This Bank Account Is the Best Place for Your Vacation Fund

I love to travel, and thanks to some big changes with my finances and career situation these last few years, it's gotten easier to do it more often. Most weeks, I'm able to funnel a little money into my vacation fund, and it's exciting to set a savings goal for a particular trip and dream about the cool museums I'm going to visit, the beaches I'll stroll, or the restaurants where I'll have dinner.

I keep my vacation fund in a high-yield savings account (HYSA) for a few key reasons -- in fact, I think these accounts are the best place to save for travel. Here's why.

Why HYSAs are perfect for vacation savings

So why should you use a high-yield savings account to save for travel? You definitely don't want to keep your vacation fund mixed with your checking account money -- why make managing money any harder? Here's why a HYSA is worth it.

The APY

You want to target a high-yield savings account specifically, not just open a savings account with a big bank, which likely pays pathetically low interest. The best HYSAs are generally offered by online-only banks. They don't have the overhead costs that come with managing bank branches, and they pass their savings on to you in the form of a higher interest rate on your saved cash.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 9, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 9, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

Right now, the average rate on savings accounts is 0.45%, but you can find rates on HYSAs of 10 times that or higher. Earn 0.45% on $5,000 in vacation savings, and you'll have an extra $22.55 after a year. But if you earn 4.50%, you'll have an extra $230.12. That could cover a night at a hotel or a few decent lunches on your trip.

Savings buckets

Not every HYSA offers them, but I'd argue that if you're hoping to save for travel specifically, savings buckets are worth considering. These will let you split up the cash in your savings account into separate sub-accounts.

If you want to save for a few different trips at the same time, this is perfect. You can set a goal for each, and your bank may even email you with encouragement when you reach certain milestones (like 50% of the way to that romantic honeymoon).

More hoops to jump through to access your money

And another reason why HYSAs are great for vacation funds is because they don't always give you such easy access to your cash (for example, most don't come with an ATM or debit card). Since they're offered by online banks, you won't be able to stroll into a branch and withdraw your cash.

It's usually easiest to move money electronically out of one of these accounts, and that might give you more motivation to keep saving and not take out cash for an unnecessary non-vacation expense.

How can you find a good HYSA?

Have I convinced you that a HYSA is a great place for your vacation fund? There are a few more key features (beyond a high APY and savings buckets) you want to target if you're looking for a new bank account to save for that dream vacation.

• A well-rated mobile app: I'm a big fan of online and mobile banking -- I love being able to check on my money anywhere and at any time. Read reviews of the bank you're considering to see what's up with its app and learn about what features it comes with (such as budgeting tools or free credit score access).
• FDIC insurance: Your money should be safe in the bank, and with this coverage, it'll be insured for $250,000 per depositor, per FDIC-insured bank, per ownership category. If your bank goes under, all your money will be returned to you under the limits.
• Security features: These include multi-factor authentication, debit cards that have EMV chips, and 24/7 customer service help. These can all be found with the safest banks.

Ready to start a new vacation fund? Dig into high-yield savings accounts and pick out a winner -- your dream destination awaits.