Erin Bendig
I wish I had done this sooner. That's a common thought when savers switch from a traditional savings account to a high-yield one, especially when you see how much money you can earn.
And this marks an excellent time to do so, as the Federal Reserve hasn't cut rates this year. However, it's possible things change before the end of the year. The "dot plot" from the latest Fed meeting indicates the central bank might cut rates twice this year, so if you want to earn higher rates of return, now is the time to do so.
Here's a look at some of our top choices of high-yield savings accounts you can open now:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Account | APY | Min. opening deposit |
|---|---|---|
4.35% | $0 | |
4.30% | $500 | |
4.30% | $500 | |
4.30% | $5,000 | |
4.25% | $0 | |
4.25% | $100 | |
4.25% | $100 | |
4.25% | $1,000 | |
4.25% | $2,500 | |
4.20% | $0 | |
4.15% | $10 | |
4.00% | $25,000 |
Rates on high-yield savings accounts are always changing, so a good way to check the most up-to-date rates is by using our savings tool, below, powered by Bankrate:
What are high-yield savings accounts?
Essentially, high-yield savings accounts are the same as traditional savings accounts with one key difference — high-yield savings accounts pay a higher-than-average APY on deposits, meaning you'll be able to accrue more cash over time. And they're great options if you're looking for a risk-free way to maximize your savings.
Most high-yield savings accounts are federally insured, keeping your savings secure if your bank or credit union fails. If you open an account through a bank, the FDIC will protect up to $250,000 in individual deposit accounts and up to $250,000 for each person's share of joint accounts.
For accounts opened with a credit union, the NCUA will protect up to $250,000 per credit union member (whether in an individual or a joint account).
Unlike CDs, in which your cash is locked away for a fixed period, high-yield savings accounts let you easily access the funds in your account.
For this reason, they're good options for short-term savings goals or emergency funds. Plus, sometimes these accounts offer a savings account bonus, putting more money in your pocket.
Ways to use a high-yield savings account
These accounts allow you to set savings goals for short or longer term purchases. Whether you want to save for a dream vacation, a retirement party or even have some money set aside to start your business in retirement, high-yield savings accounts can help you reach your goals quicker.
Pros and cons of high-yield savings accounts
As with all savings products, there are pros and cons associated with high-yield savings accounts. It's important to compare all aspects of an account to make sure it meets your needs before opening it.
Pros:
- Higher APYs: Since high-yield savings accounts have higher APYs than traditional savings accounts, you’ll accrue more interest over time. Plus, interest in these accounts is compounded daily.
- Safety: Many high-yield accounts are FDIC or NCUA insured, meaning that if something were to happen to the bank (or credit union) your account is with, your money will still be safe.
- Accessibility: While there are limitations on the number of free withdrawals you can make from a savings account, your money is still readily accessible whenever needed.
Cons:
- Harder to access than traditional savings accounts: If you have a savings account with a different bank than your checking account, you may have to wait a few days for funds to transfer from one to the other. Plus, you won't be able to easily view account details for both accounts in one place unless you have the right budgeting app.
- Not suited for long-term goals: If you're looking to save for long-term goals, like retirement, other investments, like stocks, are usually a better choice for your money. The rate of inflation can be higher than what you accrue in interest.
- Variable interest rates: Since interest rates are variable, the APY on the account can decrease from the rate it was when you opened the account if the Fed decides to cut rates in the future.
- Minimum deposit requirements and fees: Many high-yield savings accounts charge a monthly fee and/or require a minimum deposit to earn the advertised APY.
- Online banks: Since most high-yield accounts are offered by online banks, you likely won't have branch access. Therefore, contacting customer service or accessing a fee-free ATM might be more challenging.
Bottom line on high-yield savings accounts
Opening a high-yield savings account is an excellent option to consider. High-yield savings accounts offer higher rates than traditional savings accounts, meaning your cash will accrue more interest by simply sitting in a high-yield account than it would in a standard account. And there's no risk, either.
The downside? Since rates on high-yield savings accounts fluctuate with the market, take advantage of the best rates while you still can.
Related Content
-
How to Navigate Your Medicare Advantage Plan in a DisasterIf you're a Medicare Advantage member in an area that has been impacted by a disaster, you might be worried about access to care and medicine. Here's what you need to know.
-
Older Investors: Boost Your Savings and Retire EarlierThis one measure can help older investors retire up to two years earlier and potentially double their retirement savings.
-
Do Baby Boomers Spend More on Travel? What You Can Learn from Each GenerationBaby Boomers lead in travel spending, but younger travelers may be getting better value. See how older travelers compare with younger ones — and what each generation can learn about smarter travel.
-
My First $1 Million: General Manager in Construction/Home Services, 46, IndianaEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Google's AI Overview Is Wrong About Life Insurance 57% of the Time, Says StudyYou need more than a grain of salt when getting life insurance tips from Google's AI overview.
-
How Apple’s Tariff Strategy Could Affect Your Next iPhone UpgradeApple’s $100 billion US expansion could shift iPhone assembly stateside — impacting pricing, availability and your next upgrade decision.
-
Your Retirement Side Hustle Starter Kit: The Essential Tools and Apps You NeedCheck out seven awesome tools and apps to jumpstart your retirement side hustle with confidence.
-
Roku Launches $2.99 Ad-Free Streaming Plan: Howdy ExplainedRoku just launched Howdy, an ad-free streaming service with 10,000 hours of classic content. Here's how it compares to other platforms.
-
Time for a Money Checkup: An Expert Guide to Realigning Your Financial GPSEven if your financial plan is on autopilot, now is the perfect time to make sure it's still aligned with your goals, especially if retirement is on the horizon.
-
How to Break Free From the 'One More Year' Trap and Actually RetireDespite having more than enough money to retire, some people simply cannot leave their jobs.
