Are High-Yield Savings Accounts Safe? Can You Lose Money In a High-Yield Account?

In a worst-case scenario, a savings account will pay no interest, meaning your funds don't grow at all. But you would never lose the money you put into the account, other than due to fees you've been assessed. So it's important to choose an account where you can easily avoid paying any fees. As for losing money due to a bank failure, the vast majority of banks—whether physical or online—are covered by the Federal Deposit Insurance Corporation (FDIC) , which protects banking customers by insuring up to $250,000 of their deposits per institution if the bank fails. The U.S. government similarly backs credit union customers for up to $250,000 by providing insurance through the National Credit Union Administration (NCUA) . That means whether your institution is a traditional brick-and-mortar bank with branches or is an online bank or credit union, and whether it’s big or small, your deposits up to $250,000 are equally safe and protected. Just be sure to check for the words “FDIC member” or the FDIC logo on the website of any bank where you’re considering doing business (or NCUA, if it’s a credit union).

Which Banks Pay the Highest Savings Account Rates? Where Can I Earn 5%?

The top-paying institutions for savings accounts vary, with no one bank perpetually leading the rate rankings. In general, the top rate contenders tend to be online operations, whether owned by a physical bank or set up as a fully online-only institution. You can always find today's highest rates—currently well above 5%—and the institutions that offer them by regularly checking our ranking in this article. Or for a list that is exclusive to banks (no credit unions), you can check our daily ranking of the best banks for savings accounts .

Why Don't I Recognize the Banks in Your Rankings?

We track the rates of over 100 banks and credit unions every weekday. While we do check the rates at big banks—including the five largest banks of Chase, Bank of America, Wells Fargo, Citi, and U.S. Bank—their rates aren't usually high enough to make our ranking. That's because large banks typically don't need to attract deposits in the way that smaller institutions do. Other institutions may not appear in our ranking because they don't meet our qualification criteria, such as not being available to customers in at least 40 states, significantly limiting the balance on which you can earn the high-yield APY, or not offering what qualifies as a high yield rate.

Why Are Most High-Yield Savings Accounts Online?

Online-only banks, or the online operations of traditional banks, are able to avoid a lot of overhead costs by not having to build, maintain, and staff any physical branches. As a result, they can put those costs savings to use by offering higher interest rates that will attract customers and their deposits.

Will I Be Taxed on My High-Yield Savings Account?

What any bank offers in interest—whether paid on a savings, checking, money market, or CD account—will need to be reported on your annual tax return. You'll be able to see on your monthly statement or online register how much you were paid each month, and at the end of the calendar year, it will be taxed along with all of your other income from employment and other sources. The bank where you hold your high-yield savings account will not tax you directly, but in January of each year, they will send you and the IRS a Form 1099-INT indicating how much interest you were paid in the previous calendar year. You must then report this interest income on your tax return.

Do High-Yield Savings Account Rates Change?

The APY on a savings account is variable, meaning what it pays when you first open your account will most likely change sometime in the future, and it can change at any time without warning. Whether the rate goes up or down, and how often it changes, is largely influenced by the Federal Reserve . When the Fed adjusts the federal funds rate , banks and credit unions often follow suit in the same direction. That said, rate changes among savings accounts are not typically a daily or weekly event. Barring recent moves by the Fed, rates often remain at the same level for weeks or months at a time.

Is a High-Yield Savings Account Worth It?

When interest rates are moderate to high, you stand to earn dramatically more on your money in the bank if you open an outside savings account that pays one of the country's most competitive rates. Here are some examples: An average balance of $2,000 will earn just $9.00 over the course of a full year if held in a savings account paying the national average of 0.45%, but will earn $100 in a 5.00% high-yield account. If you have a large balance that averages $20,000 over a year, your gains from opening a high-yield account jump into the hundreds, with a 5.00% account paying $1,000 compared to just $50 from the 0.25% savings account. Having a separate high-yield account also can make it easier to reach your savings goals. Setting up a monthly automated transfer from your checking account to your high-yield account can be an easy way to stick to a "pay yourself first" strategy. So in short, yes, it's worth opening a high-yield savings account since you'll earn far better returns on money that's just sitting in the bank, as well as perhaps helping you build your savings more quickly.

What Are the Downsides to a High-Yield Savings Account?

There are few drawbacks to putting some of your money into a high-yield savings account. The primary downside is that your money will likely reside at a different institution than where you do your primary banking. As a result, you may not be able to instantaneously transfer money from your high-yield savings to your primary checking account, as transfers between banks generally take 1-3 days. This issue can be easily handled, however, by making sure you keep some level of cash cushion at the bank where you have your checking, enabling you to make a quick transfer to checking if you need it.

Which Banks Do You Track for High-Yield Savings Accounts?

Every business day, we check the savings account rate for about 100 banks and credit unions that offer their accounts to customers nationwide. They include the following: 5Star Bank, Abington Bank, ableBanking, Affirm, Alliant Credit Union, Ally Bank , Amalgamated Bank, American Express , American Heritage Federal Credit Union, Axos Bank, Bank5 Connect, Bank5 Connect, Bank7, BankPurely, BankPurely, Barclays , Bask Bank , Blue Federal Credit Union, BluPeak Credit Union, BMO / BMO Alto, Bread Savings, BrioDirect, Capital One , CFG Bank, Chime , CIBC USA, CIT Bank, CIT Bank, CIT Bank, Citi , Citizens Access, CNB Bank Direct, CNB Bank Direct, Colorado Federal Savings Bank, CommunityWide Federal Credit Union, ConnectOne Bank, Credit Karma, Customers Bank, Digital Federal Credit Union, Discover , DollarSavingsDirect, E*TRADE Bank, Elements Federal Credit Union, Elements Financial, EmigrantDirect.com, EverBank, Evergreen Bank Group, First Foundation Bank, First Internet Bank, Fitness Bank, FNBO Direct, Forbright Bank, Hanscom Federal Credit Union, iGObanking, iGObanking, Ivy Bank, Jovia Financial Credit Union, Laurel Road, Lending Club, Live Oak Bank, Marcus by Goldman Sachs , MemoryBank, Milli, mph.bank, MutualOne Bank, My Banking Direct, MySavingsDirect, Nationwide by Axos, nbkc bank, Neighbors Bank, Newtek Bank, North American Savings Bank, Northfield Bank, Northpointe Bank, ONE, One American Bank, Panacea Financial, Pen Air Federal Credit Union, PenFed Credit Union, Popular Direct, Presidential Bank, Prime Alliance Bank, Primis Bank, Quontic Bank, Quorum Federal Credit Union, RBMAX, Rising Bank, Salem Five Direct, Sallie Mae Bank, SFGI Direct, SmartyPig, Synchrony Bank, TAB Bank, TotalDirectBank, UFB Direct, Upgrade, USAlliance Financial, Valley Direct, Vio Bank, VirtualBank, Web Bank, Western State Bank, and Workers Credit Union.

Best High-Yield Savings Accounts of July 2024

My Banking Direct, High Yield Savings Account – 5.55% APY

Required opening deposit: $500
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: No
Mobile check deposit: Yes
Checking accounts available: Yes
CDs available: Yes
Overview: My Banking Direct is an internet-only division of New York Community Bank, which was founded in 1859 and operates more than 200 branches in five states.

Poppy Bank – 5.50% APY

Required opening deposit: $0
Minimum balance requirement: $1,000 to earn stated APY
Monthly fee: None with electronic statements; otherwise $5
ATM card: Yes
Mobile check deposit: No
Checking accounts available: Yes
CDs available: Yes
Overview: Founded in 2005, Poppy Bank is based in Santa Rosa, California, and operates 18 branches across the state, as well as serves nationwide customers online.

Note: This rate is guaranteed for 90 days from the date the account is opened.

Forbright Bank, Growth Savings – 5.30% APY

Required opening deposit: Any amount
Minimum balance requirement: Any amount
Monthly fee: None
ATM card available: No
Mobile check deposit: No
Checking accounts available: No
CDs available: Yes
Overview: Formerly Congressional Bank, an FDIC member since 2003, Forbright Bank is the result of a 2022 rebranding. It operates four physical branches in Maryland and Virginia and serves nationwide customers online.

Vio Bank, Cornerstone Money Market Savings Account – 5.30% APY

Required opening deposit: $100
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: No
Mobile check deposit: Yes
Checking accounts available: No
CDs available: Yes
Overview: Vio Bank is the online banking division of MidFirst Bank, an Oklahoma institution established in 1911 that is among the Top 100 largest U.S. banks.

Note: Although this account has "money market" in its name, it offers no check-writing privileges and instead operates like a savings account.

North American Savings Bank, E-Savings – 5.30% APY*

Required opening deposit: $10,000
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: No
Mobile check deposit: Yes
Checking accounts available: No
CDs available: Yes
Overview: Established in 1927, North American Savings Bank operates more than a dozen branches in the Kansas City area, while offering a menu of online banking products to customers nationwide.

*Not available to residents of Kansas and Missouri

BrioDirect, High-Yield Savings Account – 5.30% APY

Required opening deposit: $5,000
Minimum balance requirement: $25 to earn stated APY
Monthly fee: None; $5 with paper statements
ATM card: No
Mobile check deposit: Yes
Checking accounts available: No
CDs available: Yes
Overview: BrioDirect is an online-only bank operated by Webster Bank, which merged with Sterling National Bank in 2022.

Ivy Bank, High-Yield Savings Account – 5.30% APY

Required opening deposit: $2,500
Minimum balance requirement: $2,500 to earn stated APY
Monthly fee: None
ATM card: No
Mobile check deposit: Yes
Checking accounts available: No
CDs available: Yes
Overview: Ivy Bank is an online-only division of Cambridge Savings Bank, which has been serving the greater Boston area since 1834.

TAB Bank, High Yield Savings Bank – 5.27% APY

Required opening deposit: $0
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: No
Mobile check deposit: Yes
Checking accounts available: Yes
CDs available: Yes
Overview: Established in 1998 with a sole location in Ogden, Utah, TAB Bank offers its line of banking products exclusively online.

TotalDirectBank, Money Market Account – 5.26% APY

Required opening deposit: $25,000
Minimum balance requirement: $2,500 to earn stated APY
Monthly fee: None
ATM card: No
Mobile check deposit: Yes
Checking accounts available: No
CDs available: Yes
Overview: TotalDirectBank is an online-only operation of City National Bank of Florida, established in Miami in 1946.

Note: TotalDirectBank is available to customers nationwide except for Florida residents.

Note: Although this account has "money market" in its name, it offers no check-writing privileges and instead operates like a savings account.

Jenius Bank, Savings – 5.25% APY

Required opening deposit: $0
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: No
Mobile check deposit: No
Checking accounts available: No
CDs available: No
Overview: Jenius is the digital banking division of SMBC MANUBANK, part of the SMBC group, which has offices worldwide and U.S. headquarters in New York.

Newtek Bank, Personal High Yield Savings – 5.25% APY

Required opening deposit: $0
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: No
Mobile check deposit: No
Checking accounts available: No
CDs available: Yes
Overview: FDIC-insured since 1963 as National Bank of New York City, Newtek is the bank's 2023 rebranded identity, which operates one branch each in New York and Miami while serving nationwide customers online.

UFB Direct, Secure Savings Account – 5.25% APY

Required opening deposit: $0
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: Yes
Mobile check deposit: Yes
Checking accounts available: No
CDs available: No
Overview: UFB Direct is an internet-only division of Axos Bank, which was founded in 2000 and operates a branch in San Diego and one in Las Vegas.

Evergreen Bank Group, High-Yield Online Savings – 5.25% APY

Required opening deposit: $100
Minimum balance requirement: Any amount
Monthly fee: None
ATM card: Yes
Mobile check deposit: Yes
Checking accounts available: Yes
CDs available: Yes
Overview: Headquartered in Oak Brook, Illinois, Evergreen Bank Group is a locally owned bank established in 1999.

CFG Bank, High Yield Money Market Account – 5.25% APY

Required opening deposit: $1,000
Minimum balance requirement: $1,000 to earn stated APY
Monthly fee: None with $1,000 ongoing balance; otherwise, $10/month
ATM card: No
Mobile check deposit: Yes
Checking accounts available: Yes
CDs available: Yes
Overview: Headquartered in Baltimore with two brick-and-mortar branches in that area, CFG offers select banking products online to customers throughout the country.

Note: Although this account has "money market" in its name, it offers no check-writing privileges and instead operates like a savings account.

Upgrade, Premier Savings – 5.21% APY

Minimum opening deposit: $0
Minimum ongoing balance: $1,000 to earn the stated APY
Monthly fee: None
ATM card: No
Mobile check deposit: No
Checking accounts available: Yes
CDs available: No

Compare the Best High-Yield Savings Accounts

Institution	APY	Required Opening Deposit	Minimum Balance
My Banking Direct	5.55%	$500	Any amount
Poppy Bank	5.50%	Any amount	$1,000
Forbright Bank	5.30%	Any Amount	Any amount
Vio Bank	5.30%	$100	Any amount
North American Savings Bank	5.30%	$10,000	Any amount
BrioDirect	5.30%	$5,000	$25
Ivy Bank	5.30%	$2,500	$2,500
TAB Bank	5.27%	Any amount	Any amount
TotalDirectBank	5.26%	$25,000	$2,500
Jenius Bank	5.25%	Any amount	Any amount
Newtek Bank	5.25%	Any amount	Any amount
UFB Direct	5.25%	Any amount	Any amount
Evergreen Bank Group	5.25%	$100	Any amount
CFG Bank	5.25%	$1,000	$1,000
Upgrade	5.21%	Any amount	$1,000

Why You Should Trust Us

Investopedia collects savings account rates from over 100 banks and credit unions every weekday. When ranking high-yield savings account rates, we look at factors that will help readers choose the best savings account, like minimum opening deposit. We also research banks and credit unions to provide unbiased, comprehensive reviews to ensure our readers make the right decisions for their needs. Investopedia launched in 1999 and has been helping readers find the best high-yield savings account rates since 2019.

What Is a High-Yield Savings Account?

As the name implies, high-yield savings accounts pay much higher interest rates than traditional ones. Often offered online, whether by an internet-only bank or the online division of a brick-and-mortar bank, they're a type of savings account that's based on the idea of holding your savings wherever it can earn a competitively high yield, even if that's a different bank than where you hold your checking account.

The difference in savings account interest rates can be dramatic, with the top accounts in the country typically offering 10 to 12 times the national average rate. And you can still keep your checking account where it is, because it's simple to link a high-yield savings account to your primary account for easy transfers.

Reasons to Open a High-Yield Savings Account

Stashing some of your cash in a savings account is smart whether you're saving for something specific, or just want to sock money away for when you'll need it in the future. For instance, one common reason to open a savings account is for building up an emergency fund. By putting your emergency money in a high-yield account, you'll be able to boost your balance with monthly interest earnings, while also leaving your funds fully accessible should a financial emergency arise.

Other common reasons to open a high-yield savings account are to reach a specific goal, such as buying a house or a car, sending your son or daughter to college, or going on a special vacation. When you have a savings target in mind, earning as much return on your cash as you can will help you reach your goal more quickly.

Why Different Banks Pay Different Savings Account Rates

Each bank is a business that has different needs for customer deposits, and each operates in its own regional market. As a result, some banks have to work harder to attract funds, such as smaller banks with names you may not be familiar with.

Also important is the lending activity the bank is undertaking. If, for instance, a bank is in a strategic push to build its commercial lending portfolio, it will need to attract more customer deposits in order to fund those loans it hopes to make.

Rates at an institution can also change from time to time. Perhaps they'll offer a promotional APY for a period of time, to boost up their deposits balance, but then lower it after they've accumulated enough funds.

Common Savings Account Terms to Understand

When researching high-yield savings accounts to find the best one for you, be sure you understand what these commonly used terms mean.

Minimum opening deposit or initial deposit - Some bank accounts—whether a savings, checking, or money market account—stipulate a minimum deposit you need to make to open the account. It could be quite low, like $25, or could be as much as $25,000 for some high-balance accounts. And some accounts have no requirement, letting you open the account with no money deposited. Note that if an account has a initial deposit requirement but then no minimum ongoing balance, you do not need to keep that money at the bank after your initial deposit.
Minimum balance requirement or ongoing balance - Unlike a minimum initial deposit, a minimum balance requirement refers to the least amount of money you can keep in the account on an ongoing basis. For instance, a bank may require your balance to stay at or above $100 or $1,000 for its account—or any other amount the bank prefers. Falling below the minimum requirement could mean being hit with a fee, or could instead mean you won't earn the high-yield interest rate on the account. So be sure the account you choose either has no minimum ongoing balance or one that you feel confident you can always stay above.
Monthly maintenance fee - Banks and credit unions charge various types of fees. Unlike ones triggered by a transaction, such as an insufficient funds fee or a wire transfer fee, the monthly service fee is a standard fee you could be charged every statement cycle. Many accounts do not have a monthly maintenance fee, while some others provide ways for you to avoid the fee each month. Be sure you understand the fee rules for any account you're considering.
Mobile check deposit - The ability to deposit checks using the camera on your smartphone or tablet—rather than having to take the check to a branch—is called mobile check deposit or remote check deposit. Most institutions' mobile apps offer this as an easy way to get money deposited into your account.
External or ACH transfer - The electronic process of moving funds between two financial institutions is called an external or ACH transfer. Virtually every high-yield savings account allows you to send or receive external transfers so that you can easily move money in and out of your savings account.

Pros and Cons of High-Yield Savings Accounts

Pros

Higher APY than traditional savings accounts
Ability to withdraw or deposit funds at any time
Extremely safe, with virtually no risk
Excellent vehicle for an emergency fund or saving for a big goal
In times of rising rates, your APY may go up

Cons

Earning a top yield may require opening an account with a new institution
Some accounts have withdrawal limits of six per month
Easy access can make it tempting to dip into savings
Account could have a fee or minimum balance requirement
In times of decreasing rates, your APY may go down

Who Is a High-Yield Savings Account Best For?

Anyone with surplus savings in the bank can benefit from a high-yield savings account. If you have more money in the bank than you need to hold in your checking account, high-yield savings accounts offer a way to sock some of those funds away to earn an especially high annual percentage yield (APY). High-yield savings accounts are also well suited to those comfortable with internet or mobile banking, as moving money in and out of an online savings account must generally be done on your computer or via a mobile banking app on your phone.

Hilarey Gould, Editorial Director for Financial Products and Services at Investopedia

I first opened a high-yield savings account with American Express in 2019. The rate at the time was about half of what it is now, and because I have seen it go higher over the years, I've urged friends and family to open high-yield savings accounts, too. While Amex doesn't offer the top rate nationwide, it has a great mobile app, which is how I do most of my banking. I can see my high-yield savings account right next to my credit cards, and can easily deposit money from my checking to my savings via the app.

When choosing the best savings account for you, you'll want to check the rules of the account, such as whether it limits the number of withdrawals you can make in a month, and if you'll be assessed a monthly maintenance fee. Lastly, check that the bank is an FDIC member (or an NCUA member if it's a credit union) so that your money is insured by the federal government—up to $250,000 per depositor—should the bank or credit union fail. Online reviews of a bank's customer service may also prove useful.

Transfers between different institutions will take one to three days to complete, so be sure to keep enough of a cash cushion either in your checking account or in a linked savings account at that same institution. That way you won’t run into trouble if you can’t get funds from your high-yield account for a couple of days.

Alternatives to High-Yield Savings Accounts

High-yield savings accounts are just one vehicle for stashing your cash, and they often pay the highest APYs. But there are several alternatives for holding your funds until you need them.

High-Yield Savings Account vs. Checking Account

While the easiest place to keep surplus funds is in your checking account, this has two major downsides. First, money kept in your everyday checking account is very easy to spend, making it difficult to leave earmarked as savings. Second, checking accounts tend not to pay any interest—or if they do, the rate is a pittance. A high-yield savings account offers an opportunity to earn a reasonable return on your money.

Some high-yield or rewards checking accounts do exist, with rates that are more competitive. But these accounts require jumping through some hoops—sometimes every month—in order to earn their high rate. Still, if you're a heavy debit card user, one of the best rewards checking accounts may be a good option for you.

High-Yield Savings Account vs. Traditional Savings Account

There is no formal definition of how high a rate needs to be to qualify as "high yield". In short, it's up to each institution how to name their savings accounts. Traditional banks and credit unions more often offer traditional savings accounts, while online banks are more likely to offer a high-yield savings account. But again, the distinctions are fuzzy, rather than hard-and-fast rules.

High-Yield Savings Account vs. Money Market Account

A money market account operates very much like a savings account, with the exception that it allows writing checks. In the past, money market accounts typically imposed high minimum deposit requirements in exchange for higher rates than savings accounts. This has shifted in recent years, however, with savings and money market accounts both having a variety of required minimum balances—including no-minimums accounts. In addition, high-yield savings accounts often pay more competitive rates than money markets, though sometimes you can find a higher APY among the top-paying money market accounts.

High-Yield Savings Account vs. Certificate of Deposit (CD)

If some of your savings can be socked away and not touched for a period of time, you may be able to earn a higher rate with a certificate of deposit. CDs require you to commit your funds to remain on deposit for a number of months or years, imposing a penalty if you request to withdraw the funds before the CD’s maturity date. But in exchange, your interest rate is locked and guaranteed, even if the Fed lowers rates. Our daily ranking of the best nationwide CDs can lead you to the highest available APYs no matter the CD term you choose.

Non-Bank Alternatives to a High-Yield Savings Account

There are also a number of options that don't involve banks and credit unions:

Money market fund or cash management account - If you have a brokerage account, you can also keep some of your cash in a money market fund or a cash reserve account. Just be sure you research the yields, as many of these options pay a far inferior return than what you can earn by instead putting your money in a high-yield savings account.
I bonds - The U.S. Treasury offers I Series savings bonds, known as I bonds, whose rate is indexed to current inflation rates. Though I bonds can sometimes offer very attractive rates, your return is unpredictable because the interest rate is recalculated every May and November. I bonds offer other advantages, such as tax flexibility, but they also require your funds to stay fully locked for the first 12 months, without exception.
U.S. Treasuries - Another way to earn a return on your cash is to lend it to the U.S. government by purchasing a T-bill, which is a Treasury note having a duration of 1 year or less. Treasuries are considered one of the safest investments in the world, but their rates are not always as high as the best high-yield bank accounts. One advantage of earnings from T bills is that earnings are only taxed at the federal level.
Bond funds - Though it’s difficult to thoroughly research individual corporate or municipal bond offerings, you can put your money in a bond ETF, which represents a bundle of various bonds. Though you can easily enter and exit a bond ETF, bond returns are not guaranteed, and losses in value could erode your principal investment.

If you have a brokerage account, you can also keep some of your cash in a money market fund or a cash reserve account. Just be sure you research the yields, as many of these options pay a far inferior return than what you can earn by instead putting your money in a high-yield savings account. It is also easy to link a high-yield savings account for transferring funds in and out of your brokerage account.

What Is APY—And Why It Matters in Choosing an Account

Once you've decided to open up a new high-yield savings account, you'll want to do your homework to make sure you're choosing the best one for your needs. Searching for a top annual percentage yield (APY) is a good starting point when choosing a high-yield savings account, as you'll want to earn a competitive rate.

Though the interest rate can change, it makes sense to choose an account that is paying one of the highest rates in the country, since the higher your rate, the more interest you'll collect every month and every year. Also, through the power of compounding, you can make interest off your interest, and the higher the APY on your account, the better.

But beyond the interest rate, you'll also want to make sure the account either doesn't have a minimum balance requirement, or has one that you feel confident you can regularly maintain. Also, note if there is a minimum balance required to earn the top APY.

How to Open a High-Yield Savings Account

After comparing the best high-yield savings account and landing on a choice, the next step is to open the account online. Here's how that generally works:

The bank or credit union will ask you to provide various personal information, including your social security number, since your interest earnings will be reportable to the IRS.
The bank's account opening process will also involve security measures designed to ensure you are who you say you are.
You'll also be presented with one or more options on how to fund your account. The most common method is by ACH transfer from another bank, and you'll be provided with instructions on how to set this up.
Alternatively, some institutions allow you to make your initial deposit with a debit card, a credit card, or even a paper check sent through the mail.

Once the application process is completed, you may be able to set up online banking right away, or you may need to wait a day or two for your account to be fully opened.

Frequently Asked Questions

Are High-Yield Savings Accounts Safe? Can You Lose Money In a High-Yield Account?

In a worst-case scenario, a savings account will pay no interest, meaning your funds don't grow at all. But you would never lose the money you put into the account, other than due to fees you've been assessed. So it's important to choose an account where you can easily avoid paying any fees.
As for losing money due to a bank failure, the vast majority of banks—whether physical or online—are covered by the Federal Deposit Insurance Corporation (FDIC), which protects banking customers by insuring up to $250,000 of their deposits per institution if the bank fails. The U.S. government similarly backs credit union customers for up to $250,000 by providing insurance through the National Credit Union Administration (NCUA).
That means whether your institution is a traditional brick-and-mortar bank with branches or is an online bank or credit union, and whether it’s big or small, your deposits up to $250,000 are equally safe and protected. Just be sure to check for the words “FDIC member” or the FDIC logo on the website of any bank where you’re considering doing business (or NCUA, if it’s a credit union).
Which Banks Pay the Highest Savings Account Rates? Where Can I Earn 5%?

The top-paying institutions for savings accounts vary, with no one bank perpetually leading the rate rankings. In general, the top rate contenders tend to be online operations, whether owned by a physical bank or set up as a fully online-only institution. You can always find today's highest rates—currently well above 5%—and the institutions that offer them by regularly checking our ranking in this article. Or for a list that is exclusive to banks (no credit unions), you can check our daily ranking of the best banks for savings accounts.
Why Don't I Recognize the Banks in Your Rankings?

We track the rates of over 100 banks and credit unions every weekday. While we do check the rates at big banks—including the five largest banks of Chase, Bank of America, Wells Fargo, Citi, and U.S. Bank—their rates aren't usually high enough to make our ranking. That's because large banks typically don't need to attract deposits in the way that smaller institutions do. Other institutions may not appear in our ranking because they don't meet our qualification criteria, such as not being available to customers in at least 40 states, significantly limiting the balance on which you can earn the high-yield APY, or not offering what qualifies as a high yield rate.
Why Are Most High-Yield Savings Accounts Online?

Online-only banks, or the online operations of traditional banks, are able to avoid a lot of overhead costs by not having to build, maintain, and staff any physical branches. As a result, they can put those costs savings to use by offering higher interest rates that will attract customers and their deposits.
Will I Be Taxed on My High-Yield Savings Account?

What any bank offers in interest—whether paid on a savings, checking, money market, or CD account—will need to be reported on your annual tax return. You'll be able to see on your monthly statement or online register how much you were paid each month, and at the end of the calendar year, it will be taxed along with all of your other income from employment and other sources.
The bank where you hold your high-yield savings account will not tax you directly, but in January of each year, they will send you and the IRS a Form 1099-INT indicating how much interest you were paid in the previous calendar year. You must then report this interest income on your tax return.
Do High-Yield Savings Account Rates Change?

The APY on a savings account is variable, meaning what it pays when you first open your account will most likely change sometime in the future, and it can change at any time without warning.
Whether the rate goes up or down, and how often it changes, is largely influenced by the Federal Reserve. When the Fed adjusts the federal funds rate, banks and credit unions often follow suit in the same direction.
That said, rate changes among savings accounts are not typically a daily or weekly event. Barring recent moves by the Fed, rates often remain at the same level for weeks or months at a time.
Is a High-Yield Savings Account Worth It?
When interest rates are moderate to high, you stand to earn dramatically more on your money in the bank if you open an outside savings account that pays one of the country's most competitive rates. Here are some examples:
- An average balance of $2,000 will earn just $9.00 over the course of a full year if held in a savings account paying the national average of 0.45%, but will earn $100 in a 5.00% high-yield account.
- If you have a large balance that averages $20,000 over a year, your gains from opening a high-yield account jump into the hundreds, with a 5.00% account paying $1,000 compared to just $50 from the 0.25% savings account.
Having a separate high-yield account also can make it easier to reach your savings goals. Setting up a monthly automated transfer from your checking account to your high-yield account can be an easy way to stick to a "pay yourself first" strategy.
So in short, yes, it's worth opening a high-yield savings account since you'll earn far better returns on money that's just sitting in the bank, as well as perhaps helping you build your savings more quickly.
What Are the Downsides to a High-Yield Savings Account?

There are few drawbacks to putting some of your money into a high-yield savings account. The primary downside is that your money will likely reside at a different institution than where you do your primary banking. As a result, you may not be able to instantaneously transfer money from your high-yield savings to your primary checking account, as transfers between banks generally take 1-3 days.
This issue can be easily handled, however, by making sure you keep some level of cash cushion at the bank where you have your checking, enabling you to make a quick transfer to checking if you need it.
Which Banks Do You Track for High-Yield Savings Accounts?

Every business day, we check the savings account rate for about 100 banks and credit unions that offer their accounts to customers nationwide. They include the following:
5Star Bank, Abington Bank, ableBanking, Affirm, Alliant Credit Union, Ally Bank, Amalgamated Bank, American Express, American Heritage Federal Credit Union, Axos Bank, Bank5 Connect, Bank5 Connect, Bank7, BankPurely, BankPurely, Barclays, Bask Bank, Blue Federal Credit Union, BluPeak Credit Union, BMO / BMO Alto, Bread Savings, BrioDirect, Capital One, CFG Bank, Chime, CIBC USA, CIT Bank, CIT Bank, CIT Bank, Citi, Citizens Access, CNB Bank Direct, CNB Bank Direct, Colorado Federal Savings Bank, CommunityWide Federal Credit Union, ConnectOne Bank, Credit Karma, Customers Bank, Digital Federal Credit Union, Discover, DollarSavingsDirect, E*TRADE Bank, Elements Federal Credit Union, Elements Financial, EmigrantDirect.com, EverBank, Evergreen Bank Group, First Foundation Bank, First Internet Bank, Fitness Bank, FNBO Direct, Forbright Bank, Hanscom Federal Credit Union, iGObanking, iGObanking, Ivy Bank, Jovia Financial Credit Union, Laurel Road, Lending Club, Live Oak Bank, Marcus by Goldman Sachs, MemoryBank, Milli, mph.bank, MutualOne Bank, My Banking Direct, MySavingsDirect, Nationwide by Axos, nbkc bank, Neighbors Bank, Newtek Bank, North American Savings Bank, Northfield Bank, Northpointe Bank, ONE, One American Bank, Panacea Financial, Pen Air Federal Credit Union, PenFed Credit Union, Popular Direct, Presidential Bank, Prime Alliance Bank, Primis Bank, Quontic Bank, Quorum Federal Credit Union, RBMAX, Rising Bank, Salem Five Direct, Sallie Mae Bank, SFGI Direct, SmartyPig, Synchrony Bank, TAB Bank, TotalDirectBank, UFB Direct, Upgrade, USAlliance Financial, Valley Direct, Vio Bank, VirtualBank, Web Bank, Western State Bank, and Workers Credit Union.

How We Find the Best High-Yield Savings Account Rates

Every business day, Investopedia tracks the rate data of about 100 banks and credit unions that offer high-yield savings accounts to customers nationwide. We determine daily rankings of the top-paying savings accounts first and foremost by the annual percentage rate (APY) offered. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. If the savings account is accessible only through a mobile app, we require that the app be available on both the iOS and Android platforms.

For more about how we choose the best high-yield savings accounts, read our full methodology.

In the News