Bankrate’s guide to choosing a high-yield savings account
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 0.06 percent annual percentage yield (APY). Many of the country's biggest banks pay less than that.
Some online banks offer better deals than the average bank -- with yields that are up to seven times higher than the national average. Compare rates among today's best widely available, high-interest savings accounts to find the right account for you.
Methodology: How Bankrate picks the best high-yield savings accounts
Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. Bankrate’s editorial and research teams analyzed more than 100 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 high-yield savings accounts, our editorial team analyzed APY, minimum balance requirements, monthly fees and requirements to avoid monthly fees. All of the accounts listed below are insured by the FDIC at banks or by the National Credit Union Share Insurance Fund at National Credit Union Administration (NCUA) credit unions.
APYs (interest rates), account minimums and whether you’d have to pay a monthly service fee are some of the most important things to look at before choosing a savings account. A savings account that charges fees likely isn’t the right account for you. But many online banks offer high-yield savings accounts that don’t require you maintain a minimum balance. Savings accounts that offer a competitive yield and don’t require a minimum balance or charge a maintenance fee are a good fit for any type of saver.
Finally, the bank needs to be an FDIC-insured bank or at an NCUA credit union that’s insured by the NCUSIF so your money is safe. Always follow FDIC and NCUA limits and guidelines.
Bankrate’s editorial team chose the criteria and developed a scoring system to determine the best savings accounts. Bankrate’s editorial team used its knowledge of financial services and banking experience to choose the best ways to rate savings accounts.
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Best high-yield online savings accounts for November 2021
Note: The annual percentage yields (APYs) shown are as of Nov. 18, 2021. Bankrate's editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated and Bankrate's editorial team may occasionally update these APYs after that update. The APYs for some products may vary by region.
1. LendingClub Bank – 0.60% APY, $100 minimum opening deposit/$2,500 minimum for APY
Overview: LendingClub Bank was formed when LendingClub purchased Radius Bank. The deal closed in February 2021 and Radius Bank deposit products became LendingClub Bank products in July 2021.
Perks: LendingClub Bank offers a competitive APY on its High-Yield Savings account, which includes an ATM card. There are no monthly maintenance fees.
What to watch for: Only balances of $100 or more earn interest, and a $5 minimum balance is needed to keep a High-Rate Savings Account open.
2. Alliant Credit Union – 0.55% APY, $5 minimum opening deposit/$100 minimum for APY
Overview: In 1935, what’s now Alliant Credit Union was founded as the United Airlines Employees’ Credit Union. Alliant currently has 500,000 members.
Perks: You won’t pay a monthly maintenance fee as long as you choose online statements.
What to watch for: Only balances of $100 or more earn interest.
3. Comenity Direct – 0.55% APY, $100 minimum opening deposit
Overview: 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.
Perks: The high-yield savings account requires just $100 to open.
What to watch for: Official checks cost $15 each and there’s a $5 fee for each paper statement.
4. Quontic Bank – 0.55% APY, $100 minimum opening deposit
Overview: Quontic Bank was established in 2005 and is based in New York.
A $100 minimum deposit is required to open a Quontic Bank High Savings account. Quontic Bank also offers four terms of CDs that offer terms ranging from six months to three years and require a $500 minimum deposit.
Perks: Quontic Bank High Savings account doesn't have a monthly maintenance fee.
What to watch for: You’ll pay $10 for each withdrawal that surpasses six in a statement cycle.
5. CIBC Bank USA – 0.52% APY, $1,000 minimum opening deposit
Overview: CIBC Bank USA, formerly The PrivateBank and Trust Co., was founded in 1991 and is based in Chicago. Its online banking unit is known as CIBC Agility, which offers the Agility Online Savings Account.
Perks: The Agility Online Savings Account doesn’t have a monthly maintenance fee.
What to watch for: You’ll need $1,000 to open the Agility Savings Account.
6. Vio Bank – 0.51% APY, $100 minimum opening deposit
Overview: 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.
Perks: Vio Bank has consistently offered one of the highest APYs available.
What to watch for: There’s a $5 fee for paper statements and a $10 charge for each withdrawal beyond six in a monthly statement cycle.
7. Ally Bank – 0.50% APY, $0 minimum opening deposit
Overview: Ally Bank started in 2004 and is headquartered in Sandy, Utah. Ally Bank surpassed 1 million customer accounts in 2012 and currently has about 2.3 million customers.
In addition to its no-penalty CD, Ally Bank also offers checking and money market accounts, term CDs and two terms of a Raise Your Rate CD.
Perks: Ally Bank doesn’t have a monthly service fee and it also doesn’t require a minimum opening deposit. Official checks are free for savings account customers at Ally Bank.
What to watch for: An outgoing domestic wire will cost $20.
8. Barclays Bank – 0.50% APY, $0 minimum opening deposit
Overview: Barclays Bank has been around for more than 300 years. Back then it started in London. Barclays Bank has the Barclays Online Savings account and nine terms of CDs.
Perks: Barclays Bank doesn’t require a minimum opening deposit. You also can call Barclays Bank any day of the week. The daily phone hours are 8 a.m. to 8 p.m. Eastern.
What to watch for: Your account may be closed for keeping a balance of less than $1 in your Barclays Online Savings account for more than 179 days.
9. Citibank – 0.50% APY, $0 minimum opening deposit/$1 minimum for APY
Overview: The Citi Accelerate Savings account has a competitive APY in select markets. It’s not available in some larger states, such as California and New York state. The savings account doesn’t require a minimum balance to open the account.
There is a $10 monthly service fee if you have a checking and savings account linked and don’t meet the requirements to have the fee waived.
Perks: Savings accounts not linked to a checking account are subject to a $4.50 monthly fee should the average monthly balance fall below $500.
What to watch for: There is a $4.50 monthly service fee if your savings account isn’t linked to a Citi checking account.
10. Live Oak Bank – 0.50% APY, $0 minimum opening deposit
Overview: Live Oak Bank is an online bank founded in 2008 and based in Wilmington, North Carolina. It offers a competitive yield on its savings account.
In addition to its savings account, Live Oak Bank also offers seven terms of CDs.
Perks: Live Oak Bank’s Online Savings account doesn’t have a monthly service fee and there is no minimum balance requirement.
What to watch for: There’s a $10 dormant account fee for accounts without any activity for 24 straight months. Accounts with a balance of less than $10.01 are assessed a fee that doesn’t overdraw the account and then it is closed.
Overview: Marcus is Goldman Sachs’ consumer-banking unit, which offers a savings account, a variety of CDs and three no-penalty CD terms.
Perks: Its savings account doesn’t require a minimum opening deposit and it doesn’t have a monthly service fee. Marcus by Goldman Sachs has an app on iOS and Google Play.
What to watch for: There isn’t a minimum deposit required and the account doesn’t have a monthly service fee.
12. Synchrony Bank – 0.50% APY, $0 minimum opening deposit
Overview: Synchrony Bank is an online bank that offers a savings account, money market account, regular CDs, IRA CDs and IRA money market accounts.
Perks: Synchrony Bank’s High Yield Savings account offers a competitive yield and doesn’t require a minimum deposit.
What to watch for: There are savings accounts and money market accounts that offer a higher yield than Synchrony Bank’s High Yield Savings account.
13. TAB Bank – 0.50% APY, $0 minimum opening deposit
Overview: TAB Bank was established in 1998 in Ogden, Utah, as a banking service inside truck stops. TAB (Transportation Alliance Bank) serves businesses and individual customers.
It offers several checking accounts, a couple of savings account options, a money market account and CDs in eight terms, from six months to five years.
Perks: You won’t need to make an initial deposit to open the High-Yield Savings account at TAB Bank.
What to watch for: You need to keep at least $1 in the account. Also, a cashier’s check costs $15.
Overview: Pentagon Federal Credit Union was established in 1935. It has more than 2 million members and is based in McLean, Virginia.
PenFed offers nine terms of CDs, ranging from six months to seven years.
Perks: The Premium Online Savings Account can be opened with just $5 and there is monthly service fee.
What to watch for: You can join Pentagon Federal Credit Union through employment, association membership, military affiliation or through other methods.
15. TIAA Bank – 0.50% APY, $25 minimum opening deposit ($0 for Rhode Island residents)
Overview: TIAA Bank is a division of TIAA FSB and has nine branches, all in Florida.
TIAA also offers a money market account, a checking account and CD terms ranging from three months to five years.
Perks: The Basic Savings account only requires $25 to open the account. Rhode Island residents don’t need an opening deposit.
What to watch for: A $25 minimum monthly balance is required for the Basic Savings account to waive the $5 monthly service fee. (Residents of Rhode Island are exempt.)
16. Popular Direct – 0.45% APY, $5,000 minimum opening deposit
Overview: Popular Direct offers the Select 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.
Perks: Popular Direct has 24/7 customer support.
What to watch for: Closing the account within 180 days will cost you $25. There’s also a $5 dormancy fee that’s charged for not having account activity during a 12-month period.
Statement periods are quarterly with the Select Savings Account.
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 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:
- 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.
Are high-yield savings accounts safe?
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.
Can you lose money in a high-yield savings account?
Always make sure your high-yield savings account is at a Federal Deposit Insurance Corp. (FDIC) bank or National Credit Union Administration (NCUA) credit union. As long as you stay within FDIC or NCUA limits and guidelines, your money will be safe.
Also, make sure you check your account regularly to make sure it doesn’t have any unauthorized withdrawals or transactions. The faster you notice something may be wrong, the faster you can dispute it at your bank and potentially freeze the funds in the account.
What to consider when choosing a high-yield savings account
Here are a few 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 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.
How often rates change
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 2020 — 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.
Minimum deposit required
The minimum opening deposit required can be a big factor when deciding on which high-yield savings account to choose.
Minimum deposit amounts vary 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 higher 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.
Often, you’ll find online banks that have no minimum opening deposit requirement or no minimum balance. You can also find online banks that won’t charge monthly maintenance fees. And some of them won’t have any of those requirements and fees.
Accounts requiring a higher minimum deposit might not offer a higher yield. 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 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 in 2020 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-transaction 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 account terminology
- APY: This figure is the real rate of return that you’ll earn on a savings account or other deposit product. It factors in the interest rate as well as compounding interest and is the best way to compare savings yields on an apples-to-apples basis.
- Compound interest: In simple terms, this means you’re earning interest on your interest. Instead of only earning interest on your principal amount, you’ll earn interest on your principal as well as the previous interest earned on your principal, allowing you to grow your total savings faster.
- Monthly service charge/maintenance fee: This is a monthly fee charged by a bank, usually for going below a certain balance in the account.
- Regulation D: This Federal Reserve rule is used to limit the number of withdrawals and transfers you can make from a savings account during a monthly statement cycle. Some banks still have restrictions on withdrawals and transfers, even though the Fed removed these limits in 2020.
How much interest will you earn on $10,000 in a high-yield savings account in 1 year?
The APY will determine how much interest you’ll earn. If your high-yield savings account pays 0.01 percent APY, you would earn $1 in a year. If your account pays 0.5 percent, you would earn $50 in a year.
Savings yields are variable, meaning your APY could increase or decrease over the course of a year. Lately, though, savings rates at top-yielding banks have been stable.
Best uses for a high-yield savings account
High-yield savings accounts can be used for any savings goal. Here are some of the best uses for a high-yield savings account:
Down payment on your primary home 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 have a high-yield savings account paying a 0.6 percent APY.
- 20 percent: Three years. (Initial deposit of $1,000 and then contribute $1,076.36 each month)
- 5 percent: One year. (Initial deposit of $1,000 and then $749.50 every month for a year.)
- 3.5 percent: Six months. (Initial deposit of $1,000 and then about $999 every month).
Saving to buy a car
Assuming you’re going to finance the purchase of a car, you’re still likely going to need to make a down payment. Saving up and paying for a car with cash, check or an official bank check is even better since it will save you interest payments and financing fees.
Plan for that wedding now
Saving now can pay off for those planning to get married in the future. The national average cost of a wedding was $19,000 in 2020, according to The Knot’s Real Wedding Study. And that doesn’t include the honeymoon.
A high-yield savings account is one of the best places to save money for your wedding because it’s liquid, safe — if it’s in a FDIC-insured account and within guidelines and limits — and can offer a competitive yield.
If you have two years to save, you’d need to save around $1,122 per month in a high-yield savings account paying 0.6 percent APY in order to save around $28,000 for the wedding. That’s with an initial deposit of $1,000.
For some of your 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 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.
Teach your children healthy savings habits and save for their future
It’s never too early to start saving for your child’s future and to teach them the importance of doing so. You might begin by opening a custodial savings account for your child and adding to it over time. You’ll build a nest egg that could pay for upcoming expenses like a first car or high school prom. Here are some guidelines, by age range, on saving money and teaching kids financial responsibility:
Children ages 5 to 8
You may consider starting an allowance and encouraging children to save at least 10 percent of it. One strategy is to give your child $1 a week for each year of age, meaning a 6-year-old would get $6. Foster savings habits in kids by bringing them to the bank to deposit money. Start saving for college now if you haven’t already, as tuition can run $10,000 or more a year.
Adolescents ages 9 to 12
At this age, your child may be ready to learn about budgeting and discretionary spending. Help them set goals by calculating how much to save each week for a toy or video game. Building up your child’s savings account now is also important as the expenses of young adulthood draw nearer. It pays to start saving for that first car, as a used car can easily go for more than $20,000.
Teens ages 13 and up
The teenage years are when many kids get jobs and contribute more actively to their savings. Consider opening a high school checking account and teaching them to use a debit card responsibly. At this time (or soon enough) you can reap the benefits of having saved money, as your child becomes ready to drive, start college or live on their own.
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 air conditioning unit during a hot summer.
High-yield savings accounts FAQs
Do you pay taxes on interest earned in a high-yield savings account?
The IRS specifically says that interest earned on bank accounts is taxable interest. Interest is usually taxed as ordinary income. All interest income is taxable, even if it’s not reported on a Form 1099-INT. That form is usually generated toward the beginning of the calendar year, after you’ve earned more than $10 in interest during the previous tax year.
What are the risks of a high-yield savings account?
It would be a risk to be above FDIC limits and guidelines in an account or to bank with a non-FDIC institution. A bank failure at one of these institutions would put your money at risk. The way to avoid this is by confirming your bank is FDIC-insured, using the FDIC’s BankFind Suite. Also, confirm that your money is insured by using the FDIC’s Electronic Deposit Insurance Estimator (EDIE) and knowing the limits, guidelines and ownership categories. If you bank with a credit union, make sure the institution is backed by NCUA insurance.
What is the difference between a high-yield savings account and a money market account?
Generally, a high-yield savings account won’t let you write checks against the account. Some money market accounts have check-writing privileges. Otherwise, these deposit accounts are similar.
Money market accounts and high-yield savings accounts are typically available at FDIC-insured banks. Savings accounts are slightly more common than money market accounts, but many banks offer both.
The biggest difference between the two is that a money market account may offer the ability to write checks from the account. This will depend on the bank. Savings accounts typically don’t offer this option.
Money market account
- It may provide check-writing privileges.
- Your money is safe if it’s at an FDIC bank or NCUA credit union and within insurance limits and guidelines.
- You generally are allowed to make unlimited ATM withdrawals.
- Some high-yield savings accounts may earn a higher APY.
- You might be restricted to making only six withdrawals per statement cycle.
- Some savings accounts allow you to withdraw money from an ATM.
- Your money is safe if it’s at an FDIC bank or NCUA credit union and within insurance limits and guidelines.
- You can find a competitive APY relative to other deposit products.
- You generally can’t write checks from a savings account.
Why are most high-yield savings accounts online?
The best high-yield savings accounts are usually found online. Online banks tend to offer the most competitive yields on their accounts. One reason why these banks can pay more is that they have fewer expenses since they don’t operate branches. But these online banks also need a way to get your attention. Often, a high yield is the way to do that.
Many online banks also don’t charge a monthly service fee for their accounts and some of them don’t have minimum balance or minimum opening deposit requirements either.
Finding 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, 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.
Are high-yield savings account rates fixed?
High-yield savings accounts that offer an introductory rate may offer that fixed rate for a limited time. However, those accounts might be hard to find in this current rate environment. Most high-yield savings accounts will have a variable APY. This means the yield is subject to change.
Those looking for a fixed yield should look at certificates of deposit. A no-penalty CD might be a good option for people looking for both a fixed APY and access to their money without incurring a penalty.
How do high-yield savings accounts work?
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 0.06 percent. 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. Though in August 2021, savings rates are expected to remain relatively stable at high-yielding banks.
Are savings accounts still worth it?
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.
Why have high-yield savings rates gone down since 2020?
The Federal Reserve made two unscheduled rate cuts in March 2020 to bring rates to a near-zero level. Savings account yields closely follow the federal funds rate, which is the rate the Fed lowered due to economic concerns around the start of the pandemic.
High-yield savings account APYs tend to move before or after the Fed lowers the federal funds rate.
Here’s a look at Ally Bank’s savings yield, for instance:
- June 24, 2019: 2.2 percent APY
- June 25, 2019: 2.1 percent APY
- Dec. 20, 2019: 1.6 percent APY
- July 8, 2020: 1 percent APY
- Nov. 18, 2021: 0.5 percent APY
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.
Are high-yield savings accounts FDIC-insured?
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.
Accessibility of high-yield savings
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.
How to open a high-yield savings account
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.
What to do if you are unable to get approved for a high-yield savings account
First, ask your bank why you weren’t able to open a high-yield savings account. Depending on the answer, you might want to go to ChexSystems’ website and request a report to see whether your banking history is the reason why.
ChexSystems is a national specialty consumer reporting agency that keeps track of some of your banking history.
Your check cashing history, any suspected fraud activity and closed accounts are some of the things that may appear on a ChexSystems report.
High-yield savings account takeaways
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.
Use our quick recap of trusted bank reviews and APYs to pick a high-yield saving account that's right for you.
Best high-yield online savings accounts for November 2021
- LendingClub Bank - 0.60% APY
- Alliant Credit Union - 0.55% APY
- Comenity Direct - 0.55% APY
- Quontic Bank - 0.55% APY
- CIBC Bank USA - 0.52% APY
- Vio Bank - 0.51% APY
- Ally Bank - 0.50% APY
- Barclays Bank - 0.50% APY
- Citibank - 0.50% APY
- Live Oak Bank - 0.50% APY
- Marcus by Goldman Sachs - 0.50% APY
- Synchrony Bank - 0.50% APY
- TAB Bank - 0.50% APY
- Pentagon Federal Credit Union - 0.50% APY
- TIAA Bank - 0.50% APY
- Popular Direct - 0.45% APY
Additional trusted high-yield savings account choices for November 2021
||Bankrate Savings Rating
||American Express is an online bank that offers 24/7 customer service and up to nine withdrawals per statement cycle.
||Capital One has banking products, online services, and around 381 branch locations. It also has Capital One Cafes. Capital One’s 360 Performance Savings account doesn’t require a minimum deposit to open this account and you’re not required to keep a certain balance in the account.
||Up to 0.40%*
||The CIT Savings Builder encourages you to save by giving you a higher APY for depositing at least $100 per month. You can also get this yield with a balance of at least $25,000.
||Citizens Access launched in July 2018 and offers a savings account that requires a minimum opening deposit of $5,000. You’ll want to keep at least $5,000 in this online savings account to earn a competitive APY.
||Discover Bank’s Online Savings Account doesn’t require a minimum deposit to open the account and doesn’t have a monthly maintenance fee.
||The PNC High Yield Savings account offers a competitive yield in certain markets. The account doesn’t require an opening deposit and doesn’t have a monthly service fee.
||PurePoint Financial requires a $10,000 opening deposit for its savings account. A balance of more than $10,000 is required to earn a more competitive APY.
*Highest APY paid on account balances of more than $25,000 or accounts with less than $25,000 but with monthly deposits of $100 or more. Lowest APY paid on accounts with balances of less than $25,000.
Banks we monitor
These financial institutions are featured in our high yield savings account rate research: Alliant Credit Union, Ally Bank, Amerant Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank 5 Connect, Bank of America, Bank of the West, Barclays, BB&T, BBVA, BECU (Boeing Employees Credit Union), Bethpage Federal Credit Union, BMO Harris Bank, BrioDirect, Capital One Bank, Chase Bank, CIBC USA, CIT Bank, Citibank, Citizens Access, Citizens Bank (Rhode Island), Comenity Direct, Comerica Bank, Customers Bank, Delta Community Credit Union, Discover Bank, E-Trade Bank, Emigrant Direct, Fifth Third Bank, First Citizens Bank, First Internet Bank, First Technology Federal Credit Union, FNBO Direct, Golden 1 Credit Union, Marcus by Goldman Sachs, HSBC, Huntington National Bank, Investors Bank, Investors eAccess, KeyBank, LendingClub Bank, Limelight Bank, Live Oak Bank, M&T Bank, MySavingsDirect, Navy Federal Credit Union, PenFed Credit Union, PNC Bank, Popular Direct, Purepoint Financial, Quontic Bank, Randolph-Brooks Federal Credit Union, Regions Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Security Service Federal Credit Union, State Employees' Credit Union, Suncoast Credit Union, Suntrust Bank, Synchrony Bank, TD Bank, TIAA Bank, UFB Direct, Union Bank (California), U.S. Bank, USAA Bank, Vio Bank, VyStar Credit Union, Wells Fargo and Zions Bank.
Written by: Matthew Goldberg, consumer banking reporter for Bankrate
Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance.
Read more from Matthew Goldberg
Edited by: David Schepp, wealth editor for Bankrate
David Schepp is a wealth editor for Bankrate, focusing on deposits and consumer banking content.
Read more from David Schepp