What Is a High-Yield Savings Account?

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One of the simplest and safest ways to let your money earn more is by opening a high-yield savings account, which offers a much higher interest rate than traditional savings accounts.

Keep reading to learn more about high-yield savings accounts, and find out if they’re a good choice to grow your money.

What Is a High-Yield Savings Account?

As the name suggests, a high-yield savings account is one that offers higher interest rates than standard savings accounts, giving you much more bang for the buck. There is no set industry standard for “high yield,” but as a general rule you should expect the account to offer an annual percentage yield that earns 10 to 25 times more than the typical standard savings account.

You can find high-yield savings accounts at all types of financial institutions, including traditional banks, online banks and credit unions. But online banks tend to have the best rates because they have lower overhead than other financial institutions, allowing them to offer higher APY on their accounts.

High-Yield Savings Accounts vs. Traditional Savings Accounts

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High-yield and traditional savings accounts function in much the same way. They are both deposit accounts that let you earn interest on your money, and are typically used by customers saving for a home down payment, emergency fund, dream vacation or some other financial goal. Because of federal regulations, you’re limited to six free withdrawals or transfers per statement cycle (though that limit was temporarily suspended during the COVID-19 pandemic).

The main difference between traditional savings accounts and high-yield savings accounts is the interest you earn. As GOBankingRates noted, the average savings account interest rate as of August 2021 was 0.06% APY, though many large U.S. banks pay rates as low as 0.01% APY.

In contrast, the best high-yield savings accounts offer rates of 0.40% and higher, which means your money earns a much better return. Some high-yield accounts also come with perks such as no monthly fees or ATM cards.

What To Consider Before Opening a High-Yield Savings Account

The main thing to consider before opening a high-yield savings account is whether it meets your personal financial needs. You’ll obviously be looking for an account that offers high interest rates, otherwise it defeats the purpose of looking for a high-yield savings account in the first place. Beyond that, you might value other features as well.

For example, if you want an account that offers quick and easy access to your money, the Synchrony Bank High Yield Savings account lets you access it with an ATM card, wire transfer or electronic transfer. The Ally Online Savings Account is a good choice if you want to do your banking in one place because account holders can also open a checking account.

Are High-Yield Savings Accounts Worth It?

If you are comfortable with digital-only banking and need extra incentive to save more, the all-mobile Varo Bank Savings Account offers a tiered APY program that offers higher rates if you meet certain requirements. For customers who value free and flexible accounts, Discover and Marcus by Goldman Sachs both feature no monthly service fees or minimum deposit requirements. Once you’ve prioritized what you want from a high-yield savings account, keep in mind other factors.

Other Things To Consider:

  • Federally insured: The best way to protect your money is to find a high-yield savings account at a bank or credit union that is protected by the Federal Deposit Insurance Corporation or National Credit Union Administration.
  • Fee structure: A great interest rate isn’t so great if your return is eaten up by high fees, so do your homework and look for a savings account with no or low monthly maintenance and other fees.
  • Customer reviews: Take the time to find out what other customers have to say about the financial institution’s customer service, technology, products and features.
  • Minimum balance requirements: If the account has minimum balance requirements, your balance either has to meet those requirements during each statement cycle or you’ll owe a fee. Online banks usually don’t have minimum balance requirements.
  • Initial deposit requirements: It is also important to find out the initial deposit requirement. The lower the initial deposit requirement, the better.
  • Monthly transaction limit: Many bank accounts limit the number of monthly transactions you can make from an account, which can sometimes determine if you’re eligible to have monthly maintenance fees waived. You need to be aware of how many deposits or withdrawals you can make each month.
  • Access to digital banking: If you like to bank on the go, choose an account with mobile and online banking. Nowadays, it’s hard to find one without it.

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High-Yield Savings Accounts With the Best Rates

Because the main point of a high-yield savings account is to get the best return for your money, you’ll want to compare rates at different banks to ensure you find one that’s competitive with the rest of the field. Here’s a list of banks that offered some of the highest rates as of November 2021. Keep in mind that rates are subject to change, and might involve meeting certain requirements.

Bank APY
Prime Alliance Bank 0.60%
Vio Bank 0.51%
Ally Bank 0.50%
Synchrony 0.50%
Live Oak Bank 0.50%
Marcus by Goldman Sachs 0.50%
TAB Bank 0.50%
CIT Bank 0.42%-0.50%
Capital One 0.40%
American Express National Bank 0.40%
PNC 0.40%

Gabrielle Olya contributed to the reporting for this article.

Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on accounts is accurate as of Nov. 9, 2021.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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