High-yield savings advantages
A high-yield savings account can earn well over 2% APY, which is much higher than the national savings average of 0.09% APY. If your money is in an account that earns a high interest rate, your balance will grow faster without any additional effort on your part. A balance of $10,000 would earn about $10 in an account with a 0.10% APY. That same balance would earn about $230 in an account with a 2.30% APY.
How to choose the best high-interest savings account
Look for accounts that have high interest rates and low service charges. You want to make sure you don’t have to pay a fee to the bank each month. Some institutions don’t charge monthly fees, while others do but will waive them if you meet a balance minimum.
Be willing to look beyond the larger, well-known banks. Many smaller institutions — including online banks — have savings accounts with attractive rates and low deposit requirements.
Accessing your funds
With online banking, you can access your account securely day or night. Online banks offer the highest savings rates on the market while charging fewer fees than traditional banks. Online banks often offer good websites and mobile apps that typically let customers deposit checks and pay bills.
Do the best online savings accounts have fixed rates?
No, rates are variable and can change over time. The accounts featured in this article are among those with the consistently highest rates.
How to open an account
Depending on the type of bank, you can open a high-rate account either online or in person. You’ll need to provide your Social Security number and contact information, along with at least one form of identification, such as a driver’s license or a passport. (For a joint account, everyone wanting access to the account must provide this information and ID.) The bank will often require you to deposit money into the new account right away. You can do that by depositing cash or checks, or through a wire transfer.
What to do if you can’t open a high-interest savings account
Occasionally, a bank may not approve an application to open an account. This is likely because of issues with a customer’s previous banking history.
Unpaid bank fees and bounced checks can result in a negative file on ChexSystems, a consumer reporting agency that financial institutions use to evaluate a prospective customer’s banking history.
There are options for customers who have a ChexSystems file, including opportunities to open alternative accounts. For more information, read our primer on what to do if you have a ChexSystems record.
How often can I take money out of a savings account?
Savings accounts are subject to a federal rule called Regulation D, which limits the number of convenience withdrawals to a maximum of six per month. Affected withdrawals include online withdrawals, overdraft protection transfers and transfers initiated by telephone. If you have more than six of these transactions each statement cycle, your bank may levy an excess withdrawal fee each time you go over the limit.
Withdrawing cash from an ATM or from a branch teller does not count toward this limit.
»Want to learn more about savings withdrawal limits? Read our primer on Regulation D.
Is my money safe in an online savings account?
In short, yes. Most online banks are federally insured by the Federal Deposit Insurance Corp., up to $250,000 per depositor. If the account is with a credit union, the account will likely be insured through the National Credit Union Administration, also for $250,000 per depositor. This means that if a bank or credit union were to fail and go out of business, you would not lose the money you have in the account, up to the insured amount.
» Want to know more about how your money is protected? Read how FDIC and NCUA insurance programs work.
What is the difference between a high-interest savings account and a money market account?
Money market accounts are a type of savings account. They generally come with high APYs, high minimum deposit requirements and some check-writing privileges. NerdWallet’s guide on money market accounts can help you learn more about these products and help you decide if a money market account is a good place to stash your funds.
A high-interest savings account, on the other hand, typically does not come with checks, though it will still offer a strong APY.
High-yield savings account terminology
Here’s a look at some important savings terms to know.
Savings account: A deposit account from a bank or credit union that typically earns interest.
Money market account: A type of savings account that often offers higher interest rates in return for a steep minimum deposit. (Think $5,000 or more.)
Interest: Money a bank pays into an account over time.
Compound interest: Compound interest is the interest you earn on both your original money and on the interest you keep accumulating. In an account that pays compound interest, the return is added to the original principal at the end of every compounding period, typically daily or monthly. Each time interest is calculated and added to the account, the larger balance earns more interest.
Annual percentage yield: The APY, or annual percentage yield, is the amount of compound interest an account earns in a year. The calculation is based on the account's interest rate and the number of times interest is paid during the year.
» Read more about 10 essential banking terms you need to know
More top choices for the best savings interest rates
Here are seven more competitive choices for high-yield savings. These banks may have a higher minimum balance to earn interest, or a slightly lower APY. But when you're shopping for the account that fits you best, they're worth checking out.
» Interested in getting money from banks? See NerdWallet's best bank account promotions and bonuses
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