Best High Yield Savings Accounts in USA

A savings account is a type of bank account designed to hold funds you don’t plan to spend immediately. It has an annual percentage yield (APY), which dictates how much interest you earn on the money you keep there. You can open one of these with any bank or credit union, and you can usually contribute as much as you’d like to the account.

Banks use savings accounts to encourage people to keep money in the bank. You add your funds by direct deposit, electronic transfer, check, or some other method. In exchange, your bank pays you interest on your money, usually every month.

How much you earn depends in part on your savings account’s APY and on your balance. A higher APY leads to more money in your pocket, and a higher balance often does, too. Sometimes, banks use a tiered APY system where you qualify for a higher APY if you keep more money in the bank.

How do I access my money?

You’re free to withdraw your money from a savings account at any time, but accessing your funds isn’t always easy. Most savings accounts don’t offer check-writing capabilities or a debit card, so you have to first transfer the funds to a checking account before you can use them.

Some banks also impose limits on the number of free monthly withdrawals you can make from your savings account. This used to be required by a federal law known as Regulation D, but the government lifted this early in the COVID-19 pandemic and has yet to reinstate it. You can check with your bank to find out if your savings account has this sort of limitation.

It’s also a good idea to ask about monthly fees and balance requirements when deciding on a savings account. Some savings accounts require you to pay a monthly fee if you don’t maintain a certain balance, and this can negate all the interest you’ve earned. Fortunately, many online banks these days offer savings accounts with no maintenance fees.

What does the bank do with my money?

Banks use your savings to fund loans for their customers. Borrowers then pay interest on the loan, and your bank sends some of that interest to your savings account. A larger balance or a higher savings account interest rate results in more interest.

Here’s a look at the common types of savings accounts you’ll run into.

Traditional savings account

Traditional savings accounts are usually offered by brick-and-mortar banks. They are typically pretty easy to open and most let you directly withdraw cash through a nearby bank branch. You can manage your money online as well. But APYs tend to be pretty low, and most of these accounts carry maintenance fees if your balance falls below a certain threshold.

High-yield savings account

High-yield savings accounts are more common with online banks. These are similar to traditional savings accounts, but they offer much higher APYs and most don’t have monthly maintenance fees. This is the best choice for most people who are comfortable handling their basic banking needs online.

Money market account

Money market accounts offer the APYs of a savings account with the easier access of a checking account. Some include check-writing capabilities, a debit card, or both. However, these accounts usually have higher minimum balance requirements than typical savings accounts.

Certificate of deposit (CD) account

Certificates of deposit (CDs) usually offer higher APYs than any of the savings accounts discussed above. But you have to agree not to withdraw your funds for the full CD term. This can be anywhere from a few days to five years or more, depending on the type of CD you open. If you take your money out early, you can face penalties.

Cash management account

Cash management accounts are available through many online brokers. Money you keep in here earns some interest, and you can decide to invest it if you’d like to potentially earn even more later on. Many still give you access to the online banking features you’re probably used to. Some of these are FDIC insured, like the bank accounts listed above — this means you’ll get some or all of your money back if the bank fails. But not all of them are. If you keep funds in a non-FDIC insured account and the company goes under, you could lose that money.

Specialty savings account

A specialty savings account is a savings account that’s geared at a certain group of people. Kids’ savings accounts are a great example. These are designed for minors who may not be able to open a savings account on their own right away.

Other types of specialty savings accounts include:

• Student savings accounts
• Health savings accounts (HSAs)
• Accounts for specific goals, like Christmas Club savings accounts

Pros and cons of savings accounts

There are advantages and disadvantages that come along with savings accounts. Before deciding if a savings account suits your needs, it’s important to consider both.

A high-yield savings account earns more interest than most other savings accounts. This is known as a higher APY — or annual percentage yield. The APY on the best high-yield savings accounts can be up to eight times higher than the national average (and sometimes even higher).

High-yield savings accounts are usually found at online banks. Without a large branch network to maintain, these banks are able to pass their savings on to you in the form of higher APYs and lower fees.

Most online savings accounts carry the same FDIC insurance as traditional banks do. But because these banks don’t have branches, you often have fewer options for accessing your funds. This shouldn’t pose a serious issue for most people, though, as these accounts are intended for saving, not frequent spending.

Traditional savings accounts are usually offered by brick-and-mortar banks. Online savings accounts don’t have the overhead of running physical branches and so can offer higher interest rates. As such, the best online savings accounts are often high yield. Early on, many bank customers were concerned that hackers might gain access to their information. As a result, online banks attracted deposits by offering interest rates that brick-and-mortar banks couldn’t match.

Now, the banking world has turned upside down. Many people prefer the convenience of online banking. Indeed, traditional brick-and-mortar banks have created online systems to give their customers the same online services.

Here are some of the key differences between savings accounts at online and brick-and-mortar banks:

• Interest rates: The best online banks still offer far better rates than their brick-and-mortar counterparts, especially on basic savings accounts. Many brick-and-mortar banks pay next to nothing in interest, relying on other features to bring customers in.
• Hours of operation: Online banks are more convenient for conducting regular business at any time (although hours can vary if you need to talk to a real person). You don’t have to worry about branch location hours or what transactions your brick-and-mortar bank will let you do through an ATM.
• ATM networks: Unlike online banks, brick-and-mortar banks have extensive networks of proprietary ATMs. However, many online banks partner with a nationwide fee-free ATM network or offer ATM fee rebates.
• Customer service: Online banks typically have call centers that provide service on an extended schedule, and a few give their customers 24/7 support. Some also offer online chat assistance. However, no online bank can match the in-person relationships brick-and-mortar banks offer. These are their main competitive advantage over their internet-focused rivals.
• Account access: Most online bank transactions require customers to transfer funds electronically. This typically takes a couple of days to complete. Wire transfers are available for more time-critical needs, but you’ll often pay an extra fee. When you need quick access to your money and an ATM won’t cut it, brick-and-mortar banks let you immediately withdraw as much as you need at a branch.

The type of bank that’s best for you depends on which features are most important to you. Unless you really need to be able to visit a branch and speak to a live person, an online bank should be able to satisfy your needs most of the time. Plus, you can earn a higher APY in the process.

The best savings accounts have a high APY, no monthly maintenance fees, and FDIC insurance. Keep those things in mind as you compare your savings account options.