Where to find high yield savings accounts

Online banks offer the highest rates on savings accounts right now, and they do this because they have lower costs than brick-and-mortar banks. They don't pay for physical branches, tellers, or the overhead that comes with them. That savings gets passed to you as a higher annual percentage yield (APY). Banks like Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank are among the most common names you'll see, but there are dozens of others.

Traditional banks — the kind with a branch on your street — typically offer much lower rates on savings accounts. A big national bank like Chase, Bank of America, or Wells Fargo might offer 0.01% APY on a regular savings account, while an online bank might offer 4% or 5%. The difference adds up fast if you're saving a meaningful amount of money.

Credit unions also offer savings accounts, and some have competitive rates, though they vary widely depending on which credit union you join. Your rate depends on the specific institution, not on the fact that it's a credit union.

Key Takeaways

  • Online banks consistently offer the highest APY on savings accounts because they have lower operating costs than banks with physical branches.
  • Traditional banks with branches in your neighborhood typically offer rates that are 10 to 50 times lower than online banks.
  • The APY you receive changes over time as the Federal Reserve adjusts interest rates, so the highest-paying bank today may not be the highest next month.
  • You can open an account at an online bank entirely through your phone or computer, and your money is insured the same way it would be at any other bank.

How online banks keep rates high

An online bank has no branches to maintain, no tellers to pay, and no real estate costs. That means they spend far less money just to stay open. When a bank's costs are lower, it can afford to pay you more on the money you deposit. The trade-off is that you can't walk into a physical location — you manage your account through a website or app, and you deposit checks by taking a photo with your phone.

This model works well for people who don't need to deposit cash regularly or speak to someone in person. If you do need those services, you'll either have to accept a lower rate at a traditional bank or find an online bank that has partnered with ATM networks or other banks' branches to give you some physical access.

Why traditional banks offer lower rates

A bank with hundreds of branches across the country has much higher costs. Every branch needs a building, utilities, staff, and security. Those costs are real and substantial. To stay profitable, the bank has to keep more of the interest it earns rather than passing it all to you. That's why a savings account at a major national bank often earns less than 0.1% APY — sometimes far less.

Some people choose traditional banks anyway because they value being able to walk in and talk to someone, or because they already have a checking account there and like having everything in one place. That's a valid choice, but it does cost you money in the form of lower interest.

Rates change as the Federal Reserve moves

The APY you see advertised today will not be the same next month or next year. The Federal Reserve sets a target interest rate, and when that rate changes, banks adjust what they pay on savings accounts. When the Fed raises rates, online banks usually raise their rates quickly — sometimes within days. When the Fed lowers rates, banks lower theirs too, though sometimes more slowly.

This means the bank offering the best rate right now might not be the best in six months. Some people move their money between banks to chase the highest rate. Others stay put because the difference becomes small, or because moving money takes time and effort. There's no wrong choice — it depends on how much money you have and how much the rate difference matters to you.

What to check before opening an account

Before you open a high yield savings account, look at the current APY — not the name of the bank. The APY is what determines how much interest you actually earn. A difference of 0.5% APY on $10,000 means $50 per year, so it's worth comparing.

Check whether the bank has any fees. Most online banks don't charge monthly maintenance fees, but some do charge if you fall below a minimum balance or if you make too many transfers out of the account. Read the account terms to see what limits explore.

Confirm that the bank is insured by the Federal Deposit Insurance Corporation (FDIC). This means your money is protected up to $250,000 if the bank fails. Every bank mentioned in this guide is FDIC-insured, but it's worth checking before you open an account anywhere.

Moving money between banks

If you already have savings at one bank and want to move it to a higher-paying bank, the process is straightforward. You can set up an external transfer from your new bank's website or app, which lets you pull money directly from your old account. This usually takes one to three business days. Alternatively, you can withdraw the money and deposit it yourself, though that takes more steps.

Some people keep savings at multiple banks — one for emergency money they might need quickly, and another for longer-term savings they're willing to leave untouched. There's no rule against this, and it can help you take advantage of different rates or features at different banks.

Frequently Asked Questions

Is my money safe in an online bank?

Yes, as long as the bank is FDIC-insured. Your money is protected the same way it would be at a traditional bank. If the bank fails, the FDIC guarantees your deposits up to $250,000 per account. Online banks are regulated by the same federal agencies as traditional banks.

Can I withdraw money from a high yield savings account whenever I need it?

Yes, but there may be limits. Federal rules allow banks to limit the number of transfers you can make out of a savings account each month. Most banks have removed these limits, but some still have them. Check the account terms before you open an account if frequent withdrawals matter to you.

What's the difference between a high yield savings account and a money market account?

A money market account often comes with a debit card or checkbook, making it more like a checking account. A high yield savings account is purely for saving. Both are FDIC-insured and earn interest. Money market accounts sometimes offer slightly higher rates, but they may also have higher minimum balances or more restrictions on transfers.

Do I have to keep a minimum balance?

Most online banks don't require a minimum balance to open or maintain a high yield savings account. Some traditional banks do. Check the specific bank's requirements before you open an account. Even if there's no minimum, you'll earn more interest if you keep more money in the account.

How often is interest added to my account?

Interest is usually added monthly, though some banks add it daily or quarterly. The frequency doesn't change how much you earn over a year — what matters is the APY. A bank that compounds daily and one that compounds monthly will give you nearly the same result if the APY is the same.