Banks and credit unions that offer high yield savings accounts

High yield savings accounts exist at three types of institutions: online banks, traditional banks with online divisions, and credit unions. Online banks tend to offer the highest rates because they have lower overhead costs than brick-and-mortar branches. Traditional banks like Chase, Bank of America, and Wells Fargo offer high yield accounts online, but their rates are usually lower than online-only competitors. Credit unions offer competitive rates to their members, though you must join the credit union first, which typically requires living or working in a specific area or belonging to a particular employer or organization.

The institutions you choose from depend partly on what you already have. If you bank with Chase and want to keep everything in one place, you can open a high yield savings account there without switching. If you are starting fresh or willing to move money, online banks like Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank typically post higher rates. Credit unions like Connexus Credit Union and Pentagon Federal Credit Union also compete on rate, though membership rules vary.

Key Takeaways

  • Online banks generally offer higher rates than traditional banks because they do not maintain physical branches and can pass savings to depositors.
  • You can open a high yield savings account at your existing bank, an online bank, or a credit union, depending on which offers the rate and features you want.
  • Opening an account online takes 10 to 20 minutes and requires a government ID, Social Security number, and proof of address.
  • Your money is insured up to $250,000 per account at FDIC-insured banks and up to $250,000 per account at NCUA-insured credit unions, so institution choice does not affect safety.

How to open an account online in one sitting

Most online banks let you open an account entirely through their website or mobile app without calling anyone. You will need your Social Security number, a government-issued ID (driver's license or passport), proof of your current address (a recent utility bill or bank statement), and access to an email address and phone number. The process typically takes 10 to 20 minutes.

After you submit your information, the bank verifies your identity using a third-party service. Some institutions ask you to upload photos of your ID and address proof; others verify when ready through a database. Once approved, you can link an external bank account to transfer money in, or the bank will give you wire instructions if you want to move a large sum quickly. Most online banks let you start earning interest when ready, though the first deposit may take one to three business days to clear.

What to compare before you choose

The interest rate is the most obvious factor, but it changes frequently—sometimes weekly. Before opening an account, check the current rate on the bank's website, because rates advertised in articles or comparison sites may be outdated. Also check whether the rate applies to all balances or only balances above a certain threshold. Some banks offer a higher rate on the first $25,000 and a lower rate above that.

Other factors worth considering: whether the bank charges a monthly fee (most online banks do not), whether you can withdraw money without penalty, and whether the bank offers other products you might want later, like checking accounts or money market accounts. If you plan to move money in and out frequently, check whether the bank limits the number of transfers per month or charges for transfers to external accounts. Most do not, but some older institutions still do.

Opening an account at a credit union

Credit unions require membership before you can open any account, including a high yield savings account. Membership rules vary widely. Some credit unions are open to anyone in a geographic area; others require you to work for a specific employer, belong to a certain organization, or have a family member who is already a member. Start by searching for credit unions you might join using the CO-OP Network locator or the Alliant Credit Union website, which lists membership requirements for thousands of credit unions.

Once you confirm you are may be able to access to join, you can usually complete membership and open a savings account in the same session, either online or in person. The process is similar to opening an account at an online bank: you provide your Social Security number, ID, and proof of address. Some credit unions charge a small membership fee (typically $5 to $25) and require a minimum deposit to open the account, though many waive both. After membership is approved, you can transfer money in and begin earning interest.

Moving money into your new account

Once your account is open, you have two main ways to move money in: an electronic transfer from another bank account, or a wire transfer. Electronic transfers (also called ACH transfers) are free and take one to three business days. You provide the bank with your other account number and routing number, and the money moves automatically. This is the standard method for most people.

Wire transfers move money the same day or next business day but usually cost $10 to $30 per transfer. Use a wire transfer if you need the money in your high yield account when ready and cannot wait for an ACH transfer to clear. Some banks waive the wire fee for your first transfer. After your initial deposit, you can add money whenever you want by setting up recurring transfers or making one-time transfers through your bank's website or app.

FDIC and NCUA insurance protections

All deposits at FDIC-insured banks are protected up to $250,000 per account type per institution. This means if you open a high yield savings account at an online bank and that bank fails, your money is covered up to $250,000. If you open the same type of account at a different bank, that account is also covered up to $250,000 at that institution. The insurance is automatic—you do not need to register or do anything to set up it.

Credit unions are insured by the NCUA (National Credit Union Administration) under the same $250,000 limit per account type per institution. The protection works identically to FDIC insurance. This means the choice between an online bank, traditional bank, and credit union does not affect the safety of your money, as long as the institution is insured. You can verify FDIC insurance status on the FDIC's website and NCUA status on the NCUA's website.

What happens after you open the account

Once money is in your account, it begins earning interest at the rate posted on the day you opened the account. Interest is usually compounded daily and deposited monthly, meaning you earn interest on your interest. The rate you locked in may change after you open the account—banks adjust rates based on market conditions, and your rate can go up or down. You will receive notice of any rate change, usually by email.

You can withdraw money from your high yield savings account anytime without penalty, though the withdrawal may take one to three business days to reach your other bank account. Some banks limit the number of transfers out per month, though federal rules no longer require this limit. Check your account agreement or call the bank if you plan to move money in and out frequently. Most people use high yield savings accounts as a place to hold money they do not need when ready, so frequent transfers are uncommon.

Frequently Asked Questions

Can I open a high yield savings account if I have bad credit?

Yes. Banks do not check your credit score when you open a savings account. They verify your identity and may check ChexSystems (a banking history database) to see if you have had problems with previous accounts, but a low credit score does not disqualify you. If you have been denied a bank account in the past, ask the bank why before you explore elsewhere, because the reason matters.

Do I need a minimum deposit to open an account?

Most online banks do not require a minimum deposit to open a high yield savings account, though some require $1 or $25. Traditional banks and credit unions are more likely to require a minimum, which ranges from $25 to $500. Check the bank's website before you start the process, because the requirement is usually listed on the account details page.

How long does it take to start earning interest?

Interest begins accruing on the day your deposit clears, not the day you transfer the money. If you make an ACH transfer that takes two business days to clear, you start earning interest on day three. The interest is usually deposited to your account once per month. Some banks compound interest daily, meaning you earn interest on interest, even though the deposit happens monthly.

Can I have high yield savings accounts at multiple banks?

Yes. You can open high yield savings accounts at as many banks as you want. Each account is insured separately up to $250,000, so if you have $500,000 to save, you could open accounts at two different banks and be fully insured. Many people keep accounts at multiple banks to spread risk or to take advantage of different rates.

What if the bank lowers the interest rate after I open my account?

Banks can lower rates anytime, and they will notify you by email or mail. You can withdraw your money without penalty and move it to a bank offering a higher rate. There is no lock-in period on high yield savings accounts, so you are free to move your money whenever you want. Some people move money between banks as rates change to keep earning the highest available rate.