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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. Select will update as changes are made public.
At the beginning of the coronavirus outbreak in the U.S., the Federal Reserve decided to drop interest rates near 0% to help support the economy.
Banks, in accordance with the Fed, used this as a benchmark to lower interest rates on their various financial products — and that includes everything from checking accounts to mortgages.
But even though interest rates on high-yield savings accounts have since dropped to more than half of what they were last year, hovering around less than 1%, their yields still outpace the 0.04% return you would earn keeping your money in a traditional savings account.
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The economic fallout from the coronavirus has left many Americans feeling uncertain about their future, and as a result, many are prioritizing saving for an emergency fund. For those who are stashing their cash in a traditional savings account, you may want to consider switching to a high-yield savings.
To see just how much money you could be forfeiting by keeping your money in a normal savings account versus a high-yield savings, let's say you have an account with $1,000.
With a national average return of 0.04% in a normal savings account, your $1,000 deposit would earn you 40 cents over the course of a year.
If you deposit that same $1,000 in a high-yield savings account offering an annual percentage yield, or APY, of at least 1%, in a year you would yield $10 (or more, depending on if your APY is above 1%). And that is just with $1,000 in your account, but the larger your balance the more your savings will add up over time.
Given the Fed recently indicated keeping interest rates near zero through 2022, it could be a while before APYs on high-yield savings accounts shoot back up. But as the economy recovers, the Fed will raise is interest rates and your APY will likely increase as well.
Even though APYs for even the best savings accounts have fallen over the weeks, some still outrank others.
Select has outlined the best high-yield savings accounts, and for those looking for somewhere to stash your cash, below are our top picks and the APY that they currently offer.
- Best overall: Marcus by Goldman Sachs High Yield Online Savings (3.90% APY)
- Best for checking/savings combo: Ally Online Savings Account (4.25% APY)
- Best for easy access to your cash: Synchrony Bank High Yield Savings (4.50% APY)
- Best for earning a high APY: Vio Bank High Yield Online Savings Account (4.50% APY)
- Best if you want extra help saving: Varo Savings Account (Earn up to *5.00% APY)
Even though the APY you earn on high-yield savings accounts can go up and down at any time, they are still worth considering if you're otherwise holding money in a savings account for a rainy day or a future big purchase.
Information about the Synchrony Bank High Yield Savings has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
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