It doesn’t matter if you’re working class or very wealthy — everyone needs an emergency fund. And there’s no better place to park the money you’re saving than in a high-interest savings account.
High-yield savings accounts are used for emergency funds and storing savings for future events. They pay a yield that’s higher than average, allowing savers to reach their financial goals faster. CDs are deposit accounts that tend to pay higher yields than traditional savings and money market accounts.
The average savings account pays 0.07 percent annual percentage yield (APY). Many of the country's biggest banks pay less than that.
Sick of earning a yield around that average? Consider making a change and you'll find yields about seven times higher at some online banks. Compare rates among today's best widely available, high-interest savings accounts to find the right account for you.
Bankrate has more than four decades of experience in financial publishing, so you know you’re getting information you can trust. Bankrate was born in 1976 as “Bank Rate Monitor,” a print publisher for the banking industry and has been online since 1996. Hundreds of top publications rely on Bankrate. Outlets such as The Wall Street Journal, USA Today, The New York Times, CNBC and Bloomberg depend on Bankrate as the trusted source of financial rates and information.
Bankrate’s editorial team regularly surveys around 70 widely available financial institutions, made up of the biggest banks and credit unions, as well as a number of popular online banks. To find the best savings accounts, our editorial team analyzes various factors, such as: APY, minimum balance requirements and broad availability. All of the accounts below are insured by the FDIC at banks or by the National Credit Union Share Insurance Fund at NCUA credit unions.
Note: The APYs (Annual Percentage Yields) shown are as of Jan. 5, 2021. Bankrate’s editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated. The APYs for some products may vary by region.
High-yield savings accounts are a type of deposit account that can be found at both online and brick-and-mortar institutions. These financial tools typically pay a higher interest rate than traditional savings accounts and almost always offer better returns than traditional checking accounts.
But it’s not just higher interest rates that set high-yield savings accounts apart from other savings products.
Here are just a couple of the biggest financial benefits of high-yield savings accounts:
Like traditional savings products, safety is a mainstay of high-yield savings accounts.
Insured up to $250,000 at banks by the Federal Deposit Insurance Corp., and at credit unions by the National Credit Union Share Insurance Fund (per depositor, per institution, per ownership category), high-yield savings accounts offer a safe place to stash cash while earning interest.
That makes high-yield savings accounts a good place to keep funds for emergencies, large expenses and short-term savings goals.
Keep in mind that online banks typically offer higher rates and better benefits on these types of accounts than national brick-and-mortar banks. Online banks don’t have the costs associated with brick-and-mortar institutions and can pass those savings on to customers in the form of higher yields.
Vio Bank, established in 2018, is the national online division of MidFirst Bank. MidFirst Bank has been an FDIC-insured bank since 1934 and was established in 1911. Vio Bank offers both a High-Yield Online Savings account and CDs.
Vio Bank’s High-Yield Online Savings account has one of the top yields around, and all balances receive this APY.
Quontic Bank was established in 2005 and has its headquarters in New York. Quontic Bank calls itself the Adaptive Digital Bank.
You only need $100 to open a Quontic Bank High Yield Savings account. The account doesn't have a monthly maintenance fee.
In addition to this savings account, Quontic Bank also offers four terms of CDs. These CDs have terms ranging from six months to three years and require a $500 minimum deposit.
Live Oak Bank was founded in 2008. The online bank offers a competitive yield on its savings account. Like most online banks, Live Oak Bank’s Online Savings account doesn’t have a monthly service fee. It also doesn’t require you to keep a minimum balance.
In addition to its savings account, Live Oak Bank also offers seven terms of CDs. Live Oak Bank has its headquarters in Wilmington, North Carolina.
Synchrony Bank’s High Yield Savings account doesn’t require a minimum balance and all balance tiers earn the same competitive yield.
Synchrony Bank also has a money market account and it offers many CDs to choose from. It offers 12 CD terms, with terms ranging from three months to five years.
Comenity Direct is an online bank that offers both a high-yield savings account and five terms of CDs. Comenity Direct launched those savings products in 2019. The high-yield savings account requires you to open the account with $100.
Popular Direct offers a savings account and term CDs. Both the Popular Direct savings account and its CDs are for established savers, since the Ultimate Savings account requires a $5,000 minimum deposit and its CDs have a $10,000 minimum deposit requirement.
All Popular Direct deposit accounts are opened through Popular Bank.
Pentagon Federal Credit Union (PenFed) has a Premium Online Savings account that offers a competitive yield. You only need $5 to open the account.
PenFed has been around since 1935 and it has more than 2.1 million members. Members of the military from any branch, and Department of Defense and Department of Homeland Security employees, can join PenFed. Besides military affiliation, you may be able to join PenFed through your employment or through an association membership.
In 1935, what’s now Alliant Credit Union was founded as the United Airlines Employees’ Credit Union. Alliant currently has 500,000 members.
You’ll need to keep at least $5 in your High-Rate Savings Account in order to keep it open. You’ll also need to maintain a $100 daily average minimum balance to earn interest with this account.
Here are a few important things to consider when searching for a high-yield savings account.
One of the most important considerations when choosing a high-yield savings account is the APY.
APY includes the effect of compounding. It’s the interest earned on your initial deposit in addition to the interest earned on top of other interest earnings
And in the case of APYs, higher is always better. But it’s important to weigh the APY against the requirements to earn the yield.
For example, Bank X pays a slightly higher APY than Bank Y, but Bank X has a higher minimum deposit requirement and minimum balance requirement than Bank Y. If you can meet the requirements of Bank X, it’s worth considering. If not, Bank Y might be the better choice.
You can use Bankrate’s compound interest calculator to calculate your potential earnings on any savings account.
Besides the APY, you’ll also need to consider a bank or credit union’s tendency to adjust interest rates. Unlike CDs, which lock in a rate for a period of time, savings account yields tend to be variable. That means they could change at any time.
A bank may lower or raise an APY for various reasons. Your savings account rate could increase if a bank is trying to attract more deposits by offering a temporary promotional rate. Or broader economic factors — like the three Federal Reserve interest rate cuts in 2019, and the two emergency rate cuts from the Fed due to coronavirus in March — have caused banks and credit unions to lower their rates. Some savers have seen their yields slide in recent months as the Fed has lowered its benchmark rate.
Beware the bait and switch, since savings APYs are usually variable. Consider how often a bank offers teaser rates that may fluctuate and determine what your potential earnings could look like after a year. For more peace of mind, consider a CD or look for savings accounts with a rate guarantee for six months to one year.
The minimum deposit required, sometimes called an opening deposit, can be a big factor when deciding on which high-yield savings account to choose.
Minimum deposit amounts vary widely across banks — some require nothing to open an account, while some require a deposit of $10,000 or more.
Consider your budget and decide how much you can realistically invest when comparing high-yield savings products. If you’re trying to hit a particular goal, ask yourself how much you’re willing to save and over what period of time.
The more you invest and the better the interest rate, the faster compound interest will help you hit your goal. But if you can’t swing a particular minimum amount, it’s best to go with an account that requires less of an upfront financial commitment.
Accounts requiring a higher minimum deposit may offer a higher yield, but that’s not always the case. Make sure to check minimum deposit requirements at all institutions you’re considering before opening an account. Many of the best high-yield savings accounts require a minimum opening deposit of $100 or less.
Not only do some high-yield savings accounts require a minimum deposit to open an account, they may also require a minimum balance to earn the APY or avoid fees.
One common fee banks charge for not maintaining a minimum balance in the account is called a “monthly maintenance fee.” But often, as long as you maintain the minimum balance, the bank will waive the fee.
Like minimum deposit amounts, minimum balance requirements can range from $0 to well over $10,000.
What’s important to consider when weighing the minimum balance requirements of various high-yield savings accounts is how often you’ll need to access the money, and whether you’ll be able to maintain the balance in order to earn the APY.
Before opening any type of savings account, it’s important to consider how often you’ll need to access the money.
Regulation D, also known as “Reg D,” is the reason savers might be limited to six transactions/withdrawals per month from savings accounts or money market accounts. That includes online transfers to different accounts, transfers over the phone, automatic transfers, overdrafts and check or debit transfers. But withdrawals or transfers made at an ATM or in-person at a bank don’t count toward this limit.
However, an interim final rule introduced this year by the Federal Reserve Board suspended enforcement of the six transfer limit and made this number unlimited. Banks might have a higher monthly limit now. For instance, American Express National Bank now allows up to nine withdrawals or transfers per month. But some banks might still have a six transactions limit. So, check with your bank to see its policy and limits.
Additionally, banks all have their own options and rules for withdrawing and transferring funds. So, it’s crucial to dive into the details of an account before signing up.
High-yield savings accounts have a wide range of uses, but one of the best ones is to save up for big-ticket items. That’s because savings accounts with a decent yield offer accelerated growth of your money.
Here are some of the best uses for a high-yield savings account:
Traditional conforming loans typically require a down payment of at least 5 percent. That moves up to 20 percent to avoid private mortgage insurance.
FHA loans require a down payment of at least 3.5 percent.
Here’s how much you’d need to save for a down payment on a $200,000 home:
Saving that amount of money can take some time. But a high-yield savings account can help you hit your goal faster.
Here’s a general estimate of how long it would take to save up a 20 percent, 5 percent and 3.5 percent down payment on a $200,000 home, assuming you have a high-yield savings account paying a 0.6 percent APY.
When saving for a child’s education, it’s best to start early and save often. College savings plans like the 529 can be a great solution, mainly because money grows tax-free in a 529. It also isn’t taxed when the money is taken out to pay for college.
But college tuition costs can sneak up fast, and a high-yield savings account can be a solid alternative in last-minute situations when saving is essential.
In order to successfully use a high-yield savings account for college tuition, you’ll need to set a savings goal and calculate the monthly investment needed to hit that goal.
For example, let’s say you need $50,000 for college tuition and your child is in seventh grade. If you open a savings account yielding 0.6 percent APY, you’d need to deposit around $806.43 per month in order to hit your goal by the time he or she heads off to college. That’s with an initial deposit of $1,000.
You can use Bankrate’s savings goal calculator to create a timeline for your savings goals.
Family vacations can be an exciting adventure, but they can also be tough on the wallet. Fortunately, a high-yield savings account can help out.
In order to properly use a high-yield savings account to pack away money for a family getaway, you’ll need to first decide how much you want to spend and when you’d like to go.
Then consider making a budget for travel, lodging, food and miscellaneous items.
How fast could a high-yield savings account help you get to your goal?
If you’re planning to spend $2,000 on a getaway in 12 months, you would need to save around $159 per month in a high-yield savings account paying 0.6 percent APY. That’s with an initial $100 deposit.
High-yield savings accounts aren’t only for major expenses.
In fact, one of the best purposes a high-yield savings account can serve is as a place for your emergency fund. This is a fund that typically covers three to six months of living expenses in case of things like an unexpected layoff or replacing a failing air conditioning unit during a hot summer.
High-yield savings accounts can also be useful for expenses with a short timeline, like a wedding. The national average cost of a wedding is $33,900, according to The Knot’s 2019 Real Wedding Study. And that doesn’t include the honeymoon.
A high-yield savings account can help you save for the big day.
If you have a year to save, you’d need to save around $2,741 per month in a high-yield savings account paying 0.6 percent APY in order to save around $33,900 for the wedding. That’s with an initial deposit of $1,000.
Here are a few other potential uses for high-yield savings accounts:
Some banks offer tiered interest rates. To earn the highest yield, you may have to keep a large amount of money in your account. For example, a bank may offer a high yield, but it might require a deposit of at least $25,000 or even $100,000 to earn that APY.
Some savings accounts offer a competitive yield without requiring a high minimum deposit. Those kinds of accounts are ideal for savers in the process of building their emergency fund.
Calculate how much you stand to make with all of these offers using our simple savings calculator. Consider other factors before choosing a new bank, including fees, digital capabilities and branch and ATM access. And take a look at Bankrate’s expert reviews of popular banks with high-yield savings accounts.
High-yield savings accounts help you earn a higher yield than a typical savings account. The national average savings account annual percentage yield (APY) is just around 0.08 percent APY. But that’s just the average. There are savings accounts earning even less yield than that — some of which are offered by the large brick-and-mortar banks.
Once you put money in a high-yield savings account, it earns interest. Then the interest, which is typically credited on a monthly or quarterly basis, begins to earn interest. That’s compound interest and it’s how your money starts to really grow over time.
High-yield savings account yields are usually variable. In other words, they could increase or decrease. However, it’s been a decreasing trend since around June 2019.
Over the past year, almost all savings accounts have decreased yields. But if you have money that has just been sitting in a non-interest bearing account, earning more interest in a high-yield savings account is likely worth it. Earning a competitive APY will help the account balance grow over time (assuming you don’t make withdrawals) and help it better keep up with long-term inflation. Money that’s not growing is bound to lose purchasing power over time.
The Federal Reserve began lowering rates in July 2019. Three rate cuts in 2019 (July, September and October) unwound a third of the rate increases from December 2015 to December 2018.
In March, two unscheduled emergency rate cuts by the Fed brought the federal funds rate down to zero — the same level it was at from December 2008 until December 2015. The Fed acted quickly in March, cutting rates due to the risks coronavirus posed to the economic outlook in 2020 and beyond. The top high-yield savings accounts have been decreasing, a few basis points every so often, ever since.
High-yield savings account APYs tend to move before or after the Fed lowers the federal funds rate. That’s why almost all high-yield savings accounts have decreased since around June 2019.
Here’s a look at Ally Bank’s savings yield, for instance:
Other high-yield savings accounts have had similar yield decreases over this same time period.
While you probably won’t earn as high of a yield as you would have earned earlier this year on a savings account, it is still worth earning a competitive yield on your emergency fund or any other money that you need to keep safe. Of course, always make sure it’s with a Federal Deposit Insurance Corp. (FDIC) bank and within FDIC limits and guidelines.
Your bank deposits in your high-yield savings account are protected by federal banking regulations. If your money in a high-yield savings account is parked at a Federal Deposit Insurance Corporation-insured bank, your money is safe. If your bank fails, you’ll get your money plus accrued interest back. The coverage is automatic. In the past, the FDIC says it has paid insurance within a few days after a bank closed.
There are limits, however. The FDIC covers up to $250,000 per depositor, per ownership category, per FDIC-insured institution. You don’t want to exceed the limits. For example, if you have $25,000 in a savings account and $250,000 in a CD at the same bank, that leaves $25,000 of deposits in that ownership category uninsured. You put your funds at risk if you exceed the FDIC-insured limit.
Double-check that the bank account you’re considering is FDIC-insured. You can use the FDIC’s BankFind tool to locate FDIC-insured institutions. After confirming that the bank you want to work with is insured, you’ll be able to breathe easily as you watch your funds grow.
In choosing your high-yield savings account, think about how you’ll want to interact with the banking institution. Are you comfortable banking completely online, or would you like some in-person service options as well?
Most high-yield savings accounts are offered by online banks. That means you’ll likely have to give up access to a physical branch in order to earn the highest APY. But you’ll still have access to your savings whenever you need it. Bank branches have limited business hours that restrict when you can interact with a banker. Online, you can manage your savings account 24/7. Most banks offer call center support, too.
There are exceptions to these general rules. For example, Capital One offers an attractive rate on its high-yield savings account as well as operates some physical branches that you could visit. Another example is PNC Bank, which offers a high-yield savings account in certain states in addition to operating a branch network.
Whether you want to build your emergency fund or save for a vacation or something else, a high-yield savings account can help you reach your goals. Opening a high-yield savings account is relatively simple, too. Here’s what you’ll need to do:
1. Shop around- High-yield savings accounts are offered by online banks, traditional banks with physical locations, and credit unions. The most important part of the process is to shop around to find the best high-yield savings account with the features you want (like a well-reviewed mobile app or no-fee account).
You’ll likely find higher APY offerings at online institutions because they don’t have as much overhead to support and pass the savings along to savers.
As you consider your options, think beyond APY, too. Compare the rates, fees and services offered to find the right fit for you.
2. Fill out an application- Once you’ve chosen a high-yield savings account, you’ll need to fill out an application. It might sound like an inconvenience. But it should only take a few minutes. The bank or credit union will likely ask for personal information, including your driver’s license number, Social Security number, mailing address, and date of birth.
In many cases, you’ll be able to fill out the application online.
3. Fund your account- Once you’ve been approved, it’s time to fund your account. You have a few options. You can fund your account by linking a checking account to your new savings account and transfer money from checking to savings. Some banks will also allow you to snap a picture of a check and make a mobile deposit to your new account. Depending on the bank, you might also be able to fund your new savings account with cash, through a wire transfer or by mailing in a check.
You’ll want to make sure you deposit enough money into the account to meet the minimum deposit requirement. The bank could charge you a maintenance fee or slap you with a lower than expected interest rate until you meet the minimum balance required.
Those with some emergency savings but less than three months' worth notched the highest level in the poll's 10 years, at 27 percent.
Almost three times as many Americans have less emergency savings now (35 percent) than they had before the coronavirus pandemic, according to a Bankrate survey conducted earlier this summer. It’s not surprising. In October, the unemployment rate was at 6.9 percent.
Some unemployed Americans might have been doing better earlier this year: The Federal Pandemic Unemployment Compensation program (FPUC) provided an additional $600 per week to people collecting regular unemployment compensation. But it ended July 31. Although there might be some future relief coming, it was not set in stone when the polling was conducted.
Moreover, more than one in five Americans have no emergency fund to cover unplanned expenses, which is the lowest response in the 10-year history of Bankrate’s poll.
Having an emergency fund, with three to six months of living expenses in it, can help you survive an unexpected event, like an air conditioning system or a dishwasher breaking. Without an emergency fund, you might incur debt or spend money that isn’t earmarked for an emergency. An example is depleting your retirement savings to fund an emergency.
To build an emergency fund, budgeting is the key. Your budget will show you where your money is going. If you’re spending more than what you’re making, you need to adjust your budget or increase your income.
One of the best ways to set up an emergency fund is to automate the process to prevent you from forgetting to save. You can do this by automatically having part of your paycheck go into a high-yield savings account. It’s harder to spend money that’s never in your checking account. You could also set up a recurring transfer from your checking into your savings.
Any extra income is a great saving opportunity. Before spending a gift, stimulus money or any unexpected cash, try to save at least a portion of it. You’ll be glad you did when an inevitable emergency occurs.
You’ll want to put this emergency fund in a high-yield savings account so that it’s earning a competitive yield. After establishing an emergency fund with three to six months of expenses in it, you might want to consider putting longer-term money in a CD.
Just be aware that CDs usually have early withdrawal penalties. But a no-penalty CD could be the best of both worlds — a fixed APY and the ability to withdraw your money pretty much whenever you need it.
Paying attention to interest rates is key when you’re comparing savings accounts. But you should also use a calculator to crunch some numbers.
Let’s say you’re deciding between a savings account that pays the national average of 0.08 percent APY and one that pays 0.6 percent APY. If you’re depositing $2,000, the difference between the amount of interest you’d earn through either account in a year is about $10.40. But if you’re depositing $50,000, you’d earn around an extra $260 by picking the account with the higher yield. This assumes that the savings APY would stay the same for a year. Since savings APYs are usually variable, that’s unlikely to happen in this current rate environment.
If you’re looking for a secure account that pays more interest, take a look at the best high-yield CDs. Like savings accounts, they’re insured by the federal government and offer a guaranteed rate of return.
|Vio Bank High Yield Online Savings Account||0.66%||None ($5 if you receive paper statements)||Vio Bank Review|
|Quontic Bank High Yield Savings||0.65%||None||Quontic Bank Review|
|Live Oak High-Yield Online Savings||0.60%||None||Live Oak Bank Review|
|Synchrony Bank High Yield Savings||0.60%||None||Synchrony Bank Review|
|Comenity Direct High-Yield Savings Account||0.60%||None||Comenity Direct Bank Review|
|Popular Direct Select Savings||0.60%||None||Popular Direct Review|
|Pentagon Federal Credit Union Premium Online Savings Account||0.55%||None||Pentagon Federal Credit Union Review|
|Alliant Credit Union High-Rate Savings Account||0.55%||None with eStatements ($1 for each paper statement.)||Alliant Credit Union Review|
Overall, high-yield savings accounts can be used for a range of purposes. From your emergency fund to saving up for a down payment, high-yield savings accounts can play a major part in your broader financial plan. If you’re looking for an account that can help you save while still offering easy access to your money, a high-yield savings account is worth consideration.
You can use Bankrate’s savings rate table to compare the best savings accounts.