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.
A high-yield savings account (HYSA) is a great option if you need to build an emergency fund or save up for a dream vacation, wedding, down payment or other mid-range expense.
You can enjoy an APY that's more than 10 times what you'd get from a traditional savings account, with a lot more access to your funds than you'd get from a CD.
But HYSAs do have some drawbacks as far as requirements, rates and accessibility.
What's a high-yield savings account?
Typically offered by online banks, HYSAs are savings accounts that earn above-average interest rates.
Marcus by Goldman Sachs and EverBank are among our top picks for the best HYSAs. Neither has a monthly maintenance fee or a minimum opening deposit or balance minimum requirement.
Marcus by Goldman Sachs High Yield Online Savings
Annual Percentage Yield (APY)
3.50%
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 balance or deposit
- No monthly fees
- No limit on withdrawals or transfers
- Easy-to-use mobile banking app
- Offers no-fee personal loans
Cons
- Higher APYs offered elsewhere
- No option to add a checking account
- No ATM access
EverBank Performance℠ Savings
Annual Percentage Yield (APY)
3.90% APY
Minimum balance
None
Monthly fee
None
Maximum transactions
You may conduct up to 20 external transfers per day, subject to a maximum of 10 transfers that pull deposit funds from a linked external account into your accounts at EverBank and a maximum of 10 transfers that send deposit funds from your accounts at EverBank to a linked external account, and up to 50 total external transfers per month.
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
Terms apply.
Pros
- Strong APY
- No minimum balance required
- No monthly fees
- Free ATM card and no ATM fees
Cons
- Limited physical branch locations
High-yield savings account pros and cons
- Higher returns: HYSA returns can be 10 to 15 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. The dollar amount or number of transactions may be limited, however.
- 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 these factors:
- APY - This is the most important number to compare when shopping for a HYSA. Look for the highest APY you can find but make sure it's a standard ongoing rate and not a temporary promotional offer that will drop after a few months.
- How often interest compounds - The more frequently interest compounds, the more money you earn. Daily compounding is better than monthly compounding, so it's worth checking how each bank handles this before you open an account.
- Opening deposit and balance minimums - Some accounts require a minimum amount of money to open, and others require you to keep a certain balance to earn the top APY. Make sure the requirements are realistic for your financial situation.
- Caps on high APY - Some banks only offer their best rate up to a certain balance, then pay a lower rate on anything above that amount. Always read the fine print so you know exactly 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 savings account each month. If you go over that limit, you may face fees or other restrictions, so make sure the policy works for how you plan to use the account.
- Whether there are physical branches - Most high-yield savings accounts are offered by online-only banks, which is part of how they're able to offer better rates. If having access to in-person service or a physical location is important to you, keep that in mind as you compare your options.
- Other financial products offered by the bank - If you'd like to keep your finances in one place, look into what else the bank offers, such as checking accounts, CDs or loans. Having multiple accounts at the same institution can make managing your money a lot more convenient.
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:
- A driver's license or other government-issued ID
- Social Security number or Individual Taxpayer Identification Number
- Your current address, phone number and email address
- 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 varies by individual and varies on many factors, including how much money you're depositing, need frequent access to funds and whether you have other accounts at the institution. Our list of the best HYSAs includes a variety of accounts suitable for different types of savers.
Are high-yield savings accounts safe?
HYSAs are insured up to $250,000 by the Federal Deposit Insurance Corporation or, if opened at a credit union, with the National Credit Union Administration. So your money is as safe as it would be in a traditional savings account.
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.
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Why trust CNBC Select?
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.
Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Read more
Goldman Sachs Bank USA is a Member FDIC.
