High yield savings accounts are offered by online banks, some credit unions, and a few traditional banks with low branch networks
A high yield savings account is a regular savings account that pays a higher interest rate than most brick-and-mortar banks. The banks that offer them are usually online-only operations — they have no physical branches, which means lower costs to run, and they pass some of those savings to you as higher interest rates.
The main providers fall into three categories: online banks built from the ground up to operate digitally (like Marcus, Ally, and American Express Personal Savings), credit unions that offer competitive rates to their members, and a smaller number of traditional banks that have created online divisions to compete. You will not find the highest rates at your neighborhood bank branch, because that bank has the expense of maintaining buildings and staff.
The rate you see advertised changes constantly — sometimes weekly — because banks adjust them based on what the Federal Reserve does and how much competition exists. This means the "best" rate today may not be the best rate next month. What matters more than chasing the highest single rate is choosing a bank that is safe and accessible to you.
Key Takeaways
- Online banks typically offer the highest rates because they have no physical branches and lower operating costs.
- Credit unions often offer competitive rates to members, and some have no minimum balance requirements.
- Your deposits are protected up to $250,000 per account at banks insured by the FDIC, and at credit unions insured by the NCUA.
- The interest rate you see is not locked in — banks change rates regularly, so compare current rates across several institutions before opening an account.
- You can open most online savings accounts entirely by phone or computer without visiting a branch.
Online banks and their typical account features
Online banks have no branches, which means you cannot walk in with cash or speak to someone face-to-face. Instead, you manage your account through a website or mobile app, and you deposit money by transferring it from another bank account or by mailing a check. Some online banks also let you deposit checks by taking a photo with your phone.
Because they operate only online, these banks can afford to pay higher rates. The tradeoff is that customer service is usually by phone, email, or chat — not in person. Most online banks have 24/7 phone support, and many have no monthly fees and no minimum balance requirements. Examples include Marcus (owned by Goldman Sachs), Ally Bank, American Express Personal Savings, and Discover Bank.
When you open an account at an online bank, you will need to verify your identity — usually by providing your Social Security number, date of birth, and current address. The bank will check your identity against public records and may ask you to confirm recent transactions on other accounts you own. This process typically takes a few minutes to a few hours.
Credit unions that offer competitive rates
A credit union is a member-owned financial institution, similar to a bank but structured as a nonprofit. Credit unions often offer savings accounts with rates that compete with online banks, and some have physical branches where you can deposit cash or speak to someone in person.
To open a savings account at a credit union, you must first become a member. Membership requirements vary — some credit unions are open to anyone in a geographic area, others are limited to employees of a specific company or members of a specific organization, and some have no restrictions at all. You can search for credit unions near you or that match your profession or background using the CO-OP Network locator or the Alliant Credit Union website.
Credit union deposits are insured by the NCUA (National Credit Union Administration) up to $250,000 per account, the same protection level as bank deposits insured by the FDIC. Some credit unions have no minimum balance and no monthly fees, though this varies by institution.
Traditional banks with online savings divisions
Some large traditional banks — the kind with branches in your neighborhood — have created separate online divisions to offer higher rates. Examples include Bank of America's online savings option and Wells Fargo's online savings account. These accounts are still backed by the same bank, so they carry the same FDIC insurance as the bank's regular accounts.
The advantage of opening with a traditional bank's online division is that you may be able to deposit cash at a branch if you need to, or speak to someone in person at a local branch. The disadvantage is that these banks often pay lower rates than pure online banks, because they have the expense of maintaining branches.
If you already have a checking account at a traditional bank, opening a savings account with the same bank is usually straightforward — you can do it online or at a branch. However, you may find a higher rate by moving your money to a different institution, even if it means setting up a new account.
How to compare rates across different banks
Interest rates change frequently, so the rate advertised today may be different next week. Before you open an account, check the current rate on the bank's website — not on a comparison site, because comparison sites sometimes show outdated information. Write down the rate, the bank's name, and the date you checked it.
Compare at least three institutions. Look at the stated APY (annual percentage yield), which includes the effect of compounding and tells you the true annual return. Make sure the account is FDIC-insured (if it is a bank) or NCUA-insured (if it is a credit union). Check whether there is a minimum balance requirement and whether the bank charges monthly fees.
Once you have narrowed your choices, read recent customer reviews on sites like Trustpilot or the Better Business Bureau to see whether people have had problems with deposits, withdrawals, or customer service. A slightly lower rate at a bank with reliable service is usually a better choice than the highest rate at a bank with frequent complaints about access to your money.
What to know about FDIC and NCUA insurance
When you open a savings account at a bank, your deposits are protected by FDIC insurance (Federal Deposit Insurance Corporation) up to $250,000 per account. This means if the bank fails, the government will reimburse you up to that amount. Credit union deposits are protected by NCUA insurance (National Credit Union Administration) with the same $250,000 limit.
The $250,000 limit applies per account, per institution. If you have a savings account and a checking account at the same bank, they are counted separately — so you could have $250,000 in savings and $250,000 in checking and be fully insured for both. If you have two savings accounts at the same bank, they are combined and the $250,000 limit applies to the total.
Before you open an account, confirm that the bank or credit union is FDIC or NCUA-insured. You can search the FDIC's Bank Find tool or the NCUA's Credit Union Locator to verify. If an institution is not insured, your deposits are not protected if the institution fails.
Opening an account online and what to expect
Most online banks let you open a savings account entirely through their website or mobile app. You will need a valid government-issued ID (usually a driver's license or passport), your Social Security number, and proof of your current address (a recent utility bill or bank statement works). The process usually takes 10 to 20 minutes.
After you submit your information, the bank will verify your identity. This may happen when ready, or the bank may ask you to confirm details or provide additional documents. Once your identity is verified, your account is usually open within a few hours, though some banks take up to one business day.
To fund your new account, you will transfer money from an existing bank account. You will need the routing number and account number of the account you are transferring from. The transfer usually takes one to three business days. Some banks also let you mail a check or deposit checks by photo, though these methods are slower.
Frequently Asked Questions
Can I move money between a high yield savings account and my checking account easily?
Yes, but it takes one to three business days. You can set up a transfer through your high yield savings account's website or app, and the money will move to your checking account automatically. Some people keep their high yield savings at a different bank than their checking account specifically to avoid the temptation to spend the money.
What happens if I need to withdraw money before the rate period ends?
Savings accounts have no withdrawal penalties or time limits — you can withdraw your money whenever you want. The interest rate is not a contract; the bank can lower it at any time, and you can move your money to a different bank if the rate drops. There is no lock-in period like there is with a certificate of deposit.
Do I need a minimum balance to open a high yield savings account?
Most online banks and many credit unions have no minimum balance requirement. Some traditional banks require $500 or $1,000 to open. Check the specific bank's requirements before you open an account — this information is usually on their website under account details or FAQs.
How do I know if an online bank is safe?
Check whether the bank is FDIC-insured by searching the FDIC's Bank Find tool on their website. If the bank appears in the search results, your deposits are protected. You can also read recent customer reviews on independent sites like Trustpilot to see whether people have had problems accessing their money or getting customer service.
Can I have a high yield savings account if I do not have a Social Security number?
Most banks require a Social Security number or ITIN (Individual Taxpayer Identification Number) to open an account. Some credit unions and banks in immigrant-friendly communities may have alternative processes — call ahead to ask. You will need to provide some form of government-issued ID and proof of address.