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Top 7 reasons to open a high-yield savings account or a high-yield CD:
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Maximizing Returns: High-yield savings accounts and CDs offer significantly higher interest rates compared to traditional savings accounts. By opening one of these accounts, individuals can earn more on their savings, maximizing their returns over time.
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Safety and Security: High-yield savings accounts and CDs are typically offered by reputable financial institutions and are FDIC or NCUA insured, providing peace of mind that deposited funds are protected up to the maximum allowed by law.
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Goal-Based Saving: Whether saving for a down payment on a house, a dream vacation, or an emergency fund, high-yield savings accounts and CDs provide a dedicated space to save towards specific financial goals. The higher interest rates help accelerate progress toward achieving those goals.
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Capital Preservation: CDs, in particular, offer a fixed interest rate and a predetermined maturity date, making them an attractive option for individuals looking to preserve their capital while earning a higher return than traditional savings accounts.
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Passive Income Generation: High yield savings accounts and CDs can serve as a source of passive income, allowing individuals to grow their wealth over time without actively managing investments. This can be especially beneficial for retirees or those looking to supplement their income.
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Low Risk: Compared to other investment options, high-yield savings accounts and CDs are relatively low-risk, making them suitable for conservative investors or those with a shorter investment horizon.
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Liquidity: While CDs have a fixed term, high-yield savings accounts offer liquidity, allowing account holders to access their funds whenever needed without penalties or restrictions, providing flexibility for unforeseen expenses or emergencies.
Click here to read more about how High Yield Savings accounts are low risk due to FDIC Insurance coverage.
Unlocking the Potential of High-Yield Savings Account: A Path to Meeting Savings Objectives
A majority of people are missing out on taking advantage of the high APYs offered on high-yield savings accounts. Regrettably, the national average savings interest rate stands at a meager 0.41% APY according to the FDIC. However, online banks such as CIT Bank and Valley Direct offer high-yield savings accounts that deliver around 10 times more interest than conventional bank savings accounts. In just a few minutes you can open a FDIC insured high-yield savings account and become a savvy saver.
High-Yield Savings Accounts APY vs Regular Savings Accounts Comparison
CIT Bank Platinum Savings |
Citi Accelerate Savings |
Bank of America |
Chase |
Wells Fargo |
4.10% |
3.60% |
0.01% |
0.01% |
0.01% |
Rates are as of May 13, 2025
Distinguishing High-Yield Savings Accounts
Online banks primarily offer high-yield savings accounts, with deposits facilitated through ACH transfers from traditional bank-held checking accounts or via the online bank’s app. Withdrawals are accessible through ATMs with debit cards or ACH transfers to conventional checking accounts.
Comparing Money Market, CDs, and High-Yield Savings Accounts
Money Market Account
Numerous online banks also provide money market accounts boasting comparable high APY to savings accounts. Ally Bank, for instance, offers money market accounts with check-writing privileges and interest rates (APYs) similar to high-yield savings accounts.
Certificate of Deposit (CD)
CDs are optimal for funds not needed for one, three, or five years. Although online banks typically offer higher APY for CDs than savings accounts, early withdrawal penalties apply if funds are withdrawn prematurely. There are no-penalty CDs also available but generally their APYs are closer to a savings account APY.
CDs on the other hand are generally better-suited for money that you don’t need to touch for one, three or five years. The online banks usually offer their rates with a slightly higher APY than the savings accounts because CDs generally have early withdrawal penalties if you withdraw your funds before the CD term ends.
The most liquid (i.e. can be converted to cash easily) is the high-yield savings account among these three deposit products.
High-Yield Savings Accounts: Factors to Consider
Choosing a high-yield savings account involves assessing the following crucial features:
APY
Annual percentage yield (APY) is the interest rate offered by these account types. A higher APY leads to faster savings growth. Note that APY for high-yield savings accounts is variable and can change based on fluctuations in the federal funds rate.
When the Federal Reserve lowers rates, keeps them the same or raises them, the federal funds rate is what the Fed is changing. Generally, when economic growth stagnates, Fed cuts the federal funds rate, leading to high-yield savings account APY to decrease accordingly. When the Fed wants to slow down a hot economy to control inflation, the federal funds rate is increased which usually lead to increases in the savings account interest rates.
In March 2020, the Federal Reserve cut rates to near zero percent to support the economy during the coronavirus crisis which is why yields were at very low levels. However, you should shop around for high APY as the Federal Reserve has increased the funds rates several times in 2022 – 2023, and competition for deposits among the Banks has increased the overall high-yield savings interest rates.
Compound Interest
High-yield savings accounts often employ daily compounding of interest, enhancing savings growth.
Service Fees
While high APY is important, account handling and service fees should also be weighed.
Access to Funds
In selecting the best high-yield savings account it is important to know the various options offered by the online banks in accessing funds. Ensuring convenient fund access through bank-to-bank transfers and mobile apps is vital. Some high yield accounts allow an ATM access which enables you to deposit cash thru ATMs. Similarly, the high yield account should offer multiple options to withdraw funds relatively easily and deposit to your existing checking account.
One noteworthy rule of high yield savings account, is that you can withdraw or transfer money (including electronic transfers, checks and wire transfers) out of your account for up to six times per month without having to pay a penalty fee or risk having your account to be closed. However, this federal law, known as Regulation D, has been temporarily lifted since April 2020 for all savings deposits during the coronavirus outbreak to help people who require more urgent access to their money. Check with your financial institution if it is still allowing more than 6 withdrawals from its high yield savings accounts without any penalties.
Availability of Funds
Unfortunately, this information is usually buried in the disclosures of the account. The high-yield account should not put unreasonable holds (preferably no holds greater than 3-5 business days) on funds when you make transfers/deposits. Avoiding extended holds on funds is essential for seamless access.
Prioritizing Your Savings Goals
Since we discussed how high-yield savings account can help grow your money faster, lets talk about prioritizing your savings goals.
Emergency Savings
The Federal Reserve reports that 39% of Americans don’t have enough money on hand to cover a $400 emergency. Moreover, the coronavirus pandemic has eroded the emergency savings of many. Building an emergency savings should be the first priority to protect yourself from any unplanned life events. Generally, a minimum of 3 months of emergency savings is recommended at first to eventually build up to 6 months of emergency savings.
It is suggested that you create a budget based on your living expenses and then put aside whatever amount you can into the high-yield savings account. Start small if you have to and then make your savings automatic by setting up a recurring transfer into the high-yield savings account from your checking account.
Other Short-term goals
Once you have built your emergency fund, you can save up for your other short term goals such as for security deposit for a secured card, or to enjoy the life’s finer moments such as taking a vacation, making a large purchase such as a down payment on a home, paying for a wedding or even starting an investment account.
Long-term goals
While high-yield savings accounts are suitable for short-term goals, consider investment accounts for long-term objectives such as retirement or college expenses.
High Yield Savings accounts (APYs) are currently outpacing inflation rate. Click here to learn more.
Our picks for high-yield savings accounts
By making strategic use of high-yield savings accounts, you can amplify your savings and move closer to your financial aspirations.
The following banks were selected for their high APYs, no monthly maintenance fees, and easy access to the high-yield account. The banks recommended below are federally insured by the Federal Deposit Insurance Corporation (FDIC), which means that deposits up to $250,000 are protected if in the unlikely event that the bank were to suddenly collapse.
Please see our Banking page for more banking account rates such as for High Yield Checking accounts. According to FDIC (4/21/25), average interest rate on a savings account is a mere 0.41%.
Try our savings calculator here to help set a savings goal:
TOP RATE FROM LEADING ONLINE BANK: For deposit of a minimum of $5,000, save faster with the Platinum Savings account. This flexible account is paying a market leading APY — one of the highest in the nation. Click here to open or to learn more.
APY: 4.10% (for $5,000 or more in deposit)
Interest Compounded: Daily
Min Bal: None (open with $100)
ATM Access: Not with savings only account but available if opened with e checking account.
Other Factors: Offers top of the market CDs including the 11 month no-penalty CD. Mobile app to access account. CIT Bank might be for you if you want your checking and savings at the same online bank.
Industry leading Platinum Savings account from CIT Bank can help you avoid market volatility and grow your savings fast.
Click here to learn more about CIT Bank.
Synchrony Bank
APY: 4.00% APY
Interest Compounded: Daily
Min Bal: None
ATM Access: Yes
Other Factors: Complimentary ID Theft resolution, mobile app to access account, no checking account.
Ally Bank
APY: 3.60% APY
Interest Compounded: Daily
Min Bal: None
ATM Access: Not with savings only account
Other Factors: Free checking account with ATM access, APY is the same on all balance tiers, mobile app to access account. Ally Bank might be for you if you want your checking and savings at the same online bank.
Capital One Bank
APY: 3.60% APY (360 Performance Savings Account)
Interest Compounded: Monthly
Min Bal: None
ATM Access: Not for savings only account
Other Factors: Checking accounts, CDs. Capital One Bank might be for you if you want your checking and savings at the same online bank.
Still have questions on whether High-Yield Savings accounts are right for you? Click here to learn more.
Please Note: APYs listed in this article are up-to-date as of May 13, 2025. The APYs may fluctuate (up or down) particularly if the Fed changes the Federal Funds Rate.
HIGH MARKET RATE: Open in just a few minutes and earn one of the highest High Yield Savings rates from Valley Direct (an online subsidiary of Valley Bank) – open with a minimum of $1,000
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