If your savings are sitting in a traditional bank account, you might be losing money. With inflation consistently outpacing the minimal interest these accounts offer, the real value of your hard-earned cash is likely shrinking. Fortunately, there’s a powerful tool designed to help your money grow: the high-yield savings account (HYSA).
An HYSA can significantly accelerate your savings goals, whether you’re building an emergency fund, saving for a down payment on a house, or planning a dream vacation. These accounts offer interest rates far higher than the national average, allowing your money to work for you around the clock. This guide will walk you through what HYSAs are, how to choose the right one, and which accounts offer the best returns in the USA today.
What Is a High-Yield Savings Account?
A high-yield savings account is a type of savings account that pays a much higher interest rate than a traditional savings account. While the national average interest rate for standard savings accounts hovers around a meager 0.45% APY, HYSAs can offer rates of 4.00%, 5.00%, or even higher.
How can they offer such better rates? The primary reason is that most HYSAs are offered by online-only banks or the digital branches of larger financial institutions. These banks have lower overhead costs because they don’t operate physical branches. They pass these savings on to their customers in the form of higher annual percentage yields (APY).
Beyond the higher interest rates, HYSAs function just like regular savings accounts. They are safe places to store your money, you can deposit and withdraw funds, and your deposits are protected.
Factors to Consider When Choosing an HYSA
A high APY is attractive, but it’s not the only factor to consider. When comparing high-yield savings accounts, look at these key features to find the best fit for your financial situation.
Annual Percentage Yield (APY)
The APY is the total amount of interest you’ll earn on your savings in a year, including the effect of compounding interest. Since this is the primary draw of an HYSA, you’ll want to find an account with a competitive rate. Keep in mind that these rates are often variable, meaning they can change over time in response to the Federal Reserve’s interest rate adjustments.
Fees
The best high-yield savings accounts have minimal or no monthly maintenance fees. High fees can quickly eat into your interest earnings, defeating the purpose of opening an HYSA in the first place. Watch out for other potential charges, such as fees for excessive withdrawals, wire transfers, or falling below a minimum balance.
Minimum Balance and Deposit Requirements
Some banks require a minimum opening deposit to start an account or a minimum ongoing balance to avoid fees or earn the advertised APY. Many excellent online banks have no minimum requirements, making them accessible to savers at all levels. Always check these details before signing up.
FDIC Insurance
Ensure that any bank you consider is insured by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance protects your deposits up to $250,000 per depositor, per insured bank, in the event of a bank failure. This is a non-negotiable feature that guarantees the safety of your money. If you’re considering a credit union, look for equivalent insurance from the National Credit Union Administration (NCUA).
Account Access and Usability
Since most HYSAs are offered by online banks, a user-friendly website and a functional mobile app are essential. Check for features like mobile check deposit, easy fund transfers to and from external bank accounts, and accessible customer support.
Top High-Yield Savings Accounts for Maximum Returns
Here are some of the best high-yield savings accounts available in the USA, known for their competitive rates and customer-friendly features. Note: APYs are subject to change and were last updated in mid-2024.
- CIT Bank Platinum Savings: Often leads the pack with one of the highest APYs available, though it requires a higher balance to earn the top rate.
- Varo Savings Account: Offers a strong APY and has no monthly fees or minimum balance requirements, making it a great, accessible option.
- UFB Direct Secure Savings: Consistently provides a competitive APY with no maintenance fees and a user-friendly digital platform.
- Ally Bank Online Savings Account: A popular choice known for its excellent customer service, no monthly fees, and innovative savings tools like “buckets” to organize your savings goals.
- Marcus by Goldman Sachs High-Yield Online Savings: Backed by a trusted name in finance, Marcus offers a competitive rate with no fees and no minimum deposit.
- Discover Bank Online Savings: Another fee-free option with a solid APY and the backing of a major financial services company.
How to Choose the Right Account for You
With so many great options, the “best” account depends on your personal needs and habits. Ask yourself these questions:
- How much can I deposit initially? If you have a large sum to deposit, you might qualify for a top-tier APY at a bank like CIT. If you’re just starting, an account with no minimum deposit like Varo or Ally is a better choice.
- How important is brand recognition to me? If you prefer a well-known name, Marcus by Goldman Sachs or Discover might give you more peace of mind.
- Will I need any special features? If you value organizational tools, Ally’s savings buckets could be a deciding factor. If you prioritize a top-tier mobile experience, check out app reviews for each bank.
- How often will I need to contact customer service? If you anticipate needing support, look for banks renowned for their customer service, like Ally.
Tips for Maximizing Your Returns
Opening an HYSA is the first step. To truly make the most of it, follow these tips:
- Automate Your Savings: Set up automatic, recurring transfers from your checking account to your HYSA. Even small, regular contributions add up significantly over time thanks to compounding interest.
- Deposit Windfalls: Received a bonus, tax refund, or cash gift? Deposit it directly into your HYSA to give your savings an immediate boost.
- Review Your Rate Periodically: While you don’t need to chase every hundredth of a percentage point, it’s wise to check your account’s APY every few months. If it has dropped significantly below competitors, it might be time to switch.
- Keep Your Emergency Fund Separate: Use your HYSA specifically for your savings goals. This separation makes it less tempting to dip into for everyday spending.
Start Earning More Today
Switching to a high-yield savings account is one of the simplest yet most effective financial moves you can make. You stop letting inflation erode your savings and start putting your money to work. By choosing an FDIC-insured account with a high APY and low fees, you create a secure foundation for your financial future.
Take a few minutes to compare the options listed above and open the account that best aligns with your goals. Your future self will thank you.