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Banking

What a high-yield savings account is and how it can grow your money

High-yield savings accounts earn you a much better return on your money than a traditional savings account. Select defines what they are and how they work.

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Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC will update as changes are made public.

If you have a checking account at your local bank, you likely have a savings account there as well.

Lots of people store money in a savings account, but some savings accounts offer a much higher return than others — this is where high-yield savings accounts come in.

While the national average return on a traditional savings account is just 0.46%, in 2024, many high-yield savings accounts offer interest rates over 4% (or more). These rates can help you reach your savings goals more quickly and avoid leaving money on the table.

What we'll cover

Compare offers to find the best savings account

What are high-yield savings accounts?

High-yield savings accounts reward you with a higher interest rate than traditional savings accounts, making your money grow faster as it sits in your account. 

The interest rate that these accounts offer is noted as APY, or annual percentage yield. The higher your APY, the faster your money grows.

It's important to note, though, that the APY can change at any time on high-yield and traditional savings accounts. These variable rates often go up or down in accordance with the Federal Reserve changing its benchmark interest rate.

High-yield savings accounts are typically online, but like traditional savings accounts, they allow you to access your cash when you need it. Your money in a high-yield savings account should be federally insured by the Federal Deposit Insurance Corporation (FDIC), which means that deposits up to $250,000 are protected if the bank were to collapse.

How high-yield savings accounts work

Savings accounts, including high-yield savings accounts, typically grow your money via compound interest. That means you earn interest on both the principal balance and the interest that principal earns. With a high-yield savings account, the interest you're earning on the principal is increased, as is the interest you earn on that interest.

How often your interest is compounded depends on the account. Some compound daily, others monthly. The more frequently your interest compounds, the greater your return.

Some banks may still impose a monthly limit on the amount of withdrawals or outgoing transfers you can make from a savings account before paying a penalty. That's a holdover from when the Federal Reserve required banks and other financial institutions offering savings accounts to set these limits, though that hasn't been the case since April 28, 2020. To find out if an account has these withdrawal limits, check with the bank.

While a strong APY is a big factor in choosing a high-yield savings account, you will also want to look at the fine print. Because online banks don't have the overhead of brick-and-mortar banks, they may offer a higher APY. But it could come with starting deposit and minimum balance requirements and monthly fees, so read the terms closely.

These are some of CNBC Select's top picks, considering the above qualifications, as well as the accounts' ease of use and accessibility:

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC
  • Annual Percentage Yield (APY)

    5.00%

  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee

    None

  • Maximum transactions

    None

  • Excessive transactions fee

    None

  • Overdraft fees

    N/A

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes

Terms apply.

UFB Secure Savings

UFB Secure Savings is offered by Axos Bank ® , a Member FDIC.
  • Annual Percentage Yield (APY)

    Up to 5.25% APY on any savings balance; add a UFB Freedom Checking and meet checking account qualifications to get an additional up to 0.20% APY on savings

  • Minimum balance

    $0, no minimum deposit or balance needed for savings

  • Fees

    No monthly maintenance or service fees

  • Overdraft fee

    Overdraft fees may be charged, according to the terms; overdraft protection available

  • ATM access

    Free ATM card with unlimited withdrawals

  • Maximum transactions

    6 per month; terms apply

  • Terms apply.

SoFi Checking and Savings

SoFi Bank, N.A. is a Member FDIC.
  • Annual Percentage Yield (APY)

    Members with direct deposit earn 4.60% APY on savings, no minimum balance needed. Members without direct deposit earn 1.20% APY on savings balances, and everyone earns 0.50% APY on checking balances.

  • Welcome bonus

    Earn a $300 welcome bonus when you direct deposit a total of $5,000 or more within 25 days of your first direct deposit. Get a $50 welcome bonus when you direct deposit between $1,000 and $4,999.99 within 25 days of your first direct deposit.

  • Fees

    No monthly fee and no excessive transaction fees.

  • No-fee overdraft protection

    No-fee Overdraft Coverage up to $50 for SoFi members with $1,000 or more in total monthly direct deposits. Purchases exceeding $50 are declined.

  • Offer ATM card?

    Yes, this account offers a debit card that allows purchases and ATM withdrawals. Terms apply.

  • Offer checking account?

    Yes, bundled with savings account.

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle. Transaction amount limits apply.

How to open a high-yield savings account

Many traditional banks, online-only banks and credit unions offer various options for high-yield savings accounts, so shop around to find the best one for you. Important factors to consider include:

  • Interest rates: Some accounts offer higher yields than others, which means more significant returns on your savings. Remember interest rates fluctuate over time.
  • Deposit requirements: As with other savings accounts, many high-yield savings accounts require a minimum deposit, which could range from $0 to over $100. Be sure that you're able to meet the account's applicable requirements.
  • Fees: Fees can chip away at your savings, so be sure to think about account fees, like maintenance fees, overdraft fees or ATM fees.

You should be able to apply online or in person, depending on the institution. While banks don't check your credit score, they use your report from ChexSystems, a bank reporting agency, to help determine your eligibility. If the bank or credit union finds a history of excess overdrafts or unpaid bank fees, your application may be denied. However, some banks may offer second-chance banking options that overlook these reports and allow you an opportunity to rebuild your banking history.

The Chime® High Yield Savings Account, for example, offers a solid 2.00% APY and doesn't come with a ChexSystems check to qualify.

Chime Checking + High-Yield Savings

Chime ® banking services, credit and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.
  • Annual Percentage Yield (APY)

    Chime Checking 0% APY, required to enroll in Chime High-Yield Savings 2.00% APY

  • Minimum balance

    $0, no minimum deposit or balance

  • Fees

    No monthly maintenance or overdraft fees. SpotMe service with eligibility for no-fee overdraft up to $200.

  • Perks

    Paycheck available up to two days early with direct deposit. Automated savings of 10% of certain direct deposits. Round Ups feature transfers spare change from purchases to savings.

  • Maximum transactions

    Cash withdrawals from checking up to $515 per day at any ATM or as an over-the-counter bank withdrawal. $2,500 maximum daily spend, including any withdrawals, purchases and incurred fees.

  • ATMs

    60,000+ in-network no-fee ATMs.

  • Mobile check deposit

    Yes

Terms apply.

Pros

  • 2.00% APY on Chime High-Yield Savings
  • No minimum deposit or balance required
  • No monthly service fee
  • No overdraft fee, transactions for unavailable funds are denied; SpotMe for overdraft up to $200 with $200 or more in qualifying direct deposits over previous 34 days and an activated Chime debit card.
  • Paycheck funds available up to two days early with direct deposit
  • Automated transfer 10% of direct deposits of at least $500 to savings
  • Purchases with Chime Visa® Debit Card or Chime Credit Builder Secured Visa® Credit Card rounded up to the next dollar and difference automatically transferred to savings
  • Access to over 60,000 in-network ATMs for no fee, including MoneyPass ATMs in 7-Eleven and Allpoint or Visa Plus Alliance ATMs
  • Mobile check deposit
  • Security features include blocking transactions for a lost card, providing daily balance updates, sending real-time transaction alerts and protecting from unauthorized charges with Visa Zero Liability

Cons

  • Chime checking account required to opening Chime savings account
  • No APY on Chime Checking; Chime High-Yield Savings APY above national average but lower than other high-yield savings accounts
  • Can't withdraw money directly from savings, must transfer to checking
  • With checking, $2.50 fee for out-of-network ATMs and over-the-counter bank withdrawals
  • Checking withdrawals limited to $515 per day at any ATM or as over-the-counter bank withdrawals using Chime Visa® Debit Card. $2,500 daily max spend, including incurred fees, withdrawals, funds withdrawn at a point of sale and purchases.
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Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every banking review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Find the right savings account for you
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Help your money grow by finding the savings account that offers the best rates and features for you
Chime
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Chime offers online-only accounts that minimize fees plus, get paid up to 2 days early with direct deposits