You can reach your savings goals faster by putting your money in a high-yield savings accounts when building an emergency fund or saving for large expenses, such as a down payment.
With high-yield saving accounts, you get a higher interest rate and your money grows even faster because you can earn interest on interest, unlike traditional savings accounts. With a higher annual percentage yield (APY), your money grows faster and you get a better return than you would with a traditional savings account.
Savings account APYs are just 0.42% on average, according to the Federal Deposit Insurance Corporation (FDIC). That’s more than 12 times less than the 5-plus percent APY and 6% APY that the highest-yield savings accounts offer. Likewise, banks are offering higher annual percentage yields, or APYs, to their customers as the Federal Reserve continues to raise interest rates.
Several high-yield savings accounts, including large credit unions, were analyzed and compared by CNBC Select to determine which are the best overall. In our study, we found that even though most online banks don’t have physical branches, they typically offer higher APYs, lower fees, and overall better benefits than brick-and-mortar banks.
In ranking our top nine accounts, we considered their APY, ease of use, accessibility, monthly fees, and minimum balance requirements. Savings accounts selected to offer an above-average annual percentage yield (APY) to all customers (no matter their balance), are FDIC-insured, charge no monthly maintenance fees, and have low (or no) minimum balance requirements.
Best High-Yield Savings Accounts
- TotalDirectBank – 5.26% APY
- Salem Five Direct – 5.01% APY
- iGObanking – 5.05% APY
- Western State Bank – 5.15% APY
- Evergreen Bank Group – 5.25% APY
- Vio Bank – 5.15% APY
- CFG Bank – 5.17% APY
- Newtek Bank – 5.25% APY
- UFB Direct – 5.25% APY
- FNBO Direct – 5.15% APY
- Popular Direct – 5.15% APY
- BankPurely – 5.05% APY
- CIT Bank – 5.05% APY
- Milli – 5.25% APY
- TAB Bank – 5.02% APY
TotalDirectBank
- Money Market Account – 5.26% APY
- Minimum balance requirement: $2,500 to earn stated APY
- ATM card: No
- Monthly fee: None
- Minimum opening deposit: $25,000
- Checking accounts available: No
- Mobile check deposit: Yes
- CDs available: Yes
Milli
- 5.25% APY
- Minimum opening deposit: Any amount
- ATM card: Yes
- Minimum balance requirement: Any amount
- Mobile check deposit: No
- Checking accounts available: No
- CDs available: No
- Monthly fee: None
Newtek Bank
- Personal High Yield Savings – 5.25% APY
- Checking accounts available: No
- Mobile check deposit: No
- ATM card: No
- Monthly fee: None
- Minimum opening deposit: $0
- Minimum balance requirement: Any amount
- CDs available: Yes
UFB Direct
- Priority Savings Account – 5.25% APY
- Minimum opening deposit: None
- Minimum balance requirement: None
- Monthly fee: None
- ATM card: Yes
- Mobile check deposit: Yes
- Checking accounts available: No
- CDs available: No
Evergreen Bank Group
- High-Yield Online Savings – 5.25% APY
- Minimum opening deposit: $100
- Minimum balance requirement: Any amount
- Monthly fee: None
- ATM card: Yes
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
CFG Bank
- High Yield Money Market Account – 5.17% APY
- Minimum opening deposit: $1,000
- Minimum balance requirement: $1,000 to earn stated APY
- Monthly fee: None with a $1,000 ongoing balance; otherwise, $10/month
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
FNBO Direct
- Online Savings Account – 5.15% APY
- Minimum opening deposit: $1
- Minimum balance requirement: Any amount
- Monthly fee: None
- CDs available: No
- ATM card: Yes
- Mobile check deposit: Yes
- Checking accounts available: Yes
Vio Bank
- Cornerstone Money Market Savings Account – 5.15% APY
- Minimum opening deposit: $100
- Minimum balance requirement: None
- Monthly fee: None
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: No
- CDs available: Yes
Popular Direct
- High-Rise Savings Account – 5.15% APY
- Minimum opening deposit: $100
- Minimum balance requirement: None
- Monthly fee: None
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: No
- CDs available: Yes
Western State Bank
- Online Money Market Account – 5.15% APY
- Minimum opening deposit: $5,000
- Monthly fee: None
- Minimum balance requirement: None
- ATM card: No
- Mobile check deposit: No
- CDs available: No
- Checking accounts available: Yes
CIT Bank
- Platinum Savings – 5.05% APY
- Minimum deposit requirement: $100
- Minimum balance requirement: $5,000 to earn stated APY
- Monthly fee: None
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
BankPurely
- PurelyMoneyMarket – 5.05% APY
- Minimum ongoing balance: $25,000 to earn interest
- Minimum deposit requirement: None
- Monthly fee: None
- ATM card: Yes
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
iGObanking
- iGOmoneymarket – 5.05% APY
- Minimum deposit requirement: $25,000
- Minimum ongoing balance: $25,000 to earn interest
- Monthly fee: None
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
TAB Bank
- High Yield Savings Bank – 5.02% APY
- Minimum opening deposit: Any amount
- Minimum balance requirement: One penny
- Monthly fee: None
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
Salem Five Direct
- eOne Savings – 5.01% APY
- Minimum opening deposit: $10
- Minimum balance requirement: Any amount
- Monthly fee: None
- ATM card: No
- Mobile check deposit: Yes
- Checking accounts available: Yes
- CDs available: Yes
How safe are online high-yield savings accounts?
You can earn interest on your money in a high-yield savings account as long as the funds are federally insured. The FDIC insures up to $250,000 per depositor, per FDIC-insured bank, per ownership category. Each ownership category of an account is insured up to $250,000 by the National Credit Union Administration (NCUA).
When a bank fails, this federal insurance guarantees consumers their money is safe, as long as it stays within the limits and guidelines. You can verify your bank is insured by using the FDIC’s BankFind Suite. In addition, if you bank at a credit union, make sure NCUA insurance covers it.
Frequency-Asked Questions On High-Yield Savings Accounts:
- How do high-yield savings accounts work?
A high-yield savings account is like a normal savings account, but offers a higher interest rate, or APY, on one’s cash. Your money grows faster with a higher APY as it sits in your account. These interest rates, however, are variable, meaning they may go up or down any time.
The high-yield savings account earns you a better return on your money than traditional savings accounts, but you can still access it as you would in a regular savings account when you need it. If the bank collapses suddenly, deposits up to $250,000 are protected by the FDIC, which insures your money in a high-yield savings account.
- How do high-yield savings accounts differ from traditional savings accounts?
High-yield savings accounts differ from traditional savings accounts in that they offer higher interest rates, which in turn allows your money to grow faster. Unlike traditional savings accounts, high-yield savings accounts are generally offered by online banks that don’t have physical branch locations.
- What are the reasons why most high-yield savings accounts are online?
Because they operate exclusively online, high-yield savings accounts offer higher returns by nature. They do this because they get savings by not having to pay for overhead costs that traditionally come with operating physical branches, including the cost of real estate and the additional workers to work in those branches.
- What is the process of opening an online savings account?
Despite offering some of the highest APYs, online savings accounts are more difficult to access than brick-and-mortar banks, since they require you to transfer your money to a checking account before you can use it. As you won’t be able to withdraw from the account easily, it’s arguably a good thing if you’re trying to grow your emergency savings.
One of the biggest reasons to keep an emergency fund in a high-yield account is to watch it grow over time. The higher your account balance, the more compound interest you earn.
- What is the frequency of changes in savings rates?
Savings rates on high-yield savings accounts can fluctuate at any time. They usually change every few months after a Fed committee meets to adjust the federal funds rate.
- Are high-yield savings rates on the rise?
As the Fed continues to raise its benchmark rate in an effort to tamp down inflation, high-yield savings rates are increasing. The high-yield savings account APYs, which have increased so far in 2023, reflect this. And, as of now, interest rates are expected to increase even more throughout the remainder of the year.
- Are high-yield savings accounts risky?
When you open a savings account at an FDIC-insured bank, you won’t lose your money because your account is insured up to $250,000. While interest rates might drop, your cash won’t. Theoretically, your money would lose value if the inflation rate is higher than your APY, but that’s not different from a traditional savings account. Therefore, it’s safe to open a high-yield savings account.
- Is it possible to withdraw money from a high-yield savings account?
You can withdraw funds from a high-yield savings account just like you can from a traditional savings account.
- What is the maximum amount of money I can withdraw from a high-yield savings account?
High-yield savings accounts used to allow consumers to withdraw or transfer cash up to six times per month, without paying any fees. As a result of the pandemic, this rule has been removed and each bank can now decide how often savers can withdraw. The six-times-per-month rule has been adhered to by most banks, but others allow unlimited withdrawals without charge.
- Are high-yield savings accounts taxed?
A high-yield savings account’s interest is taxed as ordinary income. If the account earned more than $10 in one year, you must report the interest on your tax return.
- Are there any cons to high-yield savings accounts?
The biggest con of high-yield savings accounts is that even though they offer high-interest rates, those rates can fluctuate at any time. Because a few high-yield savings accounts do not offer ATM cards, withdrawals may also be a bit slower. Also, most online banks with high-yield savings accounts do not have physical locations, so if you’re interested in in-person banking, you’ll have to wait a bit.
More Keywords Related To High-Yield Savings Accounts:
- high yield savings accounts
- best high-yield savings account
- best high-yield savings account 2023
- high-yield savings account
- high yielding savings account