It doesn’t matter if you’re working class or filthy rich — 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 0.10 percent APY. Many of the country’s biggest banks pay less than that.
If you’re sick of earning less than 1 percent APY, consider making a change. Compare rates among today’s best high-interest savings accounts. They have the highest yields available to savers nationwide.
The Best High-Yield Savings Accounts in February 2019
- North American Savings Bank – 2.53% APY
- CIT Bank – 2.45% APY
- TAB Bank – 2.40% APY
- MySavingsDirect – 2.40% APY
- Vio Bank – 2.39% APY
- CIBC Bank USA – 2.39% APY
- Popular Direct – 2.36% APY
- Citizens Access – 2.35% APY
- PurePoint Financial – 2.35% APY
- Salem Five Direct – 2.30% APY
What is a high-yield savings account?
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 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:
- Higher APYs: High-yield savings accounts generally offer significantly higher interest rates than traditional savings products. That means you can earn more on your money and meet your savings goals faster.
- No or low fees: High-yield savings accounts tend to come with no monthly fees and low fees for things like having non-sufficient funds. That’s especially so with high-yield savings accounts found at online banks.
In addition, 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 Association, 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.
What to consider when choosing a high-yield savings account
Here are four important things to consider when searching for a high-yield savings account.
Annual percentage yield
One of the most important considerations when choosing a high-yield savings account is the annual percentage yield.
Annual percentage yield, or APY, tells you how much you’ll earn with compound interest over the course of a year. 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 consideration. If not, Bank Y might be the better choice.
Another component of the account’s APY is its compounding method. You can find accounts that compound on a daily, weekly, monthly, quarterly or even yearly basis.
It’s ideal to find a high-yield savings account that compounds daily. The more frequently your interest compounds, the faster your savings will grow.
You can use Bankrate’s compound interest calculator to calculate your potential earnings on any savings account.
Minimum deposit required
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.
Minimum balance required
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 annual percentage yield 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 annual percentage yield.
Before opening any type of savings account, it’s important to consider how often you’ll need to access the money.
Because of Regulation D, known for short as “Reg D,” savers can make only six transactions per month from savings accounts. That includes online transfers to different accounts, transfers over the phone, automatic transfers, overdrafts and check or debit transfers. These rules apply to money market accounts as well.
However, 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.
Comparing the best high-interest 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, with the online savings account offered by Citizens Access, customers with balances up to $4,999.99 earn 0.25 percent APY. To earn the top rate (2.35 percent APY), you have to deposit at least $5,000.
Some savings accounts — like the ones available at MySavingsDirect and Vio Bank — offer a top yield without requiring a high minimum deposit. Those kinds of accounts are ideal for savers in the process of building their emergency fund. Conversely, Customers Bank — one of the banks that offers one of the highest savings account rates available nationwide — requires a minimum deposit of $25,000.
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.
Best uses for a high-yield savings account
High-yield savings accounts have a wide range of uses, but one of the best 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:
Down payment on your first or second home
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:
- 20 percent down: $40,000.
- 5 percent down: $10,000.
- 3.5 percent down: $7,000.
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 put away $1,000 per month into a high-yield savings account paying a 2 percent APY.
- 20 percent: Three years.
- 5 percent: Nine months.
- 3.5 percent: Six months.
Last-minute college savings
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 with 2 percent interest, you’d need to deposit around $639 per month in order to hit your goal by the time they head 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.
Big family vacation
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 $157 per month in a high-yield savings account paying 2 percent interest. That’s with an initial $100 deposit.
Other savvy uses for a high-yield savings account
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 HVAC system 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 $33,391, according to The Knot’s 2017 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 $2,673 per month in a high-yield savings account paying 2 percent in order to save $33,391 for the wedding. That’s with an initial deposit of $1,000.
Here are a few other potential uses for high-yield savings accounts:
- Saving to buy a vehicle.
- Saving to buy things like furniture.
- Saving for estimated taxes as a self-employed individual.
Do the math before picking a savings account
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 2 percent APY and one that pays 2.15 percent APY. If you’re depositing $700, the difference between the amount of interest you’d earn through either account is about a dollar. But if you’re depositing $50,000, you’d earn an extra $76 by picking the account with the higher yield.
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.
Compare: Best high-yield savings accounts
1. North American Savings Bank: 2.53% APY, $50,000 minimum deposit
North American Savings Bank, which was founded in 1927, is based in Grandview, Missouri. It was originally the City Building and Loan Association.
The bank currently offers the highest nationally available savings account yield, which is available exclusively online. But you’ll need a pretty penny to qualify for the top rate.
2. CIT Bank: 2.45% APY, $100 monthly minimum deposits for APY
CIT Bank is an online bank based in Pasadena, California. It’s a subsidiary of CIT Bank, N.A., which is part of the financial holding company CIT that was founded in 1908.
CIT Bank recently started offering its Savings Builder account, a tiered interest rate product that rewards customers for consistently saving money. The minimum deposit is low ($100) and you can earn the top yield just by depositing $100 every month. If consistently depositing money into a savings account is something you struggle with, you’ll have to maintain a daily balance of at least $25,000.
3. TAB Bank: 2.40% APY, $0 minimum deposit
TAB Bank, which offers financial services to businesses in the transportation industry, was founded in 1998. The bank, which is also known as the Transportation Alliance Bank, is based in Ogden, Utah.
A competitive yield is available for consumers with an extra few thousand dollars to stick in a savings account. There are no monthly service or minimum balance fees. Don’t confuse the High Yield Savings account with the Premium Savings account, which pays much less interest (just 0.25 percent annually).
4. MySavingsDirect: 2.40% APY, $1 minimum deposit for APY
MySavingsDirect is an online division of Emigrant Bank, a New York-based institution founded in 1850. In addition to CDs, MySavingsDirect offers a traditional savings account that pays a top yield. There are no minimum balance or monthly maintenance fees.
If you’re looking for an account with bells and whistles, this one is probably not for you. You won’t have access to an app or features like account alerts. Transferring money into your linked primary checking account may also take two to four business days. That could be a problem if you need quick access to your savings.
5. Vio Bank: 2.39% APY, $100 minimum deposit for APY
Vio Bank is a new online division of MidFirst Bank, a financial institution based in Oklahoma City with more than 600,000 customers.
The bank offers a high yield online savings account that pays more than most banks and doesn’t require account holders to pay any monthly fees. Interest is compounded daily, allowing balances to grow as quickly as possible. The minimum deposit ($100) is also relatively low.
While the bank offers a competitive yield, the mobile app isn’t available yet. That means you don’t have access to mobile check deposit or other features that may be available at other banks.
6. CIBC Bank USA: 2.39% APY, $1,000 minimum deposit for APY
CIBC U.S. is headquartered in Chicago. It’s a subsidiary of the Canadian Imperial Bank of Commerce, which is based in Toronto.
The bank offers its Agility Online Savings Account, which pays a high yield and requires a reasonable minimum deposit of $1,000. The minimum balance to earn the top rate is $0.01. There are no monthly service fees, and customers have access to a mobile app.
If you open the account and close it within 90 days, you’ll get hit with a $25 fee. There’s also a $5 monthly dormant account fee. Overdraft and non-sufficient funds fees may apply to transactions made in person, at an ATM or electronically.
7. Popular Direct: 2.36% APY, $5,000 minimum deposit for APY
Popular Direct is a subsidiary of Popular Inc., a financial services firm serving the United States, Puerto Rico and the Caribbean. Popular Direct accounts are opened through its parent company Popular Bank.
The bank offers one of the highest yields available nationwide. There’s a $4 monthly service charge that’s avoidable by maintaining a minimum balance of $500. But the $5,000 minimum deposit may be a barrier for many savers.
8. Citizens Access: 2.35% APY, $5,000 minimum deposit for APY
Citizens Access is the new online-only division of Citizens Bank, a brick-and-mortar institution based in Providence, Rhode Island.
Right out of the gate, Citizens Access began offering customers competitive yields tied to savings accounts and CDs. With its savings account, there are no fees and signing up for an account takes just five minutes.
One downside is that the funds at Citizens Access aren’t exactly easily accessible. If you needed to use a portion of your online savings, it would take two to three business days for you to transfer funds to an external checking account.
9. PurePoint Financial: 2.35% APY, $10,000 minimum deposit
PurePoint Financial is an online division of MUFG Union Bank, one of the largest banks in the world.
In addition to CDs, PurePoint Financial offers an online savings account paying 2.15 percent APY, one of the highest yields currently being offered nationwide. There are no monthly fees and the account can be managed from anywhere, including your computer, tablet and smartphone.
The only potential downside for customers interested in this savings product is the minimum deposit. Being required to fill an account with at least $10,000 could be a barrier for quite a few people since many Americans don’t even have an adequate cushion of emergency savings.
10. Salem Five Direct: 2.30% APY, $100 minimum deposit
Salem Five Direct is an online division of Salem Five Cents Savings Bank, which is based in Salem, Massachusetts.
The bank offers several products, including a high-yield savings account paying a competitive yield. There are no monthly fees or minimum balance requirements to meet and all deposits are fully insured, thanks to a private fund that offers insurance coverage beyond the limits set by the Federal Deposit Insurance Corp.
You’re not eligible for an eOne Savings account if you have an existing savings or checking account with Salem Five Bank.
Best high-yield savings accounts
|Bank||Top APY||Minimum to earn high yield|
|North American Savings Bank||2.53%||$50,000|
|CIBC Bank USA||2.39%||$1,000|
|Salem Five Direct||2.30%||$100|
Note: If the minimum deposit is higher than the minimum balance needed to earn the top yield, the minimum deposit is listed.
*CIT Bank’s Savings Builder account pays 2.45 percent to anyone who deposits $100 every month or maintains a balance of at least $25,000.
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.