high-yield savings account
Supercharge your savings with a higher APY
SHOP SMART
How to compare high-yield savings accounts
Shopping for a high-yield savings account? Here are a few things to keep in mind.
- Annual percentage yield
- APY is the total amount of interest you earn on the money in your account over one year, including compound interest.
- Minimum opening deposit
- This is the minimum amount you’ll need to open your account. Some, but not all, accounts can be opened with no deposit.
- Withdrawals
- Unlike regular savings accounts, some high-yield accounts have a limit on the frequency and amount of withdrawals.
- Monthly fees
- Some banks charge maintenance fees or fees if you don’t maintain a minimum balance, so it’s good to check these.
FAQ
Frequently asked questions about life insurance
A high-yield savings account (or high-interest savings account) is a savings account that earns a higher interest rate than a traditional savings account. It’s typically offered by an online bank that doesn’t have in-person branches, so the bank can pass on the savings to you in the form of a higher interest rate. A high-yield savings account is a good way to earn interest on your money while still keeping it readily available, so people often use it to save for short-term goals or as an emergency fund.
APY stands for annual percentage yield. It’s similar to the interest rate, but will be slightly higher because it includes compound interest. When your interest is compounded, you begin earning interest on your interest, not just on the amount you deposited. The more frequently your interest compounds, the faster your balance grows. Many high-yield savings accounts compound interest daily (a good thing for your balance!), and that’s reflected in the APY.
The goal is to find an account that will pay you a high APY while avoiding unnecessary fees and charges. For example, look closely at the minimum amount you need to keep in the account. Is that realistic for your situation? If there are any other restrictions, like on withdrawals or deposits, make sure you know what those are ahead of time and that they fit with how you want to use the account.