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High-Yield Savings Accounts

High-yield savings accounts come with more flexibility than certificates of deposit and less risk than other investments — plus higher interest rates.

Eric Rosenberg Eric Rosenberg Edited by Ashley Harrison Updated July 6, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. By refinancing your mortgage, total finance charges may be higher over the life of the loan.
Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

If you’re looking for a secure place to save money for an emergency or a long-term financial goal, a high-yield savings account can be a great option. You can find high-yield accounts through traditional banking institutions or online.

While most traditional savings accounts pay interest, it’ll typically be at a very low rate. High-yield savings accounts, however, often provide savers with a more robust interest rate.

Here’s what you should know about high-yield savings accounts:

  • Compare high-yield savings accounts
  • What is a high yield savings account?
  • Who should get a high-yield savings account?
  • How to open a high-yield savings account
  • Types of savings accounts
  • What to look for in a high-yield savings account

Compare high-yield savings accounts

If you’re not sure where to start, here are several options for high-yield savings accounts. Keep in mind that none of these accounts require you to maintain a monthly balance, and they don’t charge monthly maintenance fees.

The options in the table below are Credible partners:


Discover Bank Online Savings

The online savings account through Discover Bank provides savers with a 1.10% APY. Interest accrues daily, compounds monthly, and is paid to your account each month. There’s no minimum initial deposit requirement and no insufficient funds fee.

American Express High Yield Savings Account

The American Express high-yield savings account will give you 1.00% APY. Interest accrues daily, compounds monthly, and is paid to your account each month. You can open the account with $1, although any account that remains at $0 for 180 days will be automatically closed.

Wealthfront Cash

The Wealthfront Cash account offers savers a 1.40% APY. Interest accrues daily, compounds monthly, and is paid to your account each month. You can open the account with just $1.

Good to know: Compound interest allows you to earn interest on both the money you’ve saved and the interest that your money has already earned.

What is a high-yield savings account?

A high-yield savings account is a type of savings account that typically offers above-average interest rates. The national average interest rate on standard savings accounts is only 0.07% as of May 2022, according to the Federal Deposit Insurance Corporation (FDIC). But with a high-yield savings account, you could get a much higher rate of return.

This higher interest rate can make a high-yield savings account ideal if you’re saving for an emergency fund, vacation, new car, down payment, and more.

💵 See How Much You Could Save 💵

*National average accurate as of September 2020 and is subject to change.

Under FDIC Deposit Insurance Regulations, deposits in insured institutions are eligible for deposit insurance. A high-yield savings account may be insured by the FDIC for up to $250,000 per depositor.

Pros of a high-yield savings account

  • Higher interest rates than a traditional savings account
  • FDIC insured to protect your money
  • Easy access to funds

Saving your money in a high-yield savings account gives you an excellent combination of growth, security, and accessibility. Not only can you count on your savings to grow faster than it would in a traditional savings account, but you can rest assured that your money, up to coverage limits specified under FDIC Deposit Insurance Regulations (12 CFR 330; 12 CFR 360; 12 CFR 370), will never lose principal nor disappear in case of a bank failure, since it’s insured by the FDIC.

Good to know: The majority of high-yield savings accounts are offered by online banks or traditional banks with a robust online banking system. This means it’ll be easy for you to manage your savings account online or through a mobile banking app.

Cons of a high-yield savings account

  • Lower return than you might get on other types of investments
  • May not have a physical bank location

Though high-yield savings accounts have a lot to offer savers, they shouldn’t be considered as a replacement for a checking account.

Even though many high-yield savings accounts offer ATM access, there may be no brick-and-mortar bank locations, making it tougher to access your money in an emergency.

Keep in mind: Though high-yield savings accounts offer better interest rates than traditional savings accounts, these rates may not outpace inflation, which means your money could lose buying power over time. So, you shouldn’t think of a high-yield savings account as a wealth-building investment.

Who should get a high-yield savings account?

Most of us could benefit from a high-yield savings account. It’s important to save for emergencies and other goals you might have — and if you’re saving anyway, you might as well get a higher interest rate with a high-yield savings account.

Keep in mind that it generally takes a month or more to see returns on a savings account. So if you’re planning to save money for a longer period of time, a high-yield savings account could be a good idea.

Once you’ve hit your savings goals, you might consider putting additional funds into investments. Just keep in mind that investing generally comes with some risk, while a high-yield savings account has little inherent risk to your money.

What if I won’t be saving for long? If you’re only planning to save for a few weeks, a checking account might be a better option.

You likely won’t earn any interest with a checking account, but it will give you a place to set aside your money with easy access.

Check Out: What Is the Debt Snowball Method?

How to open a high-yield savings account

Opening a high-yield savings account — whether online or in-person — is a quick and easy process. Follow these steps to get started:

  • Choose a high-yield savings account. When comparing account options, make sure you consider the interest rate, compounding frequency, fees, penalties for exceeding six withdrawals per month, and accessibility. This includes whether the account comes with an ATM card, if there’s a physical branch you can visit, and the typical transfer time when you move money to a different institution.
  • Complete the account application. This will generally be a relatively quick and easy process. You’ll need to provide several pieces of personal information, such as your contact information and Social Security number. However, unlike getting a loan, your credit score and history generally aren’t a factor for getting a new savings account.
  • Fund your new account. You’ll likely have multiple ways to deposit money into your new account. In most cases, you may be able to link to another bank account to transfer the funds online. Depending on the bank, other funding options might include mailing a check, depositing a check using the bank’s app, or a wire transfer.

Find your high-yield savings account
Compare APY and estimated earnings from our banking partners

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Other types of savings accounts

Depending on the bank or credit union you choose, you might have a few savings options to choose from on top of high-yield savings accounts.

Here are some commonly available types of savings accounts:

  • Traditional savings accounts typically offer lower interest rates compared to other types of savings accounts. They might also have minimum balance requirements to avoid monthly service fees.
  • Certificates of deposit (CD) let you earn a higher interest rate by locking your funds away for a certain amount of time. Typically, the longer you lock up your money, the higher the interest rate you’ll earn. For example, you might place your funds in a CD for six months, a year, or even five years, depending on the type of CD you choose.
  • Money market accounts act like a hybrid between a savings account and checking account. You can earn more interest than with most standard savings accounts, but still have access to your money through checks and ATMs.

Learn More: Using the Debt Avalanche Method to Pay Off Debt

What to look for in a high-yield savings account

Here are a few things to keep in mind when considering a high-yield savings account:

  • Annual percentage yield (APY): APY is the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a 365 day period (366-day period in a leap year), and is expressed as a percentage. This is usually one of the most important factors to look at for a savings account.
  • Minimum balance: Some banks require you to maintain a minimum balance to keep your high-yield savings account open. If your balance dips below this amount, you might be charged a fee. Several high-yield savings accounts are available without minimum balance requirements — and with no fees.
  • Compounding method: When your interest is compounded, it’s calculated and added to your account. Most savings accounts compound interest either daily or monthly (or both, in some cases). This might have a slight effect on how much interest you’ll earn.
  • Ways to withdraw or deposit funds: Depending on the account, withdrawal and deposit options might include ATM access with an ATM card, online transfers, wire transfers, or mobile check deposits.



About the author
Eric Rosenberg
Eric Rosenberg

Eric Rosenberg is an expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

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