The best high-yield savings accounts offer hearty yields, no fees and affordable minimums, plus great customer service. If you’re looking for a safe, accessible place to store some funds and still earn interest in these turbulent economic times, a high-yield savings account could be an ideal safe harbor. We surveyed roughly 250 accounts offered by more than 135 financial institutions to determine the best options for you.
Annual percentage yields (APYs) and account details are accurate as of Feb. 15, 2023.
Best high-yield savings accounts
Best high-yield savings accounts
Best high-yield savings accounts for small balances
These accounts are best suited for those just starting to build up their emergency funds. The following accounts offer some of the highest rates we’ve seen, but restrict how much of your savings can profit from those rates. Therefore, once you’ve amassed enough savings, you should consider moving for funds into an account mentioned above.
Compare the best high-yield savings accounts
National average for savings accounts
You may notice that our winners compare favorably to most savings accounts you see offered by banks.The national average rates for savings accounts, according to the Federal Deposit Insurance Corporation (FDIC) are:
Methodology
We looked at over 250 high-yield savings accounts offered by 135 financial institutions. We evaluated them to create a star rating for each. An institution with a perfect score of 100 would get five stars. One with a score of 80 would get four stars and so on. Here are the categories we analyzed and how we weighted each.
- APY: 75%.
- Fees: 10%.
- Minimum deposit: 5%.
- Minimum balance to avoid fees: 5%.
- Customer experience: 2.5%.
- Digital experience: 2.5%
We believe that potential earnings reign supreme, so APY was the most heavily-weighed factor, followed by fees. Non-APY factors still played a part, including customer experience and digital experience. But with a high-yield account, you want something that will deliver as much return as possible, and are thus willing to endure some tradeoffs.
The financial institutions we monitor include American Express Bank, Capital One, Chase, Citi Bank, Discover, TD Bank, Marcus by Goldman Sachs, TIAA Bank and USAA.
Why some banks didn’t make the cut
Not all savings accounts are made equal. Only the cream rose to the top—we cut most banks due to poor APY, high minimum deposit requirements and low customer ratings.
Many of the largest banks in the nation aren’t on the list as they typically don’t offer the most competitive rates. Relatively new and smaller financial institutions attract customers and their money by making a splash with high rates. Larger institutions don’t have the need to make waves in this way.
What is a high-yield savings account?
The term “high-yield” is more descriptive than technical; it’s a regular savings account that pays a high interest rate on deposits. The rate is subject to change depending on the overall financial market and the business needs of the bank or credit union.
Note that a high-yield savings account is still a savings account—you can’t access your funds by writing checks and your withdrawals are typically limited.
“Most banks have limits on how many transfers can be made from the savings account each month,” said Lisa Kirchenbauer at Omega Wealth Management in Arlington.
Even though the Federal Reserve cleared away Regulation D, which legally limited you to a total of six withdrawals per statement cycle, many banks keep the rule in their own books. Because of this, “it is not a good account for bill paying,” said Kirchenbauer.
A high-yield savings account is also not an investment account. The APYs offered on a savings account will almost certainly never exceed the inflation rate. Rather, a high-yield savings account is a safe place to shore up some cash that you don’t need day-to-day, but which you can access at any time.
“Savings accounts are best for money you might need in the next several months or an emergency fund,” said Seth Mullikin, CFP at Lattice Financial in Charlotte.
How does a high-yield savings account work?
A high-yield account works much like a regular savings account. You open the account and then deposit and withdraw funds when you want to, within what the rules allow. The biggest difference you may see between a traditional and a high-yield account is that a larger amount of interest is earned and deposited into your account at the end of each month.
The earned interest counts as taxable income for both state and federal tax filings. If you earn more than $10 in interest, you should receive a Form 1099-INT or a Form 1099-OID from the financial institution(s) with all the information you’ll need to file. Note that whether you receive the form or not, you’re still responsible for reporting your total income—you may need to request the form or, in the worst case, do some sleuthing.
Choosing the right high-yield savings account
Consider what’s important to you and do some research. It’s “best to compare rates and terms of use to get the best deal for you,” said Kirchenbauer.
Do you want the highest rate possible? Or is a well-recognized brand name more important? Maybe it’s worth it to select a lower rate in exchange for a better mobile app? Write down factors that are important to you to help guide you as you look around. Elements could include:
- Minimum APY.
- Maximum balance requirements.
- Maximum fees.
- ATM access.
- Physical branch near you.
- Highly-rated mobile app.
- Established brand name.
- Automated savings tools.
- No monthly withdrawal limit.
Prioritize those elements that are important to you, and keep in mind that you’re not limited to one high-yield savings account. You can have as many as you want, perhaps each with its own specific purpose. So if you’re stuck choosing between a couple, you could always open both and split your funds between them.
Who should get a high-yield savings account?
You should get a high-yield savings account if you need a quick withdrawal option on funds that you don’t need to touch more than once a week. Almost everyone should have one.
Yet, you might not need or want one though if you already have balanced investments with high earning potential and a convenient savings account with a bank you already trust. In this case, opening and keeping track of another account may be just an annoyance.
Pros and cons of a high-yield savings account
Overall, a high-yield savings account will typically provide an interest rate much higher than a traditional one while still allowing you to make withdrawals up to six times a month. However, if you’re after the highest rate of return possible, other deposit accounts and investments offer greater earning potential in exchange for more risk or less access to your funds.
Good alternatives to a high-yield savings account
Depending on how often you’d like to access your funds and the amount of risk you feel compelled to take, “good” alternatives can admittedly look very different. Here are a few alternatives to high-yield accounts that are still FDIC insured, plus one that’s not.
Money market accounts (MMAs). A hybrid daughter of checking and savings accounts, MMAs are savings accounts that allow you to access your funds with checks. They typically have higher interest rates but more restrictions than checking accounts.
Certificates of deposit (CDs) and share certificates. Certificates typically offer better rates of return than high-yield savings accounts. The trade-off is that you can’t touch your deposit while it’s earning interest without facing a financial penalty. The most common terms range from six months to five years.
Bonds. Bonds are when a government or corporation issues an IOU and pays you for your trouble. By purchasing a bond, you’re essentially giving a loan and you receive an interest payment twice a year until the bond matures. Bonds aren’t insured by the FDIC and they have no liquidity, but are considered one of the safest types of investments and they can provide a tax advantage. Therefore, bonds are an important part of your diversified long-term portfolio, but shouldn’t be used for money you may need soon.
Frequently asked questions (FAQs)
You’ll need to fill out a form or two with your personal information, including your name, address and Social Security number, but it shouldn’t take too long. You generally need to put money into the account within 15 days to finish the process of opening it.
Yes. The Internal Revenue Service (IRS) sees any interest earned that’s over $10 on any type of deposit account as taxable income. Your bank should send you a form 1099-INT each year, reporting the amount of cash your funds earned, but, even if the bank doesn’t, you’re still responsible for reporting any interest as income.
Yes, at least for now. During 2022, the Federal Reserve increased rates seven times and continued to hike up the rate in the first meeting of 2023. Fed chair Jerome Powell has intimated that more rate hikes may be coming until inflation decelerates toward the central bank’s 2% target.
It can be more convenient to get a high-yield savings account online, plus, online-only banks typically offer better rates because they want to attract customers and they don’t have to pay for physical branches. However, there isn’t an ironclad rule. It’s not necessarily better to get an account online if you value in-person banking.
