What Is a High-Yield Savings Account and How Does It Work?
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High-yield savings accounts (HYSAs) have become one of the most popular places to store extra cash -- and there's a good reason for that. They give you an opportunity to earn a high interest rate on your money while keeping it safe and easily accessible.
We'll go over what HYSAs can offer you and how they stack up to regular savings accounts.
A high-yield savings account is a deposit account that offers a higher annual percentage yield (APY) than what traditional savings accounts offer. This earns more money faster on deposits.
Most high-yield savings accounts are offered by online banks because their operating costs are lower. Without a branch network to maintain, they can charge fewer fees and offer better interest rates than brick-and-mortar banks can.
A high-yield savings account works the same way as a traditional savings account: You deposit money into the account, and the bank uses that money to fund loans for its other customers. Banks earn interest on loans, and you receive a piece of this interest.
How much you get depends on your APY and your balance. Most high-yield savings accounts are compounded daily, which means you earn interest on your money every day. However, most banks only deposit the interest into your account once per month.
Once that interest is in your account, you begin earning interest on it, too. This is known as compound interest. For example, if you deposit $10,000 into a high-yield savings account that earns a 0.60% APY, you'll earn $60 after one year. The next year, you'll earn a 0.60% APY on both your initial $10,000 and the $60 you've already earned.
Make sure you're getting the best account for you by comparing savings rates and promotions. Here are some of our favorite high-yield savings accounts to consider.
| Account | APY | Promotion | Next Steps |
|---|---|---|---|
Open Account for SoFi Checking and Savings
On SoFi's Secure Website.
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
up to 3.80%²
Rate info
You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.
Min. to earn: $0
|
New customers can earn up to a $300 bonus with qualifying direct deposits!¹
|
Open Account for SoFi Checking and Savings
On SoFi's Secure Website. |
Open Account for CIT Platinum Savings
On CIT's Secure Website.
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
4.10% APY for balances of $5,000 or more
Rate info
4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY
Min. to earn: $100 to open account, $5,000+ for max APY
|
Earn a bonus of at least $225 after a one-time deposit of $25,000+.
Transfer a one-time deposit of $25,000-$49,999.99 for a bonus of $225. Transfer a one-time deposit of $50,000+ for a bonus of $300. Account must be opened with code PS2025 while this promotion lasts, and funded within 30 days. Bonus will be fulfilled within 60 days from the funding date. There is no period of time where the customer will be required to maintain the funds. Account must be open when bonus is credited. One bonus per account and primary customer. Bonus will be credited into the Platinum Savings Account that fulfills the funding requirement. Funding can be deposited all at once or incrementally.
|
Open Account for CIT Platinum Savings
On CIT's Secure Website. |
Open Account for American Express® High Yield Savings
On American Express's Secure Website.
Rating image, 4.00 out of 5 stars.
4.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
3.70%
Rate info
3.70% annual percentage yield as of April 16, 2025. Terms apply.
Min. to earn: $0
|
N/A
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
SoFi disclosure:
¹ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking#1.
² SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
³ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
⁴ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations.
Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.
⁵ We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
⁶ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
⁷ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the“30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.
Yes. Savings account funds are FDIC insured up to $250,000 per person per bank, and some banks have started offering even more coverage through partner networks, so there's no risk of losing money if your bank goes under. The risk of losing money with a savings account is pretty slim. It could be possible if you incur a lot of fees, your identity is stolen, or a hacker gains access to your bank account.
As long as you are aware of the fees your bank charges (and ways to avoid them) and you protect your personal and account information, your savings account should only make you money.
There are both pros and cons of high-yield savings accounts. It's important to consider these factors when you're looking for the best savings account for your lifestyle.
Here are a few key terms to know before you open a savings account. These are important terms for online savings accounts, traditional savings accounts, and high-yield savings accounts.
| Monthly maintenance fee | This is a fee your bank charges to maintain your savings account, and most online banks don't charge one. |
|---|---|
| Liquidity | Liquidity refers to how easy it is to turn your money into cash. |
| Interest | Interest is the money a bank pays you for keeping money in a savings account. |
| Minimum balance | A minimum balance is the lowest amount of money you must keep in your savings account in order to avoid fees and penalties. |
| FDIC insurance | Government-run protection that ensures your money is safe in a bank account in the event the bank fails. |
To open an HYSA, fill out an online application form or visit a branch (if your chosen bank has them). Most of our top high-yield savings accounts have strong customer service departments that can assist you with any specific questions you have.
This process should be similar whether you open a savings account online or at a brick-and-mortar bank. You will need to provide some personal information, including your address, Social Security number, and a government-issued ID.
If you are opening a joint savings account, both parties will need to provide this information.
A high-yield savings account could be a great choice for you if you're looking for a place to house your emergency fund, as well as other money you plan to spend within the next five years or so. But these accounts aren't right for everyone.
Checking accounts are the better choice for everyday spending because they offer more withdrawal options and no limits on monthly withdrawals. Brokerage accounts are better for long-term savings because investments earn a lot more over the long term.
Ready to open an account? Start by checking out our list of the best high yield savings accounts (they offer the lowest fees and the highest rates of return). Then open an account online.
As you compare savings accounts, think about what you'll use the account for. Do you want to be able to withdraw your money at any time to cover unexpected expenses? Are you saving up for a major goal over several years, and could use every dollar of interest you can earn? Answering these questions will help you compare savings accounts and decide which is best for your needs.
Here's a look at the common types of savings accounts you'll run into.
Traditional savings accounts are usually easy to open and easy to access. But APYs tend to be pretty low compared with high-yield savings accounts, and most of these accounts carry maintenance fees if your balance falls below a certain amount.
Certificates of deposit (CDs) usually offer some higher APYs than any of the high-yield savings accounts discussed above, especially with CDs offered by online banks. If you're looking for the best APY on a savings account, CDs are definitely worth considering. But you have to agree not to withdraw your funds for the full CD term (which could be months or years).
Money market accounts offer the APYs of a savings account with the easier access of a checking account. However, these accounts usually have higher minimum balance requirements than typical high-yield savings accounts do.
Some of our favorite online banks offer checking accounts, and many are excellent financial products. While some of the top checking accounts pay interest, you should expect a relatively low APY. Checking accounts are best suited for money that you'll need in the near future (such as for bills due soon), while high-yield savings accounts are designed for money that you might need to tap into on occasion.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Motley Fool Money's top savings account picks can earn you more than 10x the national average savings account rate.
Compared to regular accounts, high-yield accounts offer depositors better interest rates, which means they pay you more for the privilege of keeping your cash safe. There are other differences, too. For example, since most high-yield accounts are offered by digital banks, they tend to offer easy-to-use apps and delightful user experiences. The specifics vary depending on your bank or credit union.
Right now, a good APY for a high-yield savings account is 4% or more. Bank account APYs go up and down depending on Federal Reserve interest rate changes.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page. APYs are subject to change at any time without notice.
