What Is a High Yield Savings Account (HYSA)?

A high-yield savings account (HYSA) is designed to maximize your savings by offering interest rates that are significantly higher than a traditional savings account. With an HYSA, your deposits earn more over time, making it a smart choice for those looking to grow their savings faster.

Many online banks and credit unions provide the highest high-yield savings account rates due to their lower operating costs from maintaining fewer or no physical branches. It's a popular choice for individuals who want the best returns without taking on large investment risks.

» Best High Yield Savings Account 2024 Reviews

HYSA vs. Standard Savings Account

Both accounts help you grow your savings, but high-yield savings accounts offer significantly better returns. While the average savings account rate hovers around 0.45% APY, the best high-yield savings account rates are nearly 10 times higher, providing a much better return on your money.

The higher interest rate often comes with additional restrictions, including a limited number of withdrawals or transfers you can make each month or year, and minimum balance requirements, making them less ideal for frequent access or those needing immediate access to funds.

What Is APY?

Annual Percentage Yield (APY) measures the total amount of interest earned over one year, factoring in both the interest rate and the effects of compounding (which is when interest earns interest). This means that the higher the APY, the more money you can earn.

The best high-yield savings account rates fluctuate based on economic conditions and competition between banks, but currently, the best HYSA 2024 rates average between 3% to 5% APY, giving savers the potential for significant returns compared to traditional savings accounts.

Savings Account Requirements

You'll need to be at least 18 years old (or have a co-owner) and provide proof of ID to obtain a savings account. Your bank may require a deposit, which can range from $1 to $300+. HYSAs may ask for a larger initial deposit or ongoing minimum balance than traditional accounts.

Some banks have additional conditions like maintaining a minimum balance to avoid monthly fees, especially for high-interest or online savings accounts. Review account terms to ensure it aligns with your financial habits and goals, and to avoid unnecessary fees.

Is a High-Yield Savings Account Right for You?

The top APY savings accounts depend on your financial goals and priorities. While these accounts offer the benefit of earning higher interest, they often come with stricter withdrawal limits and transfer restrictions.

If earning maximum interest or supplementing retirement funds is your goal, look for the highest high-yield savings account. If you're saving for a down payment, emergency fund, or major expenses like weddings or medical bills, look beyond APY for accounts with flexible withdrawal limits.

Not sure if a savings account or investment funds is right for you? Learn more.

Types of Savings Accounts

Selecting the right savings account depends on your specific needs and financial goals, whether you're looking to maximize interest rates with a high yield savings account or find the best joint savings account to manage shared finances effectively.

High Yield Savings Account

A high-yield savings account offers interest rates significantly higher than traditional savings accounts. These accounts are ideal for individuals looking to maximize their savings potential over time.

Student Savings Account

Student accounts are designed to help students start saving early with minimal extra costs. The best student savings account offers perks like no monthly fees and low minimum balance requirements.

Kids Savings Accounts

Kids savings accounts typically come with high rates and strict parental controls. The best kids savings accounts often provide free learning resources and financial education tools. Learn more.

Joint Savings Account

A joint savings account is for couples, business partners, roommates, or family who want to save collectively. The best joint account for savings should offer high rates, low fees, and easy access for all account holders. (Many online banks offer high-yield joint savings accounts with low fees.)

To compare high-yield savings accounts, consider the entire package, including account fees, balance requirements, and any additional perks. The best high-yield savings bank accounts should help you achieve your savings goals without unnecessary costs or hassle.

Certificate of Deposit (CD)

A CD holds your money for a set term, typically three months to two or more years, in exchange for a higher rate. They're great for savers who don’t need immediate access to their funds, since withdrawing early usually requires a hefty fee.

» Top CD Accounts of 2024

How to Open a High Yield Savings Account

You can open a high-yield savings account online in just a few minutes. Gather the necessary documents and fill out an online application. Once your application is approved, you can link your new HYSA to an existing bank account and pay the initial deposit requirement (if required).

Many HYSAs also offer direct deposit options, allowing you to automate any recurring savings transfers. Once your account is funded, you’ll start earning interest. Many banks offer mobile apps where you can monitor transactions and track your savings growth.

Are Online Savings Accounts Safe?

Online banks take account safety seriously, complying with federal regulations and undergoing strict security audits. The best online banks employ state-of-the-art encryption and advanced security technologies to safeguard your personal and financial information from unauthorized access.

Every high-yield savings account featured on our page is insured by the FDIC, meaning your funds are protected in the event of a bank failure. Practice good security habits to further protect your account by routinely updating passwords and monitoring account activity.