-yield savings accounts as you desire, however some banks limit the number of accounts you can have open at the same time. To get around this, distribute your funds over many banks or start an account that allows you to assign your resources to specific aims, decreasing the need for multiple accounts.
Every workday, we monitor the rates of over 100 banks and credit unions. While we do monitor rates at huge banks, such as Chase, Bank of America, Wells Fargo, Citi, and US Bank, their rates aren’t usually high enough to make our list. This is because large banks often do not require deposits in the same manner that smaller ones do. Other institutions may not appear in our ranking because they do not fulfill our qualification standards, such as not serving customers in at least 40 states, drastically limiting the balance on which you can receive the high-yield APY, or not offering a high yield rate.
In the worst-case situation, a savings account pays no interest, which means your funds will not grow at all. However, you would never lose the money you put into the account unless you were charged fees. As a result, it’s critical to select an account where you can easily avoid paying fees.
In terms of losing money due to a bank failure, the Federal Deposit Insurance Corporation (FDIC) protects banking customers by covering up to $250,000 of their deposits per institution if the bank fails.
Similarly, the United States government provides credit union customers with insurance for up to $250,000 through the National Credit Union Administration (NCUA).
That implies that your deposits up to $250,000 are as safe and protected whether your institution is a typical brick-and-mortar bank with branches or an internet bank or credit union, and whether it is large or small. Simply look for the terms “FDIC member” or the FDIC logo on the website of any bank with which you’re thinking about doing business (or NCUA, if it’s a credit union).
A savings account’s APY is variable, which means that what it pays when you first open your account will most certainly change at some point in the future, and it can change at any moment without notice.
The Federal Reserve has a considerable influence on whether the interest rate rises or falls and how frequently it changes. When the Fed changes the federal funds rate, banks and credit unions frequently follow suit.
However, rate adjustments in savings accounts are not often a daily or weekly occurrence. Rates frequently linger at the same level for weeks or months at a time, barring recent Fed actions.
Because they do not have to establish, operate, or staff physical branches, online-only banks or traditional banks’ online operations can save a lot of money. As a result, they can reinvest those cost savings by giving higher interest rates to attract clients and deposits.
Any interest paid by a bank, whether on a savings, checking, money market, or CD account, must be declared on your annual tax return. You’ll be able to see how much you were paid each month on your monthly statement or online registration, and it will be taxed at the end of the calendar year together with all of your other income from employment and other sources.
The bank where you keep your high-yield savings account will not tax you directly, but they will give you and the IRS a Form 1099-INT in January each year detailing how much interest you received in the previous calendar year. This interest income must subsequently be reported on your tax return.
There are few disadvantages to depositing money into a high-yield savings account. The main disadvantage is that your money will almost certainly be held at a separate institution than where you do your primary banking. As a result, you may not be able to move funds from your high-yield savings account to your primary checking account immediately, as transfers between banks often take 1-3 days.
This problem is simply solved by keeping some cash cushion at the bank where you have your checking account, allowing you to make a quick transfer to checking if necessary.
Every working day, Investopedia monitors the interest rates of over 100 banks and credit unions that provide high-yield savings accounts to customers across the country. We base our daily rankings of the best-paying savings accounts on the annual percentage rate (APY) given. To be eligible for inclusion in our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit cannot exceed $25,000.
Banks must operate in at least 40 states. And, while some credit unions require you to donate to a certain charity or association in order to become a member if you don’t meet other qualifying criteria (for example, you don’t live in a certain area or work in a certain type of employment), we omit credit unions that require a donation of $40 or more. If the savings account is only accessible via a mobile app, the app must be available on both the iOS and Android platforms.
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