Like most people, you probably think of your bank or credit union as a place to store your money. And while that’s undoubtedly one use for a bank account, it’s not the only one. If you’re looking for a way to grow your money and make it work, you need to use a high-yield savings account. So what is a high-yield savings account, and why should you switch over from your traditional checking or savings account? Keep reading to find out!
The best interest rate as of January 18, 2023, is 4.23% APY with Western Alliance Bank.
- The Best High-Yield Savings Account Rates
- What Is A High-Yield Savings Account?
- Why Do You Need A High-Yield Savings Account?
- What Are The Benefits Of A High-Yield Savings Account?
- Why Would I Be Denied A High-Yield Savings Account?
- How Does A High-Yield Savings Account Differ From A Traditional Savings Account?
- What Is The Difference Between A Money Market Account And A High-Yield Savings Account?
- What Is The Minimum Deposit Required To Open A High Savings Account?
- Are There Any Fees Associated With A High-Yield Savings Account?
- How Often Do Balances And Interest Rates Change For High-Yield Savings Accounts?
- Next Steps
- Request A Quote
- Frequently Asked Questions
- Related Reading
- Earn The Highest Interest Rates On Savings Today
Earn The Highest Interest Rates On Savings Today
Fixed annuities are almost identical to Certificates of Deposit (CDs) accounts and provide higher interest rates and penalty-free withdrawals for income.
|Term||Insurance Company||Interest Rate|
|N/A||UFB Bank Savings Account||3.83%|
|N/A||Western Alliance Bank Savings Account||4.23%|
|N/A||Blue Federal Credit Union Money Market||4.15%|
|27 Months||Sallie Mae CD||5.00%|
|36 Months||Canvas Fixed Annuity*||5.50%|
|48 Months||Americo Fixed Annuity||5.15%|
|5 Years||Canvas Annuity*||5.60%|
|6 Years||Americo Fixed Annuity||5.45%|
|7 Years||Canvas Annuity*||5.70%|
|10 Years||Oceanview Annuity||5.10%|
Disclaimer: This is a review. The Annuity Expert is not associated with a bank or credit union. However, fixed annuities are sold at most financial institutions. We aim to help you find the highest interest rates for your retirement savings. We may receive a small referral fee if you purchase something using a link in this article.
The Best High-Yield Savings Account Rates
The best savings account rates across the United States.
Disclaimer: High-yield savings rates change daily, and we’re doing our best to keep you updated. Please double-check with your bank or credit union!
What Is A High-Yield Savings Account?
A high-yield savings account is a type of savings account offered by banks and credit unions that pays a higher interest rate than a traditional one. These accounts typically require a higher minimum opening deposit and a higher minimum balance to earn a higher interest rate. The interest rate on high-yield accounts can vary depending on the institution and the current market conditions. They are FDIC-insured, which means that deposits are protected up to $250,000 per depositor, per institution.
Why Do You Need A High-Yield Savings Account?
A high-yield savings account can be helpful for a variety of reasons, including:
- Earning more interest: High-yield accounts typically pay a higher interest rate than traditional savings accounts, which means your money will grow faster.
- Easy access to funds: Unlike other investment options, high-yield accounts are liquid, so you can easily access your money when needed.
- FDIC-insured: High-yield accounts are FDIC-insured, meaning deposits are protected up to $250,000 per depositor, per institution. This provides a sense of security for your savings.
- Low risk: High-yield savings accounts are considered low-risk investments, which means they are less volatile than other types of investments, such as stocks or real estate.
- Saving for a specific goal: High-yield savings accounts can be used to save for specific goals such as a down payment on a house, a car, education, or an emergency fund.
- A better return than traditional savings: With low-interest rates, high-yield savings accounts can provide a better return than traditional savings accounts and may help to keep up with inflation.
What Are The Benefits Of A High-Yield Savings Account?
Some benefits of a high-yield account include the following:
- Higher interest rate: High-yield accounts typically pay a higher interest rate than traditional ones, which means your money will grow faster.
- Liquidity: High-yield accounts are liquid, which means you can easily access your money when needed, unlike other investment options that may have penalties for early withdrawal.
- FDIC insurance: High-yield accounts are FDIC-insured, meaning deposits are protected up to $250,000 per depositor, per institution. This provides a sense of security for your savings.
- Low risk: High-yield accounts are considered low-risk investments, which means they are less volatile than other types of investments, such as stocks or real estate.
- Low or low minimum deposit: Some High-yield accounts may have a low or no minimum opening deposit requirement, making it easy for people with limited funds to open an account.
- Online banking: many online banks offer high-yield accounts that can be managed online with easy access to account information, transactions, and account management.
- Potential to earn more than traditional savings account: With low-interest rates, high-yield accounts can provide a better return than a traditional savings account and may help to keep up with inflation.
Why Would I Be Denied A High-Yield Savings Account?
While high-yield accounts are considered low-risk investments, certain circumstances may result in being denied a high-yield account:
- Insufficient identification: Your application may be denied if you do not provide the necessary identification documents or if your information does not match the information on file with credit bureaus.
- Poor credit: Banks and credit unions typically check your credit history when you apply for a high-yield account. The bank may hesitate to approve your application if you have poor credit, as you may be considered a higher risk.
- ChexSystems report: ChexSystems is a consumer reporting agency that keeps track of bank account history, including damaging information such as unpaid bank fees, outstanding debts, and fraudulent activities. If you have a negative ChexSystems report, your application may be denied.
- Fraudulent activities: Your application may be denied if you have a history of fraudulent activities.
- Insufficient funds: Some banks may require a minimum deposit to open a high-yield account; your application may be denied if you don’t meet the minimum opening deposit requirements.
- Other outstanding debts: Your application may be denied if you have outstanding debts or unpaid bills.
- Geography: Some banks may not offer high-yield savings accounts to residents of certain states based on state regulations.
How Does A High-Yield Savings Account Differ From A Traditional Savings Account?
A high-yield and a traditional savings account are similar in that they offer a place to save and grow your money. However, there are some critical differences between the two types of accounts.
One of the main differences between a high-yield account and a traditional savings account is the interest rate. High-yield savings typically offer a higher interest rate than traditional savings accounts. For example, the national average rate for a high-yield account is around 0.50% to 0.70%, whereas traditional savings accounts currently average around 0.05% to 0.10% or even lower. As a result, you can earn more on your savings over time with a high-yield savings account.
Another difference is the minimum opening deposit requirement; some high-yield accounts may have a higher minimum requirement than traditional ones. In addition, some high-yield accounts may also have a higher minimum balance requirement to qualify for the highest interest rate.
Another difference is the accessibility of the account; some high-yield accounts have limited withdrawal and transfer transactions per month, while traditional savings accounts may have more transactions allowed.
High-yield accounts may also have more features or digital banking options than traditional savings accounts.
What Is The Difference Between A Money Market Account And A High-Yield Savings Account?
A money market and a high-yield account are both deposit accounts offered by banks and credit unions. However, there are some critical differences between the two:
- Interest rate: Both money market and high-yield accounts typically pay higher rates than traditional ones. Still, the interest rate on a money market account may be slightly higher than that of a high-yield account.
- Minimum deposit and balance: Both money market and high-yield accounts may require a higher minimum opening deposit and a higher minimum balance to earn a higher interest rate.
- Access to funds: The money market and high-yield accounts are liquid, so you can easily access your money when needed. However, money market accounts may have limited check-writing abilities and higher withdrawal limits than high-yield accounts.
- FDIC insurance: Both money market and high-yield accounts are FDIC-insured, meaning that deposits are protected up to $250,000 per depositor, per institution.
- Investment: A money market account is considered an investment account and may invest in short-term debt securities such as treasury bills, certificates of deposit, and commercial paper. A high-yield account is considered a savings account, and funds are held in cash.
- Regulation: Money market accounts are subject to more regulations than high-yield accounts, such as a restriction on the number of transactions that can be made in a month.
What Is The Minimum Deposit Required To Open A High Savings Account?
The minimum deposit required to open a high-yield account can vary depending on the bank and credit union. Some banks may require a minimum opening deposit of $50 to $100, while others require a minimum deposit of $1,000 or more. It is best to check with the specific bank or financial institution to determine their minimum deposit requirement for a high-yield account.
Are There Any Fees Associated With A High-Yield Savings Account?
Some high-yield accounts may have associated fees, although many do not. Therefore, it’s essential to check with the specific bank or credit union to see if any monthly fees are associated with their high-yield account.
Here are some standard fees associated with high-yield accounts:
- Monthly maintenance fee: Some banks may charge a monthly maintenance fee for a high-yield account. This fee may be waived if you meet specific requirements, such as maintaining a certain minimum balance.
- ATM fees: If you need to withdraw cash from an ATM, some banks may charge a fee for using an out-of-network ATM.
- Minimum balance fee: Some banks may charge a fee if you fall below the minimum balance required to earn the highest interest rate.
- Overdraft fee: Some banks may charge an overdraft fee if you make a withdrawal that exceeds the balance in your account.
- Account closing fee: Some banks may charge a fee if you close your account within a certain period after opening it.
How Often Do Balances And Interest Rates Change For High-Yield Savings Accounts?
Generally, competitive rates on high-yield accounts tend to follow the broader interest rate environment. This is because the Federal Reserve sets a target for the federal funds rate, the interest rate at which banks can borrow from each other overnight. When the Federal Reserve raises or lowers the federal funds rate, it can cause interest rates on savings accounts to rise or fall. However, it is essential to note that the interest rate on savings accounts, including high-yield accounts, may not move in lockstep with the federal funds rate.
The following are some of the factors that may affect interest rates on high-yield accounts:
- Economic conditions: Interest rates tend to be higher when the economy is strong and lower when the economy is weak.
- Inflation: If inflation is high, interest rates are likely to be higher to help keep pace with rising prices.
- Competition: Banks may lower the interest rate on high-yield accounts to attract customers or remain competitive.
- Bank’s profitability: Banks may adjust interest rates to maintain profitability.
High-yield savings accounts are a great way to make your money work for you and boost your financial situation. These accounts can give you better returns than traditional checking or savings accounts and come with features like access to low-cost loans and simplified automatic transfers. Many banks set their terms and conditions for high-yield accounts, so it pays to shop around and compare. For more information and a free quote request consultation, please contact us. With the right plan, you can take charge of your finances and maximize your potential returns with a high-yield account.
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Frequently Asked Questions
Are There Any Risks With High-Yield Savings Accounts?
High-yield accounts are considered low-risk investments, as the deposits are FDIC-insured, which means that deposits are protected up to $250,000 per depositor, per institution. However, there are still some risks to consider when opening a high-yield account:
- Interest rate risk: The interest rate on high-yield accounts can change, and if the rate drops, the value of your savings may not keep pace with inflation.
- Bank risk: If the bank or credit union that holds your high-yield account fails, you may lose access to your money. However, as long as the bank is FDIC-insured, your deposits will be insured up to $250,000 per depositor, per institution.
- Inflation risk: High-yield accounts tend to pay lower interest rates than other investments, such as stocks or bonds. If the inflation rate is higher than the interest rate earned on a high-yield account, the purchasing power of your savings may decline over time.
- Cybersecurity risk: As with any online transactions, the risk of cyber attack or hacking may result in unauthorized access to your account. You must ensure that your account is protected with strong passwords and other security measures and monitor your account regularly for any suspicious activity.
- Limited returns: High-yield accounts are considered low-risk investments, and as such, the returns on these accounts are also relatively low compared to other investment options.
Is It Difficult To Take Money Out Of A High-Yield Savings Account?
Taking money out of a high-yield account is generally not difficult, as these accounts are considered liquid, so you can easily access your money when needed. However, the specific process for withdrawing money from a high-yield account may vary depending on the bank and credit union that holds your account.
Here are some common ways to take money out of a high-yield account:
- Online banking: Many banks and credit unions allow you to transfer money from your high-yield account via online banking. In addition, you can transfer money to another account you own or withdraw cash using an ATM.
- Check-writing: Some high-yield accounts may allow you to write a check to withdraw money.
- Wire transfer: You may be able to request a wire transfer to withdraw money from your high-yield account. This option may be helpful if you transfer money to another institution or person.
- Debit card: Some banks may offer a debit card linked to your high-yield account, which allows you to withdraw cash at an ATM or make purchases.
Are There Advantages And Disadvantages To Having Multiple High-Yield Savings Accounts?
There can be advantages and disadvantages to having multiple high-yield accounts.
- Higher Interest Rates: Multiple high-yield accounts allow you to shop for the best interest rate available and earn more on your savings.
- Diversification: Having multiple high-yield accounts can help diversify your savings, which can help to reduce your risk if one bank or credit union fails.
- Easy Access: Having multiple high-yield accounts can make it easy to access your money from different locations if the credit or bank has branches or ATMs.
- Better Budgeting: Multiple high-yield accounts can help you budget better and save for different goals.
- Fees: Some banks may charge monthly fees for having multiple high-yield accounts, such as monthly maintenance fees.
- Difficult to Monitor: It can be challenging to keep track of multiple high-yield accounts and monitor the interest rates and balances, which may require more effort and time.
- Minimum Balance Requirements: Some high-yield accounts may have minimum balance requirements, and if you don’t meet them, you may be charged a fee or lose the higher interest rate.
- FDIC insurance limit: The FDIC insurance limit is per depositor per institution, so if you have multiple high-yield accounts with the same institution, the limit applies to the total amount, not per account.
What Are Some Strategies For Maximizing The Returns On Your High-Yield Savings Account?
Here are some strategies that can help you maximize the returns on your high-yield account:
- Shop around: Compare the interest rates and terms of different high-yield accounts to find the one that offers the highest return.
- Take advantage of promotional rates: Some banks and credit unions offer savings rates to new customers. Be on the lookout for these offers, and take advantage of them if they are available.
- Keep the balance high: Many high-yield savings accounts require a minimum balance to earn the highest interest rate. So keep your account balance above the minimum requirement to earn the highest return.
- Automate your savings: Set up automatic transfers from your checking account to your high-yield account to ensure that you consistently add to your savings.
- Avoid withdrawals: High-yield savings accounts typically compound interest daily, so the more often you withdraw, the less interest you earn. Therefore, avoid making unnecessary withdrawals to maximize the return on your savings.
- Consider a laddering strategy: Instead of keeping all your money in one account, consider “laddering” your savings across multiple accounts with different maturity dates. This will allow you to take advantage of rising interest rates and ensure you always have access to some cash.
- Keep an eye on the rate: As the interest rate fluctuates, you should keep an eye on the rate of your high-yield account and switch to another account if you find a better rate.
- Check for fees: Some high-yield accounts may have hidden fees that can eat into your returns, such as monthly maintenance or withdrawal fees. Be sure to check for these fees before opening an account.
- Diversify: Diversifying your savings across different types of accounts, such as high-yield savings accounts, CDs, checking accounts, and money market funds, can help to minimize risk and maximize returns.
Is It Worth Opening A High-Yield Savings Account With A Credit Union?
It can be worth opening a high-yield account with a credit union. Credit unions are not-for-profit financial institutions owned and controlled by their members; an example would be Alliant Credit Union. In addition, they often offer higher interest rates on savings accounts than traditional banks, which may make them a good option for a high-yield account.
Here are some benefits of opening a high-yield account with a credit union:
- High-Interest Rates: A credit union often offers higher savings rates than traditional banks. This means that you can earn more on your savings over time.
- Lower Fees: Credit unions tend to have lower monthly fees than traditional banks, which can help increase your savings returns.
- Personalized Service: A credit union is known for its personalized service and often has a more community-based approach than traditional banks.
- Eligibility: Credit unions have a membership base and often have specific criteria, such as living, working, or worshiping in a particular area, working for a specific employer, or being part of a particular group.
- Not-For-Profit: A credit union is a not-for-profit organization that can offer better rates and lower fees than for-profit banks.
- FDIC insured: Credit unions are NCUA insured, which means that a member savings account is protected up to $250,000 per depositor, per institution, just like traditional banks.
How Does The Interest Rate On A High-Yield Savings Account Compare To Other Types Of Savings Accounts?
The interest rate on a high-yield account is generally higher than that on a traditional savings account. High-yield savings accounts are designed to offer a higher return on savings, which makes them an attractive option for people who want to grow their savings over time.
The current average interest rate for a high-yield account is around 2.50% to 3.50% APY. At the same time, traditional savings accounts are currently averaging around 2.00% to 2.50% APY or even lower.
The interest rate on a high-yield account is also generally higher than that on a money market account, which is currently averaging around 3.00% to 4.00% APY. However, money market accounts may have check-writing or debit card access, and some may have check-writing or debit card access, while high-yield accounts generally don’t.
Certificates of deposit (CDs) typically offer higher interest rates than savings accounts, but they also require a longer commitment, usually from 3 months to 5 years. In addition, the interest rate on a CD is fixed for the deposit term, and early withdrawal may result in a penalty.
How does the FDIC insurance limit apply to high-yield savings accounts?
The Federal Deposit Insurance Corporation (FDIC) insures deposits in high-yield savings accounts, just as traditional savings accounts do. However, the FDIC insurance limit is $250,000 per depositor per institution. Therefore, if you have a high-yield account with an FDIC-insured bank, your deposits are insured up to $250,000 in case the bank fails.
It’s important to note that if you have multiple accounts with the same institution, the $250,000 limit applies to the aggregate total across all accounts, not per account. So, for example, if you have a high-yield account with a balance of $200,000 and a checking account with a balance of $50,000, both accounts would be insured up to $250,000.
You can also consider spreading your savings over multiple FDIC-insured institutions to ensure your deposits are fully insured. This can be done through multiple bank accounts or by utilizing the FDIC’s Temporary Unlimited Coverage for Noninterest-Bearing Transaction Accounts (Dodd-Frank Act).
It’s also worth noting that credit unions are insured by the National Credit Union Administration (NCUA) up to the same amount of $250,000.
Should You Get A High-Yield Savings Account From Banks Or Credit Unions?
When considering whether to get a savings account from a bank or credit union, it is essential to consider your individual needs and preferences. Both have their advantages and disadvantages.
Banks are generally more widely available, so you’ll have more options. Banks are often more well-established and have more resources than a credit union. Banks may offer more features and options like online banking, an online savings account, and other digital banking services. Banks may offer more access to ATMs, which can be convenient if you need to withdraw cash frequently. Banks may also have more branch locations, which can be convenient if you prefer to bank in person.
On the other hand, a credit union is a not-for-profit organization and often offers higher interest rates on savings accounts than traditional banks. In addition, credit unions tend to have lower fees than traditional banks, which can help increase your savings returns. Credit unions are also known for their personalized service and often have a more community-based approach than traditional banks.
However, credit unions may have different regulations, lower ATM networks, and digital banking options than traditional banks, so it’s always a good idea to check with the credit union to understand their terms and conditions, as well as their reputation and credit rating.
What Is The Annual Percentage Yield From A High-Yield Savings Account?
The Annual Percentage Yield (APY) is the interest that a high-yield savings account earns annually, expressed as a percentage of the account balance. The APY considers the interest rate and the effect of compounding interest.
The APY on high-yield savings accounts can vary depending on the bank or credit union offering the account and the current economic conditions. The average APY for a high-yield savings account is currently around 0.50% to 0.70%. However, some high-yield savings accounts may offer 1% or higher APY.
It’s worth noting that credit union and bank rates and APYs can frequently change, so it’s a good idea to regularly check for the best rate and compare it with other options. Also, some institutions may offer promotional rates for a certain period, and it is essential to understand the terms and conditions of these promotions.
Should You Get A High-Yield Savings Account From Federal Deposit Insurance Corp?
Getting a high-yield account from a Federal Deposit Insurance Corporation (FDIC)-the insured institution is generally a safe and secure option for your savings. The FDIC is a government agency that insures deposits in banks such as The American Express National Bank. If the bank fails, your deposits are insured up to $250,000 per depositor, per institution. This level of protection can give you peace of mind, knowing that your savings are protected.
However, it is essential to consider other factors when choosing a high-yield savings account from an FDIC-insured institution. Firstly, comparing the savings rates and fees offered by different FDIC-insured institutions is essential. Some institutions may offer higher bank rates or lower fees than others, so it’s worth shopping around to find the best deal. Additionally, it’s also good to check the institution’s reputation and credit rating before opening an account. This will give you an idea of the institution’s financial stability and ability to meet its obligations.
What Are Some Strategies For Maximizing The Returns On My High-Yield Savings Account?
Maximizing the returns on your high-yield savings account involves several strategies. One of the most important strategies is to compare bank rates offered by different high-yield savings accounts. Savings rates vary significantly between institutions, so finding the best one is essential. This can help you earn more money on your savings over time.
Another strategy is to utilize automatic savings. By setting up automatic savings from your checking account to your high-yield savings account, you can help yourself save more money over time and take advantage of compound interest. This can be particularly beneficial if you’re saving for a long-term goal, such as retirement or a down payment on a house.
Another strategy is to keep your account balance high. Some high-yield savings accounts have tiered interest rates, which means the interest rate increases as your account balance increases. So keeping a high balance in your account can help you earn more interest over time.
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