Most traditional banks do not offer high yield savings accounts
If you walk into a Chase branch or call your local Bank of America, you will not find a high yield savings account. The major national banks — Chase, Bank of America, Wells Fargo, Citibank — offer savings accounts, but their rates are typically 0.01% to 0.05% APY. That is not a typo. You earn almost nothing.
High yield savings accounts, which currently pay 4% to 5.35% APY depending on the institution and the week, come almost exclusively from online banks and credit unions. These lenders have lower overhead costs than brick-and-mortar branches, so they pass the savings to depositors through higher rates. If you have money sitting in a traditional bank's savings account, you are leaving hundreds of dollars a year on the table.
The catch is that you cannot walk in and open one. You open it online, and your money lives in a digital account. For most people, that is not a problem — you move money in, watch it grow, and move it out when you need it. But it means understanding which banks actually offer these accounts and what the differences between them are.
Key Takeaways
- Online banks and credit unions offer high yield savings accounts; traditional brick-and-mortar banks do not.
- Current rates at online banks range from roughly 4% to 5.35% APY, while traditional banks pay 0.01% to 0.05%.
- All FDIC-insured online banks protect your deposits the same way traditional banks do, up to $250,000 per account.
- Some credit unions offer high yield savings, but you must be a member, which sometimes requires living or working in a specific area or joining an affiliated organization.
Which online banks offer high yield savings accounts
Online banks that currently offer high yield savings accounts include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank, Synchrony Bank, and LendingClub. Rates change weekly based on the Federal Reserve's decisions and competition between lenders, so the exact APY shifts. What matters is that these institutions exist to take deposits and lend money, not to sell you investment products or charge you monthly fees for checking accounts.
Each of these banks is FDIC-insured, meaning your deposits are protected up to $250,000 per account, the same as at Chase or Bank of America. The difference is purely the rate you earn. A $10,000 deposit at 0.01% earns $1 per year. The same $10,000 at 5% earns $500 per year. Over five years, that is a $2,500 difference on a single account.
You can open an account at any of these banks without having an existing relationship with them. You provide your Social Security number, proof of identity, and a way to fund the account (usually a transfer from another bank). The process takes 10 to 15 minutes online.
Credit unions that offer high yield savings
Some credit unions offer high yield savings accounts with rates competitive to online banks. The catch is membership. Credit unions are member-owned cooperatives, and membership rules vary. Some credit unions are open to anyone in a geographic area. Others require you to work for a specific employer, belong to a union, or be related to an existing member.
If you already belong to a credit union, call and ask whether they offer a high yield savings product. If you do not belong to one, you can search for credit unions you may be able to join at CO-OP or Alliant Credit Union's website. Some credit unions, like Connexus Credit Union and Pentagon Federal Credit Union, have looser membership rules and may be open to you even if you do not live in their service area.
Credit union deposits are insured by the National Credit Union Administration (NCUA), not the FDIC, but the protection is identical: $250,000 per account. The main difference between a credit union high yield savings account and an online bank account is that credit unions sometimes have lower rate ceilings or require a minimum balance.
Why traditional banks do not compete on rates
Traditional banks have physical branches, employees, real estate, and marketing budgets. Those costs are real, and they come out of the money the bank has to pay depositors. A bank with 5,000 branches nationwide cannot offer the same rate as a bank with zero branches and a website.
Traditional banks also make money differently. They earn revenue from checking account fees, overdraft fees, credit card products, and loans. A savings account is almost an afterthought — they offer it because customers expect it, not because it is a profit center. Online banks, by contrast, make money primarily from the interest they earn on loans funded by deposits. They need deposits to stay in business, so they compete aggressively on rate.
This is not a judgment on traditional banks. If you need a checking account with a debit card, a local branch, and customer service by phone, a traditional bank may be the right choice for you. But if you are looking for a place to park savings and earn interest, a traditional bank is the wrong tool.
How to compare rates across banks
Rates change constantly. A bank offering 5.35% today may drop to 5.00% next month. The best way to track current rates is to visit each bank's website directly — do not rely on comparison sites, which update slowly. Write down the APY, any minimum balance requirement, and whether the rate is may provide or variable.
Most high yield savings accounts have no minimum balance, no monthly fees, and no lock-in period. You can move money in and out whenever you want. Some banks offer slightly higher rates if you maintain a larger balance — for example, 5.35% on balances over $25,000 and 5.25% on smaller amounts. Read the fine print, but in most cases the differences are small enough that the bank's reputation and ease of use matter more than a 0.1% difference in rate.
One thing to confirm: whether the rate is a promotional rate that expires after a few months, or a standard rate that stays in place. Most online banks now offer the same rate to all new and existing customers, but some still use promotional rates to attract new deposits. If a rate looks too good to be true, check the terms and conditions.
Moving money between accounts
Once you open a high yield savings account at an online bank, you will need a way to move money in and out. Most online banks let you link an external bank account (your checking account at Chase, for example) and transfer money for free. The transfer usually takes one to three business days.
Some people keep their checking account at a traditional bank for everyday spending and bill pay, and their savings at an online bank for interest. Others move everything to an online bank that offers both checking and savings. There is no wrong answer — it depends on whether you value having a physical branch and local customer service.
If you need to move money quickly, some online banks offer a debit card or ATM access, though ATM networks vary. Ally Bank, for example, reimburses out-of-network ATM fees. Marcus does not offer a debit card or ATM access, so you have to transfer money back to your checking account before you can spend it. These details matter if you think you might need emergency access to your savings.
What happens if an online bank fails
Online banks fail rarely, but it has happened. When it does, the FDIC steps in, insures your deposits up to $250,000, and either transfers your account to another bank or sends you a check. The process is transparent and automatic — you do not have to do anything. Your money is protected the same way it would be if your traditional bank failed.
The FDIC maintains a list of all insured institutions on its website. Before you open an account, you can search the bank's name to confirm it is FDIC-insured. If a bank is not on that list, do not deposit money there, no matter what rate it offers.
Frequently Asked Questions
Can I get a high yield savings account at my current bank?
Almost certainly not, if your current bank is a traditional brick-and-mortar institution. Call and ask, but expect the answer to be no. If you want a high yield savings account, you will need to open one at an online bank or credit union. You can keep your checking account where it is.
Do I lose FDIC protection by moving to an online bank?
No. All FDIC-insured banks — online and traditional — protect your deposits the same way, up to $250,000 per account. You can verify that an online bank is FDIC-insured by searching its name on the FDIC's website before you open an account.
What if I need to withdraw money quickly from a high yield savings account?
Most online banks let you transfer money to a linked checking account in one to three business days. Some offer debit cards or ATM access for faster withdrawals. Check the bank's website for details on how quickly you can access your money in an emergency.
Are there any fees for high yield savings accounts?
Most online banks charge no monthly fees, no minimum balance fees, and no withdrawal fees. Some charge a fee if you close the account within a certain period, or if you fall below a minimum balance. Read the fee schedule on the bank's website before you open an account.
What is the difference between a high yield savings account and a money market account?
Both are savings products that earn interest, and both are FDIC-insured. Money market accounts sometimes offer a debit card or checkbook, while high yield savings accounts typically do not. Rates are usually similar. For most people, a high yield savings account is simpler and sufficient.