Banking
How to choose a high-yield savings account
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- High-yield savings accounts pay a higher APY than typical savings accounts, and online banks often offer the highest rates.
- Savings rates are variable and can go up or down at any time.
- Make sure the bank is FDIC-insured, or the credit union is NCUA-insured, before you deposit.
A high-yield savings account is a savings account that pays noticeably more interest than the typical account at a large branch bank. It is a common home for an emergency fund or money for a goal in the next few years, because your money stays easy to reach and protected.
How APY works
APY, or annual percentage yield, is the interest you earn in a year including compounding. Comparing APY lets you compare accounts that compound daily and monthly on equal terms. As a rough example, $10,000 kept for a year at a 4.00% APY earns about $400, while at 0.50% it earns about $50. Rates change, so check the current APY when you compare.
What to compare
- APY on your balance: some accounts pay the top rate only up to a certain balance, or only for an intro period.
- Fees and minimums: look for no monthly fee and a low or no minimum balance.
- Transfers: how fast money moves to and from your checking account, and whether there are withdrawal limits.
- Deposit insurance: confirm FDIC or NCUA coverage.
- Extras: savings buckets, automatic transfers and a good mobile app make saving easier.
How your money is protected
Deposits at FDIC-member banks are insured up to $250,000 per depositor, per bank, for each ownership category. Credit unions insured by the NCUA have the same limit. You can check a bank at the FDIC's BankFind tool and a credit union at the NCUA's Credit Union Locator.
Some savings apps are not banks themselves and hold your money at a partner bank. Ask which bank holds your deposits and how insurance applies.
Comparing savings accounts?
See savings optionsSavings account, CD or money market?
| High-yield savings | Certificate of deposit | Money market account | |
|---|---|---|---|
| Rate | Variable | Fixed for the term | Variable |
| Access | Withdraw any time | Penalty for early withdrawal | Withdraw any time, sometimes with checks or a debit card |
| Good for | Emergency fund | Money you will not need until a set date | Savings you may want to spend from directly |
The bottom line
Look for a competitive APY, no monthly fees and confirmed deposit insurance. Keep your emergency fund somewhere you can reach it within a day or two, and revisit your rate every so often, since savings rates move with the market.