Best High-Yield Savings Accounts in 2024

A savings account is a popular way amongst individuals to grow their savings more effectively as compared to traditional savings accounts. These accounts offer higher interest rates and act as an attractive option to maximize savings with minimal risk.

These high-yield savings accounts are insured by FDIC (Federal Deposit Insurance Corporation), making it popular and trusted than stocks and mutual funds. The two crucial factors, higher interest, and financial security, make it a compelling choice for long-term or short-term financial goals. 

The current economic landscape is unpredictable, with inflation that can erode the purchasing power of idle money. So, it is always advisable to research a bit and opt for the best high-yield savings account to preserve the value of your money.  

The flexibility and the potential for higher returns that this account type offers can prove extremely helpful for building an emergency fund, saving for a big purchase, or simply growing your financial cushion over time.

In this article, we will discuss what are high-yield savings accounts and a detailed guide to know everything about this type of account. 

Key Takeaways

• High-yield savings accounts offer higher interest rates, unlike traditional accounts, making them attractive for maximizing savings with minimal risk.
• Insured by the FDIC, high-yield savings accounts provide a secure option, unlike riskier investments like stocks or mutual funds.
• Understanding the workings of high-yield savings accounts helps in leveraging their benefits effectively for financial growth and security.

What is a High-yield Savings Account?

It is a type of savings account that offers considerably higher interest rates as compared to traditional savings accounts. The high-yield savings accounts help individuals grow their idle money and increase its value many folds.

The best online savings account has minimal risk involved, and the overhead costs are also less. The financial bodies that generally offer this account type are online banks and credit unions.  The key features of these account types are:

• These accounts offer significantly higher interest rates compared to traditional savings accounts, allowing your money to grow faster.
• These accounts are typically insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) up to $250,000 per depositor, per institution.
• These are the best online savings account types that have low minimum balance requirements and minimal fees, making them accessible to a wide range of savers.
• They are suitable for building an emergency fund, saving for large purchases, or simply accumulating interest over time.

Apart from this, many high-yield savings accounts are offered by online banks, providing convenient online and mobile banking options.

How do High-yield Savings Accounts Work?

The best high-yield savings account in 2024 works by offering higher interest rates, making your money grow faster. Once you deposit money into a high-yield savings account, the bank or credit union pays you interest on your balance. This amount is typically compounded daily or monthly.  

To access your funds, you can typically transfer money to a linked account or withdraw directly through online and mobile banking platforms. 

You can start by researching the available options and choose the best high-yield savings account, like American Express Savings. Invest your money into that account and sit back and relax as you gain higher interest with minimal risk involved. You can withdraw your money conveniently through your online banking application.

What is the Difference Between Savings and High-yield Savings?

The question that most commonly arises is how savings and high-yield savings accounts differ. The primary difference between a traditional savings account and a high-interest savings account lies in the interest rates offered.

High-yield savings accounts provide significantly higher interest rates compared to traditional savings accounts, allowing your money to grow faster over time. Let us discuss the differences related to all significant factors. 

Interest Rates

Traditional accounts typically offer lower interest rates, often around 0.01% to 0.05% annual percentage yield (APY). On the other hand, high-interest accounts offer higher returns, commonly ranging from 1% to 2% or more. 

Accessibility and Convenience

Traditional accounts are available at the brick-and-mortar banks, they provide easy access to funds through branches, ATMs, and online banking. They may also come with additional services like personalized customer support.

However, high-interest accounts are available at online banks and credit unions. Access to funds is typically through online and mobile banking platforms, which can be just as convenient for tech-savvy users.

Minimum Balance Requirements

You have to meet higher minimum balance requirements to avoid monthly fees in a traditional account setup. On the other hand, higher-interest accounts usually have low or no minimum balance requirements, making them accessible to a broader range of savers.

Fees

Traditional accounts have higher fees for maintenance, withdrawals, or falling below minimum balance requirements. Whereas, the top high-yield savings accounts have minimal fees involved. 

In summary, high-yield savings accounts offer higher returns on your savings with similar safety and accessibility features as traditional savings accounts, making them a more effective tool for growing your money.

What are Alternatives to High-yield Savings Accounts?

If you’re exploring alternatives to high-yield savings accounts for growing your savings, consider the following options.  

Certificates of Deposit (CDs)

The CDs offer higher interest rates than the high-yield savings account option. The difference is that it comes with a lock-in period. You need to lock your funds for a specified time period that can range between a few months to several years. Though you can withdraw your funds before the lock-in ends, it comes with penalties. 

Money Market Accounts

In this savings option, your interest rate will be similar to that of a high-yield savings account. These accounts have higher minimum balance requirements, failing which, you would have to pay the fees. The highlight feature is that it comes with check-writing capability and debit card access. 

Investment Accounts

Another option is the investment account for the stock market, mutual funds, and ETFs. Unlike savings accounts, these investments are subject to market risk, but the returns can be astonishingly high. However, one should keep in mind that losing the value entirely can also be a consequence.

Peer-to-Peer Lending

This is a trusted mode to add value to your idle money. You can lend money to startups or individuals at a higher interest rate than a traditional loan option. It can be done through various online applications these days. However, there is a risk that the borrower might default on your loan.

High-yield Savings Account v/s Certificate of Deposit (CD)

While exploring the best online savings account details, it is helpful to know the difference between high-yield savings accounts and CDs to make a fair choice. 

High-Yield Savings Account

These accounts offer higher interest rates than the traditional methods. You can expect to get around 2% APY. The highlight feature is that the account is insured by FDIC, keeping the risk minimal. Moreover, these accounts provide easy access to your saved funds with no withdrawal penalties.

High-yield savings Accounts are ideal for those needing flexible access to their funds with minimal fees and competitive interest rates.

Certificate of Deposit (CD)

These account options offer higher interest but to get the maximum benefit, you should plan a long-term investment. Your funds are locked in for a pre-decided term that can be several years! Another significant thing to note is that funds are locked for a fixed term and withdrawing money before that would incur penalties.

On the other hand, Certificates of Deposit (CDs) are best for individuals who can commit their funds for a fixed term to earn higher interest rates and don’t need immediate access to their money.

High-yield Savings Account v/s Checking Account

High-Yield Savings Account 

While we discover high-yield savings accounts, the highlight features include higher interest rates that help grow your savings faster. These accounts provide easy access to funds but may limit the number of withdrawals per month (usually six). This can be a popular choice for saving money and not for everyday transactions. 

High-Yield Savings Accounts are best for earning interest on savings with occasional access to funds.

Checking Account

This account type typically offers little to no interest on balances, making it less suitable for growing savings. It provides unlimited transactions, including checks, debit card purchases and electronic transfers, making it convenient for daily use. It can have higher fees, including monthly maintenance, overdraft, and transaction fees. 

On the other hand, checking accounts are ideal for daily transactions and managing everyday expenses.

Pros and Cons of High-yield Savings Accounts

Whether you choose Capital One high-yield savings or Amex high-yield savings, there are pros and cons to every account type. The Pros and Cons mentioned below will give you better clarity. 

Pros 

• Higher Interest Rates: Earn significantly higher interest compared to traditional savings accounts.
• Safety and Security: It is insured by the FDIC or NCUA up to $250,000 per depositor, per institution, ensuring your funds are protected.
• Easy Access: You get easy access to your funds through online and mobile banking platforms, although withdrawals may be limited. 
• Minimal Fees: Generally, these accounts have minimal fees, making them cost-effective.

Cons 

• There are limits to the number of withdrawals per month (usually six), which may not be convenient for all users.
• Interest rates can fluctuate based on market conditions and the bank’s policies.
• Some accounts may require a minimum balance to earn the highest interest rates or to avoid fees.
• While offering higher interest than traditional savings accounts, returns are still lower compared to riskier investments like stocks or mutual funds.

Are High-yield Savings Accounts Safe?

Yes, high-yield savings accounts are generally considered safe for adding value to your savings. They are typically offered by reputable banks and credit unions, many of which come with insurance from the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). This insurance protects your deposits up to $250,000 per depositor, per institution, in case the bank fails. 

Furthermore, these accounts focus on preserving your principal while earning competitive interest rates. They are not subject to market risks like stocks or other investments. However, it’s essential to verify that your chosen bank is FDIC or NCUA insured.

Additionally, you should learn and understand any terms and conditions that may affect your account, such as withdrawal limits or potential changes in interest rates. Overall, high-yield savings accounts offer a secure option for saving money with the benefit of higher interest rates.

List of Best High-yield Online Savings Accounts

Here’s a list of the best high-yield savings accounts in 2024 that you can consider opting for to save and multiply your money. 

American Express National Bank 

The American Express savings account offers competitive interest rates with no minimum balance requirement. The bank offers convenient online account management and 24×7 customer support to assist you better. Additionally, customers can benefit from the security and reliability associated with American Express, along with FDIC insurance. 

Capital One – 360 Performance Savings

The capital one high yield savings offer competitive APYs with no additional fees or minimum balance requirement. The 360-performance account has easy mobile accessibility. Additionally, the customers get access to the extensive ATM network offered by Capital One.

Ally Bank – Online Savings Account

The high-yield savings account offered by Ally Bank is another promising option with no minimum balance requirement or monthly maintenance fee.

The bank also offers 24×7 customer support and easy online account management. The customers also get access to a wide network of ATMs nationwide, and Ally’s savings tools help customers set savings goals and automate deposits.

Marcus by Goldman Sachs – Online Savings Account

Marcus offers a high interest rate with no fees or minimum deposit requirements. They emphasize transparency in banking, with easy online account management. Furthermore, Marcus provides a user-friendly online application and has FDIC insurance up to the maximum allowable limit. 

Discover Bank – Online Savings Account

Discover Bank offers competitive interest rates, no monthly fees, and no minimum balance requirements. Their online savings account provides easy access to funds and 24/7 customer service.

Furthermore, it offers a variety of banking products and services, like credit cards and cashback rewards that you can link to your savings account. 

Synchrony Bank 

The high-yield savings account offered by Synchrony Bank has high APYs with no minimum balance requirement. The bank also offers ATM access with debit cards and a user-friendly application for online banking.

Additionally, this account type is known for excellent customer service and diverse services, like CDs and money market accounts. 

CIT Bank – Savings Builder

CIT Bank offers excellent APYs with the opportunity to earn higher rates by maintaining a qualifying balance or making monthly deposits. They have no monthly maintenance fees and provide 24/7 customer support.

It aims to encourage savings habits with its tiered interest rate structure, allowing customers to maximize their earnings based on their saving behaviours.

HSBC Direct – Online Savings

This bank offers competitive rates with no monthly maintenance fees and no minimum balance requirements. They provide 24/7 online account access and a global ATM network.

Additionally, customers can benefit from HSBC’s global banking presence and comprehensive financial services, including checking accounts, CDs, and investment products.

Varo Bank – Savings Account

Varo Bank offers high APYs against savings accounts with no fees and no minimum balance requirements. Their mobile-first banking experience includes automatic savings tools and early direct deposit capabilities.

Additionally, it is integrated with their checking account features, providing customers with a seamless banking experience through their mobile app.

Chime – Savings Account

Chime offers promisingly high APY with no additional fee or minimum balance requirement. The savings account includes an automatic saving feature and easy mobile banking access.

The account is designed to help customers build savings effortlessly, with features like round-up savings on purchases and early direct deposit options.

These accounts are popular for their competitive interest rates, fee structures, customer service reputation, and overall banking experience.

Choosing the best account depends on your specific financial goals, preferences for online banking features, and the level of customer support you require.

Conclusion

In conclusion, it is fair to say that high-yield savings accounts are a reliable and advantageous option for savers looking to grow their money effectively in the ever-changing economic landscape.

These accounts offer higher interest rates as compared to traditional savings options, making them a compelling choice for both short-term and long-term financial goals.

The security provided by FDIC or NCUA insurance ensures that the deposits are protected up to $250,000 per depositor per institution, offering minimal risk amidst market uncertainties.

As inflation poses a threat to the value of idle funds, high-yield savings accounts serve as a hedge by earning competitive returns with minimal risk.

However, it is crucial to choose the best high-yield savings account involves researching options like Amex high-yield savings or Ally Bank based on interest rates, fees, and additional offerings that align with your savings needs and preferences.

FAQs

1. Is high-yield savings a good investment?

High-yield savings accounts are not considered investments in the traditional sense. However, these are beneficial for saving money safely while earning competitive interest rates with minimal risk.

2. Can you ever lose your money with a high-yield savings account?

No, you cannot lose your money entirely with a high-yield savings account. These accounts are FDIC or NCUA insured, protecting your deposits up to $250,000 per depositor, per institution. Therefore, even if the bank fails, your funds are safeguarded.

3. Can I withdraw all my money from a high-yield savings account?

Yes, you can withdraw all your money from a high-yield savings account at any time without penalties. However, there may be limits on the number of withdrawals per month due to federal regulations.

4. How much money should I put in a high-yield savings account?

The amount you put in a high-yield savings account depends on your financial goals and liquidity needs. It is advisable to start with an amount that aligns with your savings objectives and emergency fund requirements. 

5. How much will 50000 make in a high-yield savings account?

In a high-yield savings account with competitive interest rates, $50,000 could earn substantial interest over time. Exact earnings depend on the account’s APY and compounding frequency.

6. Will interest rates go down in 2024?

Predicting future interest rate movements, including whether they will go up or down in a specific year like 2024, involves various economic factors and is quite uncertain. However, seeing the historical rise, it is expected to grow. 

7. Should I have more than one savings account?

Having more than one savings account can be beneficial for organizing savings goals, taking advantage of different offerings, and diversifying funds for specific purposes like emergencies or long-term savings.