A high-yield savings account, or high-interest savings account, is a type of savings account that pays well over the average. Most high-interest savings accounts come from online banks and come with additional perks like no recurring fees, no minimum balance, and the ability to add funds and withdraw from your account online or with an app.
If you want to earn more and spend less with your savings, which is the right choice, here's what to look for in a high-yield savings account and some of the best places to find one.
What to Look For in a High-Yield Savings Account
High-yield savings accounts are about making money while keeping your money safe. At some of the biggest banks in the United States, you'll get as little as 0.01% in interest. That's earning 1¢ on $100.00 per year! To go any lower, they would have to add another zero on the wrong side of the decimal point. And the average rate in the U.S. is also very low, 0.09% (9¢ on $100.00) as of this writing.
High-interest savings accounts currently offer around 1.5% to 2% ($1.50 to $2.00 on $100.00), with just a few above 2%. The best accounts don't charge any monthly fees, have no minimum balance requirements, and make online banking and self-service easy.
Don't pay to let a bank hold on to your hard-earned money. They should pay you! While 2% interest isn't much, it's still 200 times better than 0.01% interest.
The Best High-Yield Savings Accounts
While there are a growing number of excellent savings accounts that meet our criteria of matching low costs and high-interest rates, here's a list of favorites you should consider. Keep in mind that interest rates can change often, so double-check the website of the bank to confirm the annual percentage rate (APY).
1. Ally Bank
Ally Bank Online Savings is one of our favorites because of its reasonable rates, great features, and excellent customer service. The bank charges no recurring fees and currently features a 1.25% APY. Ally is one of the top online banks with excellent checking and investing accounts too.
2. Capital One
Capital One's 360 Performance Savings has no recurring fees and offers a 1.00% rate. And it's also an excellent online bank for checking. Capital One is a high-tech bank with great add-on tools and mobile app features.
3. Discover Bank
Discover's online bank has a top-yielding Online Savings Account. With a 1.25% APY, it has rates in line with the best in the industry. This bank dropped all fees on all accounts in 2019, which makes it another good contender for all of your banking needs.
4. HSBC Direct Savings
HSBC is better known in Europe than the United States, but HSBC Direct Savings features 1.60% APY. And there are no monthly fees or ongoing minimum balance requirements. And you can open the account with just $1.
5. Citizens Bank
Citizens Bank is best known on the East Coast, but it offers banking and lending products online nationwide. The Citizens Access Online Savings Account currently yields 1.30% APY if you have at least $5,000 deposited. For deposits less than $5,000, the yield is 0.25% APY. This full-service bank has made strides in recent years to better compete in the nationwide online banking industry.
6. PenFed Credit Union
Anyone can easily join PenFed Credit Union. Once you're signed up, you can open the Premium Online Savings Account with a 1.25% APY and no maintenance fees. Credit unions are not-for-profit entities, so they tend to offer better rates than for-profit banks for many products.
Simple encourages you to open up savings goals, which are essentially sub-savings accounts inside of a regular Simple savings account. You can earn 1.40% APY with Simple. It's also another bank with no fees across the board.
Varo is a newer bank that runs primarily through the Varo mobile app. The Varo Savings account features a 1.61% APY on new accounts, which also require a Varo Bank Checking account. If you meet a particular debit card and direct deposit requirements, you'll earn 2.80% APY on balances up to $10,000.
SoFi started as a student loan company and quickly expanded also to offer banking, investing, and lending. The SoFi Money account is a hybrid checking and savings account with a 0.2% APY as of this writing. Like the others on this list, you won't run into minimum balance requirements or fees with this account.
Wealthfront Cash Account might be known as a robo advisor, but they have branched out to other financial services. Their latest offering is a savings account that offers very high levels of FDIC insurance. Wealthfront Cash offers an APY of 0.35%. It might not offer as high of an APY as other banks on this list, but because it works with multiple banks to hold your funds, you get up to $1 million in FDIC coverage compared to the normal $250,000 that is FDIC insured at other banks.
Don't Settle for High Fees or Bad Rates
There are plenty of banks thrilled to take your money, charge you fees, and pay you nearly nothing while they lend it out for a significant profit. While some of those banks may be a good investment, they are not a great place for your savings. For emergency funds and long-term savings goals, high-yield savings accounts are the best place to store your cash.