The best savings accounts help you grow your money safely. But there are major differences in the interest rates you can earn depending on the bank with which you choose to open your savings account.
In this article, I’ll take a look specifically at high-yield online savings accounts.
High-yield savings accounts earn much more interest than standard savings accounts. The rates are more variable because they’re heavily influenced by the federal funds rate (more on that later). And since we’re narrowing down the choices from hundreds of accounts, I’ve also limited my choices to online accounts because of their convenience.
I’ve researched the current rates, and in this article, I’ll offer some recommendations for the best high-yield online savings accounts that will put more money in your pocket.
Some of the options I recommend have physical locations. But it’s possible to open and maintain a savings account at every institution on the list without ever setting foot in a branch.
I’ll also tell you the best ways to use your savings account.
I updated this article in May 2023. We review the rates weekly and the included banks monthly. You can find detailed notes on all updates here.
Best High-Yield Savings Accounts in May 2023
| Financial Institution | Account Name | Why It Makes Our List | APY |
|---|---|---|---|
| Ally Bank | Online Savings Account | Suite of tools includes automatic savings transfers, savings goal allocations. | 3.85% |
| American Express | High Yield Savings Account | Offers competitive interest and no fees while syncing nicely with checking and credit card products. | 3.90% |
| Capital One | 360 Performance Savings | You can view your credit score and allocate with "My Savings Goals." This account also has a highly-rated app. | 3.75% |
| Discover Bank | Online Savings Account | Extreme about no fees, and this account's "Quick View" lets you see your balance without logging in. | 3.9% |
| Marcus | Online Savings Account | This competitive interest, stand-alone savings account is also fee-free. | 4.15% |
| PenFed Credit Union | Premium Online Savings Account | A $5 deposit gets you membership at the only credit union on our list. | 2.7% |
| Synchrony Bank | Online Savings Account | No-frills stand-alone savings account offers competitive interest, highly-rated app. | 4.15% |
| Wealthfront | Cash Management Account | Known for its robo-advisor, also offers competitive interest rate on no-fee cash management account. | 4.55% |
It may be tempting to find the savings account with the highest interest rate and ignore everything else.
But you should look for a financial institution that won’t charge you fees, doesn’t require a high minimum balance or initial deposit, offers strong customer service and has a good website and/or app. And of course, you’ll want to make sure that your account choice is federally insured.
Several banks shut down in 2023 after a long period of interest rate hikes by the Fed. Ongoing contagion risk at other banks makes it important to make sure that your account(s) include FDIC insurance for every dollar you hold in the bank.
It’s also important to understand the withdrawal rules before choosing a high-yield savings account. Federal law used to limit savings account transactions to six per month, excluding ATM and bank teller withdrawals. If you went over that limit, you were subject to a penalty. But because of economic conditions related to the COVID-19 pandemic, the Federal Reserve lifted that restriction in April 2020. It’s now up to each bank to decide whether to charge fees or penalties if you exceed the limit.
Based on the criteria I listed above, I’ve chosen the best high-yield online savings accounts that make the grade. Later in this article, I’ve provided a table of eight other accounts that did not quite crack our list but could be great savings options for specific people.
Table of Contents
- Best Online Savings Accounts
- What You Need in a Savings Account
- How Does a High-Yield Savings Account Work?
- Good Ways To Use Your High-Yield Savings Account
- Frequently Asked Questions About Savings Accounts
Best Online Savings Accounts
Ally Bank
Monthly Fees: $0
APY: 3.85%
Minimum Balance: $0
Minimum Deposit: $0
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Advantages:
Disadvantages:
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The Details: Ally Bank’s Online Savings Account provides some interesting tools and programs. Perhaps the most interesting is what Ally Bank calls “surprise savings.” The website says, “We analyze your linked checking accounts for safe-to-save money, then transfer it to your savings so you don’t have to.”
Ally also offers recurring transfers, and this account lets you organize your savings account funds into “buckets” to help you meet your savings goals for specific things like vacations, emergency funds or cars.
I opened a savings account at Ally because, among other reasons, it allows joint accounts.
American Express
Monthly Fees: $0
APY: 3.90%
Minimum Balance: $0
Minimum Deposit: $0
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Advantages:
Disadvantages:
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The Details: American Express has launched an online-only bank with a rewards component to “absolutely maximize the loyalty we can get,” according to the company’s general manager for consumer banking, Eva Reda.
American Express limits the number of withdrawals or transfers involving your savings account to nine per month.
Capital One
Monthly Fees: $0
APY: 3.75%
Minimum Balance: $0
Minimum Deposit: $0
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Advantages:
Disadvantages:
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The Details: Capital One’s app is tied for the second-highest average rating (iOS/Android) among the 40+ savings accounts I reviewed. Capital One 360 Performance Savings provides an automatic savings plan and a way to track and allocate money in your account through “My Savings Goals.”
You can also view your credit score for free, get alerts when it changes and get tips on how to improve your score.
Discover Bank
Monthly Fees: $0
APY: 3.9%
Minimum Balance: $0
Minimum Deposit: $0
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Advantages:
Disadvantages:
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The Details: Discover’s Online Savings Account takes the “no fees” creed to a pleasant extreme.
In addition to no monthly maintenance fees, no minimum deposits and no minimum balance, there are no fees for insufficient funds, excessive withdrawals, returned deposits, stop payment orders or account closures.
If you enable “Quick View,” you can check your savings account balance on your phone, watch or tablet without logging in.
Marcus by Goldman Sachs
Monthly Fees: $0
APY: 4.15%
Minimum Balance: $0
Minimum Deposit: $0
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Advantages:
Disadvantages:
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The Details: Marcus’ Online Savings Account requires you to link to an outside bank account or accounts for incoming and outgoing transfers. But there may be a benefit to that.
“If somebody is doing OK financially, and they’ve got money in both savings and checking, I don’t necessarily like for them to do their checking and savings at the same place,” Clark says. “A bank wants you to tie with them, where they try to tie as many services together as they can. But that’s only in their interest. That’s not in yours.”
Your options to deposit money are via a transfer from another account or by mailing your deposit to Marcus. Mobile deposits are not available. Marcus does not charge for those transfers (ACH or wire).
Synchrony Bank
Monthly Fee: $0
APY: 4.15%
Minimum Balance: $0
Minimum Deposit: $0
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Advantages:
Disadvantages:
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The Details: Like Marcus, Synchrony is a good option if you don’t mind maintaining your savings account at a separate bank. Clark thinks that’s a good idea, generally.
Synchrony is online-only, so it doesn’t operate any physical branches. It does, however, offer the highest interest rate of any bank on our list — while avoiding fees and deposit requirements.
You’ll have to look elsewhere for bells and whistles. But this simple, straightforward savings account can generate some extra interest for you.
Wealthfront
Monthly Fees: $0
APY: 4.55%
Minimum Balance: $0
Minimum Deposit: $1
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Advantages:
Disadvantages:
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The Details: Wealthfront made our list of the best investment companies in 2023 as one of the two best robo-advisors.
But its cash management account also pays one of the best rates on the market at better than 4.50% APY. It also offers up to a whopping $5 million in FDIC insurance. That’s helpful if you have more than $250,000 in cash, the typical limit at an FDIC-insured bank.
Wealthfront also fits the Clark profile. It doesn’t charge monthly fees, it doesn’t require a minimum balance, you need just $1 to open an account and doesn’t offer overdraft protection.
As this is a cash management account, Wealthfront offers a debit card and free ATM access. But you’ll have to pay for cash deposits and you have to meet certain requirements for Wealthfront to send a check on your behalf.
If you’re looking for high yield on your savings, though, Wealthfront is an excellent choice.
Other Savings Account Options
Here are some other savings accounts that stand out for specific reasons.
| Bank | Why It Stands Out | Account Features |
|---|---|---|
| CIT Bank | Best for those chasing max yield | • Savings Connect offers 4.6% APY • Must open a checking account and deposit $100 in both accounts • Checking account also pays interest |
| Current | Best for saving your first $6,000 | • 4% APY up to $6,000 • Limited customer service • Expensive to deposit cash |
| Digital Federal Credit Union | Best for saving your first $1,000 | • 6.17% APY up to $1,000 • 0.16% APY on remaining balance • $5 minimum balance, $5 minimum deposit |
| Fitness Bank | Best for those who want financial incentives for fitness goals | • Interest rate tiers based on monthly steps • 12,500+ steps per month equates to 4.4% APY • Must maintain $100 balance to earn interest |
| HMBradley | Best for big savers | • Hybrid checking/savings • Tiered APY based on the % of your direct deposits you save • APY up to 4.5% if you save 20%+ and meet certain criteria • Highest-rated bank app we reviewed |
| LendingClub | Best for larger savings accounts | • 4.25% APY • $100 initial deposit requirement • No minimum balance |
| SmartyPig | Best for those who love to chart and share savings goals | • 3.75% APY • Cash boosts for using money on "best-in-class" retailers • Tracking tools for savings allocations • Must fund via one outside bank account |
| SoFi | Best for those who don't mind mixing checking and savings | • 4.2% APY with direct deposits • Up to $250 in cash via promotion that ends December 31, 2023 • 15% cash back on certain debit card purchases |
What You Need in a High-Yield Online Savings Account
Many of Clark’s principles for good savings accounts apply to checking accounts as well.
The differences between the best savings accounts are even smaller than your choices with checking accounts. For a real savings account, other than the interest rate, the main things you want are a good website and/or app and a lack of hidden fees.
High-Yield Online Savings Account Features You Want
- Good interest rate. If everything else is equal, you want the option that’s going to pay you the most interest.
- Good website and app. There’s little excuse for a bank to have a clunky website and app in 2022. You should be able to access your account easily. Many bank websites and apps have features like savings goals that allow you to allocate the money in your savings account to things like an emergency fund or a family vacation.
- Good customer service. You probably will not spend as much time managing your savings account as you will with your checking account. But it’s still important to be able to call, email or chat with someone helpful at your bank whenever you have questions or concerns.
Things To Avoid
- Lots of fees and service charges. Look for a savings account that doesn’t charge you for things like monthly maintenance or paper statements. A good interest rate won’t help you if your financial institution cancels out all your earnings by slapping you with fees.
- High minimum balance requirement. This may not be a dealbreaker if you are fortunate enough to have considerable assets. But even then, it’s nice if your bank can offer you peace of mind that it will continue paying you interest and avoid penalizing you even if your account balance gets low.
- High initial deposit requirement. There are a few banks that offer you very competitive interest rates if you make a big deposit when you open your account. But some banks will pay you a good interest rate without requiring a large deposit.
How Does a High-Yield Savings Account Work?
If you’re new to banking, a high-yield savings account may seem a little like black magic. How can a bank pay you to hold your money in a safe, insured place?
The bank takes all the money it has on deposit and loans it out at a slightly higher interest rate than what it pays you. That’s one way that these institutions make money.
And by doing business only online, these financial institutions can operate with lower overhead costs than if they had to maintain physical locations.
The interest rates that banks offer change depending on market conditions — namely, the rate set by the Federal Reserve. That’s the central bank of the United States. “The Fed,” as it’s often called, helps the U.S. maintain a safe, flexible monetary and financial system and influences interest rates at other banks.
The current Federal Reserve rate is much higher than it was in January and February 2022. The Fed raised rates from a range of 0 to 0.25% to 4.25 to 4.5% in just nine months — including four consecutive 0.75% hikes. The gap between one of the megabanks, which are typically still paying less than 0.1% interest, and the best high-yield savings accounts is much bigger now.
So although it mattered little for a while, it’s once again important to shop your savings account.
Good Ways To Use Your High-Yield Savings Account
Clark believes in goal-oriented savings accounts that are as automated as possible. In other words, he likes accounts that help you save for specific expenses like family vacations. And he likes for you to save a set, automated amount every paycheck.
Some of the high-yield online savings accounts that I recommend meet these criteria by letting you allocate funds toward multiple goals within a single account. You can set up automatic transfers that go into each savings “bucket.” If the financial institution you choose doesn’t allow you to split up your savings by goal, you may need more than one savings account. The idea is to keep the money for each savings goal separate.
“People do the best with savings accounts when they have a clear purpose in mind and they contribute to it automatically,” Clark says. “People need to think in terms of every paycheck, putting a certain amount of money in for the different goals. Because otherwise they’re always chasing their tails.”
According to Clark, if you keep your funds for different goals in the same pool of money, it becomes too easy to “borrow” the money from one goal to pay for something else.
If you keep separate pools of money for different savings goals, depleting one still leaves another.
Some potential goals for savings accounts include:
- Family vacation
- Car
- Furniture
- Down payment on a house
- Wedding
- Rainy day fund
Frequently Asked Questions About Savings Accounts
How Do I Calculate How Much Interest I’ll Get?
The best high-yield online savings accounts offer competitive interest rates, usually expressed as APY.
APY stands for Annual Percentage Yield: the total amount of interest you’ll earn in one year, assuming you don’t add or withdraw funds. Interest can compound daily, monthly or quarterly. It’s important to look at APY because it standardizes the time frame and helps you compare apples to apples.
The formula for how much interest you’ll earn is simple. Just multiply the amount of money in your account by the APY, and that’s how much you’ll earn in one year.
Fo example, if you have $1,000 in savings and your bank offers you 3% APY, you’ll multiply $1,000 by 0.03, which equals $30. An interest rate of 0.3% APY would yield $1,000 times .003, or $3 per year.
How Often Do Interest Rates Change?
The answer depends on multiple factors, including whether the Federal Reserve is making changes to its interest rate and whether your bank is trying to attract more depositors by offering a limited-time promotional rate.
The Federal Reserve hiked interest rates seven times in 2022, including six hikes of at least 0.5%. It was the most aggressive surge since the early 1980s. Historical inflation, the highest in 40+ years, compelled the moves.
As such, interest rates that most banks are offering have climbed all year.
You don’t want a bank that’s going to secure your business with a high interest rate only to slash it in short order. It’s also important to know that savings account interest rates tend to be variable, so they could change at any time.
Should I Open a Savings Account for My Child?
Teaching your children about finances can give them a great advantage. Opening a “custodial” or joint savings account can be an excellent way to educate them about finances. And making sure that the account comes with low fees and minimum requirements boosts the value of the lesson.
Children who are old enough to actively participate in maintaining a savings account can make regular deposits and watch their balances grow over time. This can instill good habits. Money in a savings account also isn’t as accessible as money in a piggy bank or wallet.
It’s an especially good idea to avoid accounts with minimum balance requirements and fees when you open a savings account for a child. He or she is likely going to be depositing small amounts at a time. You will need to act as a custodian for the account and have full access. When your child turns 18, you may sign over your custodial rights if you wish.
When Should I Use a Savings Account vs. a CD or Money Market Account?
If you want to earn interest on your money in a safe, low-risk way, you have multiple options.
Money market accounts sometimes offer higher interest rates than savings accounts. But you might have to maintain a higher minimum balance. Traditionally, you get check-writing and debit card privileges with money market accounts, which you usually don’t get with savings accounts.
A CD, or Certificate of Deposit, is akin to a low-risk investment. You agree to leave your money in the CD for a specified period, and in exchange, the bank offers you a fixed interest rate that often is higher than a regular savings account. There are penalties if you withdraw the money early.
If your goal is to get the highest interest rate possible and you know you won’t need to access the money for a certain amount of time, it makes sense to at least shop for CDs to see if you can secure a better rate than a savings or money market account.
Are there Transactions Limits for My Savings Account?
Maybe. Federal Reserve Board Regulation D used to stipulate that you couldn’t make more than six transactions during a single statement cycle. (The rule applies to money market accounts as well.)
It included online transfers, automatic transfers, withdrawals and transfers made with a savings account that act as overdraft protection for a checking account and debit card purchases.
The Federal Reserve amended that rule in April 2020. Banks are now allowed to set their own rules on transaction limits. You’ll want to know those details before opening an account to make sure the bank’s transaction limits work for you.
Final Thoughts
If you have a savings account at a traditional big bank, or you’re earning a paltry interest rate at any kind of financial institution, consider switching to one of the options I’ve recommended in this article.
If you’re looking to open a new high-yield savings account, look for the account with the best APY that still offers low fees and reasonable minimum deposit and balance requirements.
I haven’t listed many credit unions here because most of them are either limited to local areas and/or base memberships on specific criteria. But Clark recommends that you check out the product offerings from your local credit union to see if there’s a savings account there that best fits your needs.
Article Updates
- May 11, 2023: Added Wealthfront to the list of best online savings accounts and removed PenFed Credit Union.
