Who offers high yield savings accounts right now

Online banks offer the highest rates because they have lower overhead than brick-and-mortar branches. Names you may recognize include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank, and Capital One 360. Smaller online banks like Wealthfront, Betterment, and Vanguard Digital Advisor also hold savings accounts with competitive rates. The actual rate each one pays changes weekly or monthly, so the leader today may not be the leader next month.

Traditional banks—Chase, Bank of America, Wells Fargo, Citibank—offer high yield savings accounts, but their rates are typically lower than online competitors. You pay for the convenience of a physical branch and the ability to deposit cash in person. Credit unions often pay rates between online banks and traditional banks, and membership requirements vary by location and employer.

Money market accounts, which function like savings accounts but may include check-writing, are offered by the same banks and credit unions. Brokerage firms like Fidelity, Charles Schwab, and E*TRADE hold cash management accounts that pay interest on uninvested money. Treasury money market funds, sold through brokerages and some banks, hold short-term government debt and pay rates that track the federal funds rate.

Key Takeaways

  • Online banks consistently pay higher rates than traditional banks because they operate without physical branches and pass savings to depositors.
  • The bank offering the highest rate this month may not offer it next month, so comparing rates across multiple providers is necessary before opening an account.
  • Credit unions and money market accounts are alternatives that may pay competitive rates, though access and minimum balances vary by institution.
  • All deposits at FDIC-insured banks and NCUA-insured credit unions are protected up to $250,000 per account holder per institution, regardless of the rate paid.

How to find the current highest rate

Rate comparison sites like Bankrate, DepositAccounts, and DepositAccounts track rates across hundreds of institutions and update them daily. These sites let you filter by account type, minimum balance, and whether you need a physical branch nearby. The rates shown are current as of the date listed, but they change frequently—a rate quoted on Monday may be lower by Friday.

Call or visit the bank's website directly to confirm the rate before opening an account. The advertised rate applies only to new deposits, and some banks offer a promotional rate for a limited time before dropping to a lower standard rate. Read the terms carefully to see when the promotional period ends and what the rate will be after.

Federal Reserve data shows that rates on high yield savings accounts tend to move in the same direction as the federal funds rate, which the Federal Reserve sets. When the Fed raises rates, banks typically raise their savings rates within days or weeks. When the Fed cuts rates, banks cut savings rates more slowly, so high yield accounts may stay competitive for a few months after a rate cut begins.

Minimum balances and account requirements

Most online banks have no minimum balance requirement to open a high yield savings account, though some require $1 to $25 to fund the account initially. A few require $10,000 or more to earn the advertised rate, and others pay a lower rate if your balance falls below a threshold. Check the account terms before you open—the difference between "no minimum" and "$10,000 minimum" changes which bank makes sense for you.

Some banks charge a monthly maintenance fee if your balance drops below a certain amount or if you do not meet other conditions. Online banks rarely charge maintenance fees, but traditional banks often do. Credit unions may charge fees or require membership dues, though many waive fees for members who maintain a minimum balance or set up direct deposit.

How deposits are insured and what that means

The FDIC (Federal Deposit Insurance Corporation) insures deposits at member banks up to $250,000 per depositor per bank. This means if the bank fails, you get your money back up to that limit, regardless of the rate it was earning. The NCUA (National Credit Union Administration) provides the same protection for credit union deposits.

If you have more than $250,000 to save, you can split it across multiple banks to stay fully insured. For example, $250,000 at Bank A and $250,000 at Bank B are both fully covered. Some people use a service called IntraFi, which automatically spreads deposits across multiple banks within a network, but this is rarely necessary for personal savings.

Money market funds held at a brokerage are not FDIC-insured because they are investments, not bank deposits. The fund itself is not at risk of disappearing, but the value of your shares can fluctuate slightly. Treasury money market funds are backed by U.S. government debt, so the principal is secure, but the interest rate paid is lower than a high yield savings account at a bank.

Moving money in and out of a high yield account

Most high yield savings accounts allow unlimited transfers in and out, though some banks limit the number of withdrawals per month. Federal regulations once capped savings account withdrawals at six per month, but that rule was suspended in 2020 and has not been reinstated. Check your bank's terms to see if they impose their own limit.

Deposits typically arrive within one to two business days if you transfer from another bank account. Withdrawals to your external bank account take one to three business days. If you need cash immediately, you cannot withdraw from a high yield savings account at an ATM—you must transfer to a checking account first, which takes time.

Some online banks offer ATM networks or reimburse ATM fees charged by other banks, which makes withdrawing cash easier. Others do not, so you may need to transfer money to a checking account to access it. Ask about ATM access before opening an account if you withdraw cash regularly.

Tax reporting and interest income

Interest earned in a high yield savings account is taxable income. The bank sends you a 1099-INT form in January showing how much interest you earned in the previous year. You report this on your tax return, and you owe federal income tax on it at your marginal tax rate. Some states also tax savings account interest.

If you earned $10 or more in interest during the year, the bank must send you a 1099-INT. If you earned less, the bank may not send a form, but you still owe tax on the interest. Keep your own records of interest earned so you can report it accurately.

Comparing high yield savings to other places for cash

A high yield savings account pays more interest than a traditional savings account at the same bank, but less than a certificate of deposit (CD) if you lock your money away for a set term. CDs currently pay 4% to 5.5% depending on the term, but you cannot withdraw the money without a penalty. A high yield savings account lets you access your money anytime.

Money market accounts pay rates similar to high yield savings accounts and may offer check-writing or debit card access. Treasury bills (short-term government debt) pay rates close to high yield savings accounts and are backed by the U.S. government, but you must buy them in $100 increments and they mature on a fixed date. For most people saving money they might need soon, a high yield savings account is simpler.

Frequently Asked Questions

Can I move my money out whenever I want without a penalty?

Yes. High yield savings accounts have no withdrawal penalties or lock-in periods. You can move money out the same day you request it (though it takes one to three business days to arrive at another bank). This is different from a CD, which charges a penalty if you withdraw early.

Do I have to keep a certain amount of money in the account to earn the advertised rate?

It depends on the bank. Most online banks pay the advertised rate on all balances, no matter how small. Some require $1,000 or $10,000 minimum to earn the top rate. Check the account terms before opening—the bank's website lists the minimum balance requirement clearly.

What happens to my rate if the Federal Reserve cuts interest rates?

Your rate will drop, but usually not immediately. Banks cut savings rates more slowly than they raise them. After a Fed rate cut, your high yield account may stay competitive for a few months before the bank lowers the rate. You can switch to a different bank if the rate becomes uncompetitive.

Is my money safe if the bank fails?

Yes, up to $250,000. The FDIC insures deposits at member banks, so if the bank fails, you get your money back. Check that the bank displays the FDIC logo or states it is FDIC-insured. Credit unions are insured by the NCUA up to the same limit.

Can I use a high yield savings account as my main checking account?

Not easily. Most high yield savings accounts do not come with a debit card or checkbook, and transfers take one to three business days. They are designed for money you do not need to spend immediately. Use a checking account for daily spending and a high yield savings account for money you want to earn interest on.