How to Find the Best High Yield Savings Accounts


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High yield savings accounts offer higher interest rates than traditional accounts, which helps you reach your financial goals faster. (iStock)

Whether you’re saving for a down payment on a house, a vacation, or just putting money aside for an emergency fund, you want to earn as much interest as possible on the money you put in the bank. A high yield savings account may be your best option.

These accounts pay a higher interest rate and therefore a better return than a regular savings account, adding to your savings faster. With the national average APY savings account at just 0.06% as of August 2021, according to the FDIC, it’s even more vital that you find a high-yielding account for your savings. (APY stands for Annual Percentage Return and refers to the interest you earn.)

Here’s how to find the best high yield savings accounts that can help you reach your financial goals faster.

What is a high yield savings account and how does it work?

A high yield savings account is a bank account that pays a significantly higher interest rate than a traditional savings account. Banks may be able to offer these rates by requiring a higher minimum balance, charging monthly fees for inactive accounts, or being an online bank only without the physical branch fees.

When you deposit money into an account, the bank can then use those deposits to lend money to other people. Interest is the fee your bank pays you for using your money. With most savings accounts, this interest is compounded, which means that you not only earn interest on the money you put in the account, but also on the interest you earn. With compound interest, even a slightly higher interest rate can make a huge difference in your savings.

Here’s an example: Suppose you have $ 5,000 in a traditional savings account and you pay 0.06% APY. After one year, you would have $ 5,003. You earned $ 3 in interest. After five years, you would have just over $ 5,015, assuming the rate stays the same and you haven’t made any further deposits into the account.

But if you put that same $ 5,000 into a high yield savings account paying 2% APY, after a year you would have $ 5,100. That’s $ 100 in interest versus $ 3 in the traditional account. In five years, you would have about $ 5,520 – again, assuming you didn’t add anything more to the account.

Credible makes it easy to compare high yield savings rates.

What Makes the Best High Yield Savings Accounts?

When shopping for a high yield savings account, you should look for a few attributes. The best high yield accounts will have high APYs, low minimum balance requirements, and low fees.

Annual percentage return, or APY

APY measures the interest you earn on your account. The higher the APY, the more interest you earn and the faster you reach your savings goals. Most banks will highlight the APY they offer on their high yield savings accounts, making it easier to compare to other accounts.

Minimum opening deposit

This is the amount of money you need to deposit to open the account. For most accounts, this is between $ 25 and $ 100, although high yield accounts may require higher amounts. Buy an account with a minimum deposit that meets your needs.

The minimum balance

The minimum account balance is the amount you must have in your account in order to earn interest. Some high yield savings accounts don’t have a minimum balance, which means you’ll earn the full APY no matter how much you have in your account. But other accounts may have a minimum balance of $ 10,000 or more to earn the advertised interest rate.

FDIC Insurance

FDIC deposit insurance protects your money in the event of your bank failing. Check that the bank offering the high yield savings account you choose is FDIC insured.

Method of composition

Interest can be compounded daily, monthly, quarterly, annually, or somewhere in between. The more frequently your interest is compounded, the faster your savings will grow. The best high yield savings accounts are compounded daily.

Deposit and withdrawal options

Banks may allow you to use direct deposit, online transfer, check deposit, or other methods to put money into a high yield savings account. Think about how you plan to save and make sure the account you choose has this option. Remember, though: Federal law limits your transactions to a maximum of six withdrawals or transfers from a savings account each month. So you won’t want to use this account for your daily expenses.

Low fees

Banks may charge a monthly maintenance fee to their savings accounts, but most will offer ways to avoid the fees, such as maintaining a minimum balance, making regular deposits, or signing into another bank account. The best high yield savings accounts won’t have fees or easy ways to avoid fees.

Where can I find the best high yield savings accounts?

You can find high yield savings accounts at many financial institutions, from traditional banks and credit unions to online-only banks.

  • Traditional institutions: Traditional banks may offer high yield savings accounts. These offers may be available exclusively online or require you to hold other accounts with the same bank. An account with a physical bank or credit union gives you the option of in-person service and the ability to deposit money.
  • Online Banks: High yield savings accounts are more commonly found at online banks only. These institutions are able to offer higher rates because they do not have the costs of maintaining a network of physical branches. But with a high yield online savings account, you might not have access to ATMs or the ability to deposit money. You also won’t have a branch to go to if you need in-person help with your account.

With Credible, you can compare the rates of high yield savings accounts from various financial institutions within minutes.

How to get a high yield savings account?

High yield savings accounts are generally easy to open.

  • Compare the prices. The first step is to find the best type of savings account for you. Shop around using a site like Credible to compare APYs and other account features.
  • Apply for an account. Most banks with high yield savings accounts have an online application. All you will usually need is your social security number or tax ID number, address, name, and date of birth.
  • Fund your account. When you open your account, you will need to make a first deposit. It can be as little as $ 1 or $ 5, or as large as $ 100 or more. You can usually do this by wire transfer from another bank account. You can also mail a check, use mobile app check deposit, or send a wire transfer.

Best High Yield Savings Accounts: 6 Banks to Consider

When looking for high yield savings accounts, you can use a site like Credible to compare the APY and minimum balances of different banks. While eligibility requirements vary, the following three banks are credible partners with high yield savings accounts worth checking out. The prices are in effect in September 2021.

American Express National Bank

  • APY: 0.40%
  • Minimum balance: $ 0

Discover the Bank

  • APY: 0.40%
  • Minimum balance: $ 0

Wealth front

  • APY: 0.10%
  • Minimum balance: $ 1

Other banks to consider

Here are three other credible banks assessed. Keep in mind that these banks are not offered through Credible, so you will not be able to easily compare your rates with them on the Credible platform as you can with partner banks. The prices are in effect in September 2021.

Allied bank

  • APY: 0.50%
  • Minimum balance: $ 0

Bank of live oaks

  • APY: 0.50%
  • Minimum balance: $ 0

Marcus by Goldman Sachs

  • APY: 0.50%
  • Minimum balance: $ 0

Methodology: How Credible Rated the Best High Yield Savings Accounts

Credible chose the best high yield savings accounts purely for the following factors:

  • APY of 0.10% or more
  • Minimum balance required of $ 0 or $ 1

Are High Yield Savings Accounts Safe?

Yes, high yield savings accounts are safe. Unlike investments, you won’t lose money in a high yield savings account. In virtually all cases, high yield savings accounts are offered by financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Deposits up to $ 250,000 are protected against loss in the event of bank failure.

If you’re ready to find a high yield savings account that’s right for you, use Credible to compare rates.

Alternatives to high yield savings accounts

If you’re looking for relatively secure ways to earn interest on your savings, a high yield savings account isn’t your only option. Here are some other ways to save.

  • Certificate of Deposit, or CDs: Also called term deposits, CDs allow you to earn a higher interest rate in exchange for depositing your money into the account for a certain length of time. The longer the period, the higher your APY tends to be. But keep in mind that you will usually be subject to penalties for withdrawing money early.
  • Money market account: A money market account is like a cross between a savings account and a checking account. You will earn interest and may be able to write checks on this account, but you are limited to six withdrawals or transfers per month. These accounts are also insured by the FDIC or the NCUA.

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