High yield savings accounts have been paying rates that would have been unthinkable five years ago. While your big bank offers 0.01% APY, online banks are paying 4% to 5%. That’s a real difference. On $20,000 in savings, it’s the gap between earning $2 per year and earning $900.
Not all high yield accounts are created equal, though. Here’s what to look for and which ones consistently deliver.
What makes a savings account “high yield”
There’s no official threshold, but generally any savings account paying significantly above the national average qualifies. The national average savings rate has been around 0.45% to 0.50% APY. Accounts paying 4% or more are solidly in “high yield” territory.
These rates come almost exclusively from online banks and fintech companies. They can pay more because they don’t have the overhead costs of physical branches. Your money is just as safe, as long as the institution is FDIC insured (up to $250,000 per depositor).
Accounts worth looking at
Ally Bank savings account
Ally is the name that comes up most often, and for good reason. Consistently competitive rates, no minimum deposit, no monthly fees, and strong customer service. Their app is well-designed and makes transfers easy. They also offer “buckets” within your savings account, letting you separate money for different goals without opening multiple accounts.
Ally has been around since 2009 (originally a subsidiary of GMAC) and holds over $140 billion in deposits. It’s FDIC insured.
Marcus by Goldman Sachs
Marcus often has one of the top APY rates among established banks. No minimum deposit, no fees, and the Goldman Sachs name carries weight for people who care about institutional backing. The interface is clean and simple, though the app offers fewer features than Ally’s.
One downside: Marcus doesn’t offer a checking account, so you can’t use it as a full banking replacement. It works best as a dedicated savings vehicle alongside your existing checking account.
Capital One 360 Performance Savings
Capital One’s online savings account pays competitive rates with no minimums and no fees. The advantage here is integration. If you already use Capital One for credit cards or checking, having savings in the same ecosystem makes transfers instant rather than the usual one to two business day wait.
Capital One also has physical cafes in some cities, giving you a hybrid between online and traditional banking if you happen to live near one.
Discover Online Savings
Discover’s savings rate is consistently competitive, and they periodically run promotions offering bonus APY for new customers. No fees, no minimums, and FDIC insured. If you already have a Discover credit card, the integration is seamless.
SoFi Savings
SoFi often pushes the highest APY numbers in the market, though you typically need to set up direct deposit to get the top rate. Without direct deposit, the rate is still competitive but not always the highest. SoFi also offers checking, investing, and loans, making it a decent one-stop shop for people who want everything under one brand.
What to check before opening an account
APY vs. promotional rate: Some accounts advertise a high rate that only lasts for a few months before dropping. Check whether the rate is ongoing or time-limited. Ongoing rates can still change (they’re variable), but they don’t have a built-in expiration date.
FDIC insurance: Verify this directly on the FDIC’s BankFind tool. Some fintech apps partner with banks for FDIC coverage, which is fine, but the coverage flows through the partner bank, not the app itself. Make sure you understand who’s actually holding your money.
Withdrawal limits: Federal Regulation D used to cap savings account withdrawals at six per month. That rule was suspended in 2020, and some banks have kept unlimited withdrawals while others still enforce their own limits. Check the fine print if you expect to move money in and out frequently.
Transfer speeds: Moving money from your savings account to an external checking account typically takes one to three business days. If you need faster access, choose a bank that offers same-day transfers or maintain a small buffer in your checking account.
How much to keep in savings
A high yield savings account is the right place for money you might need within the next one to three years: emergency fund, upcoming large expenses, short-term savings goals. It’s not the right place for long-term investment money, which belongs in the stock market where returns historically average 8% to 10% annually.
The standard recommendation is three to six months of living expenses in your emergency fund. Beyond that, assess your upcoming needs. Saving for a car down payment in 18 months? That money goes here. Saving for retirement in 30 years? That money goes into an IRA or 401(k).
Rates will change
High yield savings rates track the federal funds rate. When the Fed raises rates, savings APYs go up. When the Fed cuts, they come down. The rates you see today won’t be the same in two years. That’s fine. Even if rates drop from 4.5% to 3%, that’s still vastly better than the 0.01% your traditional bank pays.
Chase the best rate if you want, but don’t switch banks every time another institution offers 0.15% more. The hassle of moving accounts for a few extra dollars isn’t worth the effort. Pick a solid institution with a consistently competitive rate and let your money work.