The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Basics of high-yield savings accounts
A high-yield savings account pays a higher interest rate on deposits than a traditional savings account. High-yield accounts help your bank balance grow faster than other options. The average national rate for savings accounts is 0.38%, but a high-yield savings account, also called a HYSA or high-interest savings account, earns up to 10 times that rate or more.
If you want to earn more interest on your money, compare today’s best high-yield savings accounts. They can boost your savings balance without much effort on your part.
How do high-yield savings accounts work?
When you put money in an account that pays a high interest rate, your money grows more than with a low-yield option. And interest in a savings account compounds — which means the interest you are paid on your cash also earns interest.
If you earn 4% on a $1,000 balance that compounds each month, your money would grow by about $40 after a year. It may not make you rich, but that's much better than in an account with a rate of, say, 0.50%. That would earn only about $5 in the same time period.
What if you keep that $1,000 in an account that earns 4% for three years? You’ll earn about $130.
When you have money in savings, compounding time frames make a difference. Some savings accounts compound daily instead of monthly, and that gives your money more opportunities to grow. You can add up how much you could save with daily, monthly or annual compounding interest using NerdWallet’s compound interest calculator.
When you have money in savings, compounding time frames make a difference. Some savings accounts compound daily instead of monthly, and that gives your money more opportunities to grow. You can add up how much you could save with daily, monthly or annual compounding interest using NerdWallet’s compound interest calculator.
Which banks have the best savings interest rates?
High-interest savings accounts are typically offered by online-focused banks and credit unions. These institutions don’t have the expense of maintaining branches like brick-and-mortar banks and credit unions do, and they can pass the savings on to customers by offering higher yields.
Many online savings accounts also have no monthly maintenance fees. That can go a long way toward boosting your bank balance.
» Understand: Learn the difference between APY and interest rate
AD
Member FDIC
Forbright Bank Growth Savings 
APY
3.85%
Min. balance for APY
$0
Member FDIC
Varo Savings Account 
APY
5.00%
Min. balance for APY
$0
Member FDIC
E*TRADE Premium Savings 
APY
4.00% for 6mo
Min. balance for APY
$0
How to choose the best high-yield savings accounts
Start by looking for banks with the highest rates; these days, anything above 4% APY is a great return. Then take a look at the requirements to open the account. With some banks, you must have a certain minimum deposit — such as $1,000. Others offer a competitive rate without minimums or restrictions.
Consider whether you'll have ATM access, good customer service, and quality mobile apps and remote deposit features. NerdWallet’s bank and credit union reviews take all these factors into account when researching banks. It’s also a good idea to confirm that the funds will be federally insured.
Consider whether you'll have ATM access, good customer service, and quality mobile apps and remote deposit features. NerdWallet’s bank and credit union reviews take all these factors into account when researching banks. It’s also a good idea to confirm that the funds will be federally insured.
Is my money safe in a high-yield savings account?
Putting your money in a federally insured high-interest savings account is safe. Funds at covered banks are insured up to $250,000 per depositor, per ownership category by the Federal Deposit Insurance Corp., or FDIC. At credit unions, the National Credit Union Administration, or NCUA, has a fund that also federally insures up to $250,000 per depositor. This means that you won’t lose your money, up to this amount, if the bank or credit union goes under.
Apart from checking your institution's website, you can make sure it's covered by searching for it using the FDIC’s BankFind search page (for banks) or the NCUA’s research page (for credit unions). To learn more, read NerdWallet’s primers on FDIC and NCUA insurance.
Apart from checking your institution's website, you can make sure it's covered by searching for it using the FDIC’s BankFind search page (for banks) or the NCUA’s research page (for credit unions). To learn more, read NerdWallet’s primers on FDIC and NCUA insurance.
Best uses for a high-yield savings account
High-yield savings accounts are a great place for your emergency fund. Your money is parked in a safe place, and the APY boosts your savings balance.
You can also use high-yield savings accounts to put money away for short-term goals, such as the down payment on a house, a big vacation or a rainy day fund to cover repair or maintenance expenses. You’ll know you’re earning interest, and there’s not the risk of losing your principal as there is with investment accounts.
An investment account may be a better way to go for longer-term savings goals, such as saving for retirement, as the returns may be higher over time. Use NerdWallet’s savings calculator to estimate your balance over time.
» Looking for more? Read our picks for the best high-interest accounts
How often do savings rates change?
Savings rates are variable and technically can change at any time. In practice, it’s common to see a bank’s rate remain the same for several weeks in a row. But if the Federal Reserve recently cut rates or increased them, you will often see several banks change their savings rates around the same time.
How to open a high-yield savings account
Depending on the type of bank or credit union, you can open a high-rate account either online or in person:
1. Provide contact information. Be prepared to share your Social Security number and 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.)
2. Sign up for online access, if you'll be managing your account with your desktop or mobile device. You’ll typically need to create a username and password to log in to the account online. For security, choose a strong password that’s hard to guess and is different from passwords you have for other accounts.
3. Make a deposit. A bank will generally let you set up a transfer from an existing bank account, set up a wire transfer, or provide a check or cash.
What happens if I can’t open a savings account?
Not everyone who applies to open a new bank account gets approved on their first try. If you apply online, for example, the financial institution may not be able to confirm your identity. Or you may have a negative banking history — such as a past unpaid bank fee — that another institution reported to a consumer reporting agency, such as ChexSystems.
If you’re unable to open a savings account, you can take steps to get your consumer file on track. For example, you may be able to open a second chance bank account. That way, you’d have an opportunity to establish a solid banking history for a few months or a year. Then, you’d be in a much better position to shop around for a higher-yield option and successfully open a new account.
If you’re unable to open a savings account, you can take steps to get your consumer file on track. For example, you may be able to open a second chance bank account. That way, you’d have an opportunity to establish a solid banking history for a few months or a year. Then, you’d be in a much better position to shop around for a higher-yield option and successfully open a new account.
The bottom line
The best high-yield savings accounts can help you grow your money faster than basic options. They pay many times more than the national average of 0.38%.
» Learn more: How much interest can I earn on $100, $1K or $10K?
