Best High-Yield Savings Accounts of April 2024 (Up to 5.27%)

Here is more information about high-yield savings accounts.

A high-yield savings account is a type of federally insured savings product that earns rates that are much better than the national average. They can earn around 5%. By comparison, the national average rate is 0.47%.

With a high-yield savings account, also known as a high-interest savings account, your balance can grow faster over time than it would in an average savings account. This is without additional effort on your part. Your money is working harder for you in a higher-rate account.

A high-yield savings account earns a much higher rate than a regular savings account. While some traditional savings accounts, particularly those at large national banks, earn rates as low as 0.01% APY, high-yield accounts earn many times more. Currently, rates at the best high-yield accounts earn around 5% APY.

High-yield savings accounts and money market accounts are both types of savings accounts, but MMAs typically offer debit cards and checks, with the ability to make a few purchases each month. Both types of accounts generally let you link to other deposit accounts, such as checking accounts, to make electronic withdrawals and deposits. But with the added benefit of debit cards or checks, money market accounts give easier access to your funds. This can be helpful if you need fast access to your cash. However, some MMAs also charge monthly fees and have high minimum opening deposits.

High-yield savings accounts and certificates of deposit are both federally insured deposit accounts, but CDs tend to have higher rates in return for locking in your money for a set time period. CDs are best for funds that can be put away for the entire CD term, which can typically range from a few months to five years or more. If you have a short-term savings goal for an item you’d like to purchase in a few years, consider opening a CD. Funds in high-yield savings accounts can generally be withdrawn at any time, though there may be a limit of six per month for certain types of withdrawals. Compared to a CD, a high-yield savings account is a better option for an emergency fund.

The difference between a high-yield savings account and a checking account is that a high-yield savings account is used for building your account balance, while a checking account is used for everyday spending. Some checking accounts earn interest or offer cash-back rewards, but a high-yield savings account likely pays more interest, though it may also limit certain types of withdrawals to a maximum of six per month.

» Looking for online checking? Read about the best online checking accounts

If your money is in an account that earns a strong rate, your balance will grow faster without any additional effort on your part. With a 5% APY, a savings balance of $10,000 would earn a bit more than $500 after a year. It may not make you rich, but the earnings are much better than an account with a 0.40% APY, which would earn about $40 dollars.

Look for accounts that have high interest rates and low service charges. You want to make sure you don’t have to pay a fee each month. Some institutions don’t charge monthly fees, while others do but will waive them if you meet a balance minimum.

Be willing to look beyond the larger, well-known banks. Many smaller institutions — including online banks and apps — feature good rates and low deposit requirements.

Here’s a look at benefits and drawbacks of typical high-yield savings accounts compared with other ways to grow your funds.

• Earns higher rates than other savings accounts.

• Is a deposit account, so it has federal insurance (unlike investments).

• Typically can be opened online, without the need to leave your home.

• Sometimes requires a higher minimum opening balance compared with regular savings accounts.

• While they can be opened online (a pro), some are online-only, so face-to-face customer service is not an option.

With online banking, you can access your account securely day or night. Online banks, credit unions and nonbank providers offer some of the best savings rates on the market while charging fewer fees than traditional banks. They also often offer good websites and mobile apps that typically let customers deposit checks and pay bills.

Depending on the type of financial institution, you can open an account either online or in person. You’ll need to provide your Social Security number and contact information, along with at least one form of identification, such as a driver’s license or a passport. (For a joint account, everyone wanting access to the account must provide this information and ID.) You will often be required to deposit money into the new account right away. You can do that by depositing cash or checks, or through a wire transfer.

Occasionally, your application to open an account may not be approved. This is likely because of issues with your previous banking history.

Unpaid bank fees and bounced checks can result in a negative file on ChexSystems, a consumer reporting agency that financial institutions use to evaluate a prospective customer’s banking history.

In short, yes. High-yield savings accounts at banks and credit unions are federally insured up to $250,000 per depositor, and many nonbank providers partner with banks for insurance. Accounts at banks are backed by the Federal Deposit Insurance Corp., while credit union accounts are backed by the National Credit Union Administration. This means that even if the financial institution fails, the government makes sure your money is safe and accessible. Read NerdWallet’s primer on FDIC insurance to learn more.

Here’s a look at some important savings terms to know.

Savings account: A deposit account from a financial institution that earns interest.

Money market account: A type of savings account that often offers higher interest rates in return for a steep minimum deposit. (Think $5,000 or more.)

Interest: Money a financial institution pays into an account over time.

Compound interest: Compound interest is the interest you earn on both your original money and on the interest you keep accumulating. In an account that pays compound interest, the return is added to the original principal at the end of every compounding period, typically daily or monthly. Each time interest is calculated and added to the account, the larger balance earns more interest.

Annual percentage yield: The APY, or annual percentage yield, is the amount of compound interest an account earns in a year. The calculation is based on the account’s interest rate and the number of times interest is paid during the year. A savings account with the highest APY grows faster than an account with a lower yield.

When selecting the best high-yield online savings accounts, NerdWallet uses multiple data points, including monthly fees, minimum balance requirements, APY, mobile app ratings and customer service availability. Click the financial institution’s name in the table below to read a full review.

The table below shows movement that some financial institutions have seen with savings rates over the last few months. We chose a few online institutions and two national banks to compare.

Note: Rates are accessed at the beginning of the month unless otherwise noted. Current rates may change at any time.