Editor's Note: APYs listed in this article are up-to-date as of the time of publication. CNBC Select will update as changes are made public.
If you need to build an emergency fund or save up for a mid-range expense, a high-yield savings account (HYSA) is a great option. You can enjoy an APY that's more than 10 times what you'd get from a traditional savings account, with more access to your funds than you'd get from a CD or the stock market.
HYSA rates are variable, however, so the return you got when you opened the account may not last. There may also be a limit on the number of withdrawals you can make and other drawbacks.
Find out the pros and cons of HYSAs, plus what to look for in an account and how to open one when you're ready
What's a high-yield savings account?
High-yield savings accounts are savings vehicles with above-average interest rates. Some of the best offer APYs of 4% to 5%, compared to a national average of about 0.38%
Typically offered by online banks, HYSAs offer compound interest and deposits of up to $250,000 are insured by the FDIC or NCUA.
Their healthy return, security and accessibility make HYSAs a good place for emergency funds or for money you're saving for a short-term goal, like an upcoming purchase, vacation or down payment.
Marcus by Goldman Sachs and EverBank are among our picks for the best HYSAs, because they pair a competitive APY with no monthly maintenance fee, minimum opening deposit or balance requirements.
Marcus by Goldman Sachs High Yield Online Savings
Annual Percentage Yield (APY)
3.40%
Minimum balance
None
Fees
No monthly maintenance, overdraft or excessive transactions fee
Maximum transactions
No limit to the number of withdrawals or transfers you can make
Checking account
No
ATM card
No
Terms apply.
Pros
- No minimum deposit, no minimum balance and no monthly fees, making it one of the most straightforward savings accounts to open and maintain.
- No limit on withdrawals or transfers, so you can move your money as often as you need without penalty.
- Earns a competitive APY with no conditions or hoops to jump through.
- Easy-to-use mobile app makes managing your savings simple from anywhere.
- Also offers no-fee personal loans through Marcus, a useful perk if you ever need to borrow.
Cons
- Higher APYs are available elsewhere, so it may not be the top pick if maximizing your rate is the priority.
- No checking account option, so you’ll need a separate account for everyday spending.
- No ATM access or debit card, making it best suited as a dedicated savings account paired with another bank.
EverBank Performance℠ Savings
Annual Percentage Yield (APY)
3.90% APY
Minimum balance
None
Monthly fee
None
Maximum transactions
Up to 20 external transfers per day, with a maximum of 10 transfers from a linked external account into your EverBank accounts and 10 transfers from EverBank to external accounts. Up to 50 total external transfers per month.
Excessive transactions fee
None
Overdraft fees
N/A
Checking account
Yes
ATM card
Yes
Terms apply.
Pros
- Earns a competitive APY with no minimum balance.
- Free ATM card and no ATM fees
Cons
- Limited branch locations
High-yield savings account pros and cons
- Higher returns: HYSA returns can be more than 10 times higher than those with a traditional savings account. Depending on the bank, interest can compound daily or weekly.
- Lower risk: HYSAs are a safer option than stocks, bonds, ETFs, and other investments that are affected by market shifts. And your account is federally insured up to $250,000.
- Accessibility: Unlike CDs, which are locked in for a fixed term, money in an HYSA can be withdrawn or transferred without a penalty. However, the dollar amount or number of transactions may be limited.
- Fewer fees: Online institutions with HYSAs have lower overhead than brick-and-mortar banks, so they can usually avoid charging monthly service fees or requiring minimum deposit or balance requirements.
- Variable rates: Interest rates on high-yield savings accounts fluctuate with the Fed funds rate.
- Limited growth: While still better than that of traditional savings, the return on an HYSA is still lower than that of stocks or other investments.
- Lack of in-person banking: Most HYSAs are with online banks, making them a poor option if you prefer face-to-face banking at a physical branch.
- Limits on withdrawals: The dollar amount or number of transactions may be capped. You can transfer funds between banks, but it can take 24 to 48 hours.
- Fees, caps and minimum requirements: None of the banks on our best HYSA list charge a monthly service fee, but some do. And that tempting APY may require a minimum balance or have a cap.
How to shop for a high-yield savings account
If you're looking for a HYSA, consider:
- APY: Choose the highest APY you can find, but make sure it's an ongoing rate and not a temporary promotion.
- How often interest compounds: Some high-yield HYSAs compound interest monthly, but daily compounding will grow your money faster.
- Opening deposit and balance minimums: There may be a minimum to open your account or a required balance to earn the top APY. Make sure the requirements fit your financial situation.
- Caps on high APY: Some HYSAs only offer the best rate up to a certain balance, then pay a lower rate on anything above that. Read the fine print so you know what rate you'll be earning on your full balance.
- Limits on withdrawals and transfers: Many banks limit how many times you can move money out of your HYSA each month or charge fees above a certain number of withdrawals or transfers.
- Physical branches: Most HYSAs are offered by online banks. Keep that in mind if in-person service is important to you.
- Other financial products: If you'd like to do all your banking in one place, look for an HYSA at an institution that also offers checking accounts, CDs, loans, and other products.
How to open a high-yield savings account
Depending on the bank, you can open a HYSA online, over the phone or in person. Have the following documents and information ready:
- Your address, phone number and email address
- A driver's license or other government-issued ID
- Social Security number or Taxpayer Identification Number (TIN)
- Debit card, money order or bank account information for the initial deposit
Complete the application form and, if required, transfer funds from a linked account.
After the bank verifies your identity with a soft credit check, you should be able to manage your account and start earning higher interest.
FAQs
High-yield savings FAQs
What's the best high-yield savings account?
The best HYSA vdepends on how much money you're depositing, whether you need frequent access to your money and whether you have other accounts at the institution. Our list of the best HYSAs includes accounts suitable for different types of savers.
Are high-yield savings accounts safe?
Yes, your money is as safe as it would be in a traditional savings account. HYSAs are insured up to $250,000 by the Federal Deposit Insurance Corporation or, if opened at a credit union, by the National Credit Union Administration.
Do you pay taxes on a high-yield savings account?
The interest generated from a HYSA is considered taxable. If you earn more than $10, your bank should send you a Form 1099-INT to use when preparing your return.
Which is better, a high-yield savings account or a CD?
CDs can sometimes offer higher interest rates than HYSAs, but they require you to lock funds away for a set term of your choosing, ranging from three months to 10 years. So, CDs are a strong option if you want to secure a fixed rate and know you won't need the money for a long time. If the money is intended for an emergency fund or short-term goal, a HYSA is a better choice.
Can the APY change after I open an HYSA?
Yes. Unlike a CD, which locks in a fixed rate for the term, a HYSA's APY is variable, which means the bank can raise or lower it at any time, often in response to Fed rate changes. It's worth checking your rate periodically, since the account that was competitive when you opened it may not remain so.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every savings article 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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