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By Fernando Garcia and Andrea Agostini
Updated: September 1, 2021 1:34 PM ET | Originally published: March 8, 2021
Woman Climbing Up Oversized Staircase Made Out Of Stacks Of Cash
Money; Shutterstock

A high-yield savings account offers interest rates up to 25x times higher than a traditional savings account, making it an excellent place to keep your short-term savings for that new computer or long-term goals, including a down payment fund or a vacation account.

Read our list of the 6 best high-yield savings accounts for 2021, and learn the importance of APYs, minimum deposit, and withdrawal options.

Our Top Picks for the Best High-Yield Savings Accounts

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Best High-Yield Savings Accounts Reviews

Each company’s annual percentage yield (APY) is accurate at the time of this publication, but they may vary according to the rates set by the Federal Reserve. None of our top picks have a monthly maintenance fee.

Discover- Best Overall

Highlights:

APY
0.40%
Minimum deposit
None
Minimum account balance
None
Other fees
No fees if you exceed the federal limit of 6 transactions per statement cycle.
APY
0.40%
Minimum deposit
None
Minimum account balance
None
Other fees
No fees if you exceed the federal limit of 6 transactions per statement cycle.
APY
0.40%
Minimum deposit
None
Minimum account balance
None
Other fees
No fees if you exceed the federal limit of 6 transactions per statement cycle.

The Discover online high-yield savings account checks all of the boxes by offering high interest rates and no fees. That means $0 monthly maintenance fees, no minimum initial deposit requirements, and no minimum balance.

Interest is compounded daily and paid monthly, and customers can manage their accounts with their mobile phones and deposit checks with the Zelle cash app. You can also integrate your savings with other Discover bank accounts.

In terms of customer satisfaction, Discover ranks 4th in JD Power’s 2020 Direct Banking Satisfaction Study.

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Ally Bank - Best Online-Only Bank

Highlights:

  • Multiple online tools to boost savings
  • Daily compounding interest
  • Free access to the Allpoint ATM network
  • Ranks 6th in JD Power’s 2020 Direct Banking Satisfaction Study
  • FDIC insured
APY
0.50%
Minimum deposit
None
Minimum account balance
None
Other fees
$10 excessive transactions fee if you exceed the federal limit of 6 transactions per statement cycle.
APY
0.50%
Minimum deposit
None
Minimum account balance
None
Other fees
$10 excessive transactions fee if you exceed the federal limit of 6 transactions per statement cycle.
APY
0.50%
Minimum deposit
None
Minimum account balance
None
Other fees
$10 excessive transactions fee if you exceed the federal limit of 6 transactions per statement cycle.

Ally’s online high-yield savings account is ideal for customers comfortable baking entirely online who want a high APY (0.50%) and no monthly fees.

The account is easy to set up and has convenient tools to boost savings, including customizable savings goals (“buckets”), which help you save for goals inside your online savings account. Customers can check their balances and complete other tasks using Amazon’s Alexa.

Ally has free ATM access at multiple locations with the Allpoint ATM network, and retail bank customers can speak with a representative over the phone 24/7.

CIT Savings Builder- Best Committed Savings Plan

Highlights:

  • Interest compounds daily
  • Option to use Zelle cash app with an online savings account
  • Access to a high-yield savings calculator
  • Online check deposit
APY
0.28% to 0.40%
Minimum deposit
$100 to open an account
Minimum account balance
Make a $100 each month or maintain a balance of $25,000
Other fees
Excess activity fee if you exceed the limit of 6 transactions per statement cycle
APY
0.28% to 0.40%
Minimum deposit
$100 to open an account
Minimum account balance
Make a $100 each month or maintain a balance of $25,000
Other fees
Excess activity fee if you exceed the limit of 6 transactions per statement cycle
APY
0.28% to 0.40%
Minimum deposit
$100 to open an account
Minimum account balance
Make a $100 each month or maintain a balance of $25,000
Other fees
Excess activity fee if you exceed the limit of 6 transactions per statement cycle

CIT Savings Builder is a good option for customers who want to stick to a monthly savings plan. The Savings Builder account pays 0.40% APY but, to qualify, you must maintain a minimum balance of $25,000 or commit to depositing $100 each month.

Customers must also keep track of CIT’s Evaluation Period and Evaluation Day Calendar to meet these requirements, but if they miss the cutoff date in one cycle, they can always qualify in the next one.

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Betterment Cash Reserve - Best Cash Management Service

Highlights:

  • Unlimited savings withdrawals
  • Option to create cash goals for specific saving goals
  • Highest FDIC insurance available
APY
0.30%
Minimum deposit
$10
Minimum account balance
None
Other fees
None
APY
0.30%
Minimum deposit
$10
Minimum account balance
None
Other fees
None
APY
0.30%
Minimum deposit
$10
Minimum account balance
None
Other fees
None

Use Betterment’s Cash Reserve high-yield savings account to create separate stashes of cash for specific goals and set up auto-deposits for each.

Cash Reserve doesn’t offer a set rate like a bank. Instead, it tracks the Federal Reserve’s rate — currently 0.40%APY — compounds and pays interest monthly and includes online and mobile banking options such as mobile check deposit. Combining a Cash Reserve account with a Betterment checking account will give you access to a Visa debit card, unlimited ATM fees reimbursement, direct deposit and check writing, and multiple cash apps.

The company guarantees FDIC insurance on your savings by working with program banks, and depending on your bank of choice, Cash Reserve savings can be insured for up to $1,000,000.

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PenFed Premium Online Savings - Best Credit Union

Highlights:

  • Free online transfers
  • No maintenance fees
  • Interest is compounded and credited to your account monthly
  • Insured by the National Credit Union Administration for up to $250,000
APY
0.45%
Minimum deposit
$5
Minimum account balance
None
Other fees
A fee may be charged if you exceed the limit of 6 transactions per statement cycle.
APY
0.45%
Minimum deposit
$5
Minimum account balance
None
Other fees
A fee may be charged if you exceed the limit of 6 transactions per statement cycle.
APY
0.45%
Minimum deposit
$5
Minimum account balance
None
Other fees
A fee may be charged if you exceed the limit of 6 transactions per statement cycle.

PenFed’s Premium high-yield online savings account features competitive APYs and no fees. Credit Unions usually have a membership requirement, and in this case, you need to make ($5 deposit) to become a credit union member.

Open the account online and use the PenFed app to transfer funds between accounts, although check deposits must be made by mail.

This account is entirely online, but if necessary, customers can also find in-person service at one of the many physical branches available nationwide.

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Varo - Best For Combining Checking and Savings

Highlights:

  • Interest is compounded daily and paid monthly
  • Online and mobile accessibility
  • Highest APY rate with its tiered interest rate program
  • FDIC insured
APY
0.20% to 3.00%
Minimum deposit
$5
Minimum account balance
None
Other fees
None
APY
0.20% to 3.00%
Minimum deposit
$5
Minimum account balance
None
Other fees
None
APY
0.20% to 3.00%
Minimum deposit
$5
Minimum account balance
None
Other fees
None

Varo’s high-yield savings account stands out for its tiered APY program. Customers can benefit from the highest rate advertised (2.80%) by opening a Varo checking account and depositing at least $1,00 each month. Additionally, they must make a minimum of five monthly purchases with their ATM card.

Varo also offers a set of useful online saving tools. Save Your Pay automatically transfers funds by taking a percentage of your paycheck, while Save Your Change rounds up checking account transactions and transfers the difference to savings.

Other High-Yield Savings Accounts We Considered

My Savings From Nationwide by Axos

  • Earn up to 0.70% APY
  • $0 monthly maintenance fee
  • No minimum requirement balance need
  • $100 deposit to open your account.

Marcus by Goldman Sachs

  • Earn up to 0.50% APY
  • No fees and minimum deposit
  • Same-day transfers of $100,000 or less to/from other banks
  • US-based contact center open 7 days a week

Performance Savings by Capital One 360

  • Earn up to 0.40% APY
  • No monthly fees
  • No minimums to peon or maintain your account
  • Digital personal saving tools

Vio Bank

  • Earn up to 0.57% APY
  • Only $100 minimum to open
  • No monthly fee
  • 6 free withdrawals per monthly statement cycle

Personal Savings by American Express

  • Earn up to 0.50% APY
  • No minimum, no monthly fees
  • Up to 9 withdrawals/transfers per month
  • Easy access to your money, round-the-clock

Barclays Online Savings

  • Earn up to 0.40% APY
  • No monthly maintenance fees
  • No minimum balances to open
  • Tools to help you save

Synchrony High Yield Savings

  • Earn up to 0.50% APY
  • No minimum balance
  • Access your money online, by phone, or via ATM
  • FDIC Insured

High-Yield Savings Accounts Guide

High-yield savings accounts, also known as high-interest rate savings accounts, are bank accounts that earn you higher interest than a traditional savings account. When it comes to saving, a higher interest rate means a better return on your money.

For example, most traditional savings or checking accounts provide a 0.01% interest rate, while interest rates on high-yield savings accounts range from 0.4% to 0.9%.

What should you look for in a high-yield savings account?

Relatively stable rates

The interest rate you will get will vary depending on the interest rate set by the Federal Reserve. Banks use this to calculate the annual percentage yield (APY) for savings and investment products. When choosing a high-yield savings account, you want to find one that offers an APY greater than the national average 0.05% that you would earn in a standard savings account. Online banks and credit unions typically provide far higher interest rates on savings accounts than brick-and-mortar banks since they pay less overhead than banks with a physical branch.

Few to no administrative fees

High-yield savings accounts can come with monthly maintenance fees or requirements to maintain a minimum balance. Some accounts require you to maintain a minimum balance that would earn you at least one cent each month based on the APY. With other banks, you might not have to pay a monthly maintenance fee, but there may be additional fees such as overdrafts and wire transfer fees that you might need to pay.

FDIC/NCUA Insurance

Money in an online bank or any type of bank is secure as long as the bank is FDIC insured, meaning that the Federal Deposit Insurance Corporation backs it. Most high-yield savings accounts are FDIC-insured up to $250,000.

COVID-19 And High-Yield Savings Accounts

Certain Fees And Transaction Limits Are Temporarily Lifted

At the start of 2020, the Federal Reserve lifted a regulation that legally required banks to limit savings account transactions to a maximum of 6 per statement cycle. The purpose of this change was so that consumers could easily access their savings in times of economic uncertainty, and it is fortunately still in place.

As of February 2021, customers can withdraw money from their savings account as many times as needed, and most banks are waiving fees and related penalties. We advise you to visit the website of your bank of choice to learn more and to keep track of any federal policy changes.

Interest Rates On A Downward Trend

High-yield savings accounts rates fluctuate according to the federal funds rate reserve. In times of economic hardship, these rates can be negatively affected, and customers should be prepared to see their interest rates drop.

Because of the COVID-19 pandemic, the Federal Reserve is currently maintaining a zero-interest-rate policy. This policy is set to remain in place until the economy begins its recovery, which means 2021 interest rates for high-yield savings accounts are projected to stay low.

This should not deter you from putting money into high interest savings accounts because even at their lowest, these will earn more than traditional savings and checking accounts.

Best High-Yield Savings Accounts FAQ
What is a high-yield savings account?
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High-yield savings accounts are deposit accounts that pay higher interest rates than standard savings accounts, with some offering rates up to 25 times higher than the Fed national bank average. Although it is possible to find this type of financial product at traditional brick-and-mortar banks, online banks offer the highest savings account rates.
What are the benefits of a high-yield savings account?
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High yield savings accounts are the best option for savers to reach their financial goals faster. They are a no-risk investment option to grow your emergency fund or down payment fund, all the while maintaining direct access to your money as needed. Also, high yield-saving accounts are an excellent product for those looking for low fees or zero monthly fees.
What is compound interest?
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Compound interest, or compounding interest, is the interest on a loan or deposit that is credited to an existing principal amount as well as to the interest that's already been paid. It is the percentage advertised as the annual percentage yield (APY), and it's what distinguishes high-yield savings accounts from regular savings or checking accounts.
Why are compounding periods important?
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The more often a company compounds interests and pays them to your account, the higher your earnings will be. Daily compounding will maximize your money more than monthly or quarterly compounding.
What is the difference between a high-yield savings account and a traditional savings account?
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A high-yield savings account has a higher interest rate than regular savings accounts rates, often up to 25x higher. The average savings account pays a 0.07 percent annual percentage yield (APY). Even with the current low rates, high-yield accounts rates are around 0.50%.
Can you lose money with a high-yield savings account?
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If your high-yield savings account does not grow at the same rate as inflation, you will lose money in the sense that the purchasing power of your savings will diminish. High-yield savings accounts can also make you lose money if you don't keep track of maintenance and service fees, and you wind up paying more than what you're earning.
What do I need to sign up for a high yield savings account?
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Online banking is the norm for high yield savings accounts, and the sign-up progress can be quick and easy. Banks require your Social Security number, along with personal information like home address, phone number, and email address. If you plan on linking banks from other institutions, you will need your account number and routing number to start the process.
Can I be denied a high-yield savings account?
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Denied applications are uncommon, but they can happen. If you've had instances of bounced checks or unpaid fees within the last five years, it could still be logged in your record, which would inform the bank's decision to allow or deny your application.

Another possible reason for getting denied is having a credit freeze on your account. Since a freeze restricts access to your credit history, the bank would not perform the required background checks to approve your new account.

Are high-yield savings accounts rates fixed?
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Most high-yield saving accounts will have a variable APY. Those looking for a fixed interest rate should look at certificates of deposit. CDs are deposit accounts that tend to pay higher interest than traditional savings and money market accounts.

How We Chose the Best High-Yield Savings Accounts

Competitive annual percentage yield rates

  • Companies must offer competitive rates and have a solid history of high APY rates even before the federal reserve rates cut.
  • The annual percentage yield for most high-yield savings accounts at the moment is between 0.40% to 0.50%.

Ease of use and accessibility

  • User-friendly mobile app and online platforms
  • Transparency with crucial information and terms and conditions
  • Accounts with mobile accessibility were rated higher than those without
  • Options to withdraw or deposit their money by electronic transfers, wire transfers, mailed checks or linking to external checking accounts
  • ATM withdrawal options are a plus. Most online banks require that you open a checking account with them to access your money from an ATM.

Maintenance fees or account balance requirements

It is not in your best interest to sign up with an institution that will charge a handful of fees. We prioritized companies with:

  • No maintenance
  • None or minimal balance fees
  • None or low minimum balance requirements
  • Free online transfers

Customer experience

We recognize that direct banking customers should be familiar with online and mobile platforms, but customer support must be readily available when needed. The best online savings account offered chat, phone, email support, and some even guaranteed 24/7 customer support.

Strong financial standing

Your financial institution of choice should have a strong financial rating from a reputable credit rating agency. S&P Global Ratings, Moody’s, and Fitch Group are known as The Big Three in the industry, and you can search their databases for information on the bank of your choice.

Our Top Picks also had to be insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The FDIC covers up to $250,000 per depositor, per ownership category, per FDIC-insured institution.

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Summary of Money’s Best High-Yield Savings Accounts of 2021