Current rates range from 4.25% to 5.35% APY, depending on the bank and how often rates change

A high-yield savings account (HYSA) pays you interest on the money you deposit. The rate you earn depends on which bank you choose and when you open the account. Right now, the highest rates sit between 4.25% and 5.35% annual percentage yield (APY). That means if you deposit $10,000, you could earn $425 to $535 per year in interest alone, paid into your account monthly or daily.

The catch: these rates are not locked in. Banks raise and lower their rates based on what the Federal Reserve does with its benchmark rate. When the Fed raises rates, banks tend to raise HYSA rates within days or weeks. When the Fed cuts rates, banks cut HYSA rates just as fast—sometimes faster. A rate that is 5.35% today might be 4.50% in six months if the Fed moves.

Traditional savings accounts at big banks (Chase, Bank of America, Wells Fargo) typically pay 0.01% to 0.05% APY. Online banks and credit unions offer the higher rates because they have lower overhead costs and compete directly for deposits. You will earn 50 to 100 times more interest in a HYSA than in a regular savings account at a major bank.

Key Takeaways

  • High-yield savings accounts currently pay between 4.25% and 5.35% APY, but rates change whenever the Federal Reserve adjusts its benchmark rate.
  • Online banks and credit unions offer the highest rates because they have lower operating costs than traditional brick-and-mortar banks.
  • Your interest is FDIC-insured up to $250,000 per account holder per bank, so the money you earn is protected even if the bank fails.
  • Interest compounds daily or monthly depending on the bank, meaning you earn interest on your interest, though the effect is small on balances under $50,000.
  • You can move your money to a different bank if rates drop, but most HYSAs have no penalty for withdrawals or transfers.

How much you actually earn depends on your balance and how long you keep it there

The APY is an annual rate, but interest accrues (builds up) daily or monthly. If you deposit $5,000 at 5.00% APY and leave it untouched for one year, you earn $250. If you deposit $5,000 at 5.00% APY for six months, you earn roughly $125. The longer your money sits in the account, the more interest you collect.

Most banks calculate interest daily but pay it monthly. That means your balance grows a tiny bit each day, and at the end of the month, the accumulated interest lands in your account. Some banks pay interest weekly or quarterly instead. The difference is small—daily compounding earns you a few dollars more per year than monthly compounding on a $10,000 balance—but it adds up over time.

If you add money to the account during the year, that new deposit also earns interest from the day it arrives. If you withdraw money, you stop earning interest on the amount you took out. Some banks charge a fee if you make more than six withdrawals per month, though this rule has loosened since 2020. Check your bank's withdrawal policy before you open an account.

Online banks and credit unions offer the best rates right now

Online-only banks like Marcus, Ally, American Express Personal Savings, and Wealthfront Cash Account currently offer rates at or near the top of the market. Credit unions like Connexus and Pentagon Federal also compete for deposits with high rates. These institutions have no physical branches, so they spend less on real estate and staff, and they pass those savings to you in the form of higher interest rates.

Traditional banks with branches—Chase, Bank of America, Wells Fargo, Citibank—pay much lower rates on savings accounts, usually 0.01% to 0.05% APY. They make money from loans and investment products, not from paying interest on deposits. If you bank with them for convenience, you are trading higher interest for the ability to walk into a branch.

Some online banks offer promotional rates for new customers—a rate that is higher than their standard rate for the first three to six months. After the promotional period ends, your rate drops to their regular rate. Read the fine print to see when the promotion ends and what your rate will be after that.

Your money is protected up to $250,000 per bank

Every dollar you deposit in a high-yield savings account at an FDIC-insured bank is protected up to $250,000 if the bank fails. This protection covers both your original deposit and the interest you earned. If you have $100,000 in a HYSA earning 5% APY, and the bank fails after one year, you get back your $100,000 plus the $5,000 in interest—all protected.

The $250,000 limit applies per depositor, per bank. If you have two accounts at the same bank (a savings account and a money market account, for example), the FDIC counts them together toward your $250,000 limit. If you have accounts at two different banks, each account gets its own $250,000 protection. Credit unions offer similar protection through the National Credit Union Administration (NCUA), also up to $250,000 per account.

This protection is automatic—you do not need to do anything to activate it. The bank is required by law to carry FDIC insurance, and the insurance is paid for by the bank, not by you.

Rates have fallen from their 2023 peak and may fall further

In 2023, some HYSAs paid as high as 5.35% to 5.50% APY. The Federal Reserve had raised its benchmark rate to fight inflation, and banks competed aggressively for deposits. As of early 2024, rates have stabilized in the 4.25% to 5.35% range, with most top-tier banks offering between 4.75% and 5.25%.

If the Federal Reserve cuts its benchmark rate, banks will cut HYSA rates in response. A cut of 0.25% by the Fed typically leads to a 0.25% cut in HYSA rates within one to three weeks. If the Fed cuts rates by a full percentage point, HYSA rates could fall to 3.25% to 4.35% range. Conversely, if the Fed raises rates again, HYSA rates will rise with them.

You cannot predict what the Fed will do, but you can monitor your rate. If your bank's rate drops significantly and another bank is offering a higher rate, you can transfer your money without penalty. Most HYSAs allow unlimited transfers to external accounts, and the transfer usually takes three to five business days.

Compare rates across multiple banks before you decide

Rates change frequently, so the highest rate today may not be the highest rate next week. Before you open an account, check the current rates at five to ten banks. Sites like Bankrate, DepositAccounts, and the banks' own websites show current rates. Look for the APY, not just the interest rate—APY accounts for how often interest compounds and gives you the true annual return.

Beyond the rate, consider these factors: Does the bank allow unlimited transfers, or does it charge a fee after six per month? Is there a minimum deposit to open the account? Can you manage the account online, or do you need to visit a branch? Does the bank offer a promotional rate, and if so, when does it end? Some banks also offer perks like no monthly fees or no minimum balance requirements.

Once you open an account, set a reminder to check your rate every three to six months. If your bank's rate falls more than 0.50% below the market leader, moving your money to a higher-paying bank takes about a week and costs nothing.

How to move money between high-yield savings accounts

If you find a bank offering a better rate, you can transfer your money without closing your old account. Most banks let you initiate an external transfer online. You provide the new bank with your old bank's routing number and your account number, and the new bank pulls the money over. This usually takes three to five business days.

Alternatively, you can withdraw the money from your old bank (by check, wire transfer, or debit card) and deposit it into the new bank. This is slower and leaves your money vulnerable for a few days, so the electronic transfer is safer. Some banks offer a bonus for new customers who deposit a certain amount within a set timeframe—$100 to $300 is common—so timing your transfer to capture a bonus can add a little extra to your earnings.

You do not lose any FDIC protection when you move money between banks. Your new bank's FDIC coverage begins the moment your deposit lands in the account.

Frequently Asked Questions

Can I withdraw money from a high-yield savings account whenever I want?

Yes. HYSAs are savings accounts, not certificates of deposit (CDs), so you can withdraw your money anytime without penalty. Some banks limit you to six withdrawals per month, though this rule is less common now. Check your bank's policy before you open an account. Transfers to another bank usually do not count toward the withdrawal limit.

What is the difference between APY and interest rate?

Interest rate is the percentage the bank pays on your balance. APY (annual percentage yield) is the true annual return, accounting for how often interest compounds. If a bank compounds interest daily, the APY will be slightly higher than the stated interest rate. Always compare APY, not the interest rate, when choosing between banks.

Do I have to pay taxes on the interest I earn?

Yes. Interest earned in a HYSA is taxable income. At the end of each year, your bank sends you a 1099-INT form showing how much interest you earned. You report this on your tax return. If you earned $500 in interest and you are in the 22% tax bracket, you owe roughly $110 in federal taxes on that interest.

Is a high-yield savings account the same as a money market account?

They are similar but not identical. Both pay interest and are FDIC-insured. Money market accounts sometimes offer check-writing or debit card access, while HYSAs typically do not. Money market accounts may have higher minimum balances. For most people, a HYSA is simpler and offers comparable rates.

What happens to my interest if the bank fails?

The FDIC protects both your deposit and the interest you earned, up to $250,000 total. If your bank fails, the FDIC transfers your account to another bank or pays you directly. You do not lose your interest or your principal.