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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. A is the same as a standard savings account but pays a much higher yield on your money. The national average yield on savings accounts is 0.06 percent. However, you can find high-yield savings accounts that pay up to 0.60 percent. Why you should consider a high-yield savings account
A savings account is an important part of any financial portfolio. When you’re building your savings, you want that money to earn a competitive yield. Putting your savings in a high-yield savings account will keep your money safe and let you earn some interest. Benefits of a high-yield savings account
Emergency fund: One of the best ways to use a high-yield savings account is to use it for your . If you make regular deposits into a high-yield savings account instead of investing all of your money, you don’t have to worry about a market drop wiping out your savings and pushing back your goal, for example. Short-term savings goals: High-yield savings accounts are also a good way to save for short-term goals, such as saving for a vacation or a car. If you want to pay for something in the next few months, you don’t want to put your money into risky investments like stocks. If the market drops, you’ll lose your vacation fund. To park your windfall: High-yield savings accounts are also a good place to store windfalls, such as stimulus checks or other payments. You can save the windfall in your high-yield savings account until you decide what to do with the money. Disadvantages of high-yield savings accounts
Poor options for long-term goals: Although high-yield savings accounts have high yields compared with standard , they don’t pay enough interest to hit long-term savings goals or even keep up with . If you have a long-term goal like and can handle some volatility, investments like or are likely to be a better choice. May have more stringent requirements: High-yield savings accounts may have tougher requirements than a typical savings account. For example, you might need to have a larger deposit to qualify to open the account at certain banks. May be a bit harder to access your money: High-yield savings accounts held at different institutions from your checking account provider can make accessing your money harder, too. For example, it can take a couple of days to transfer funds to your checking account. Additionally, you’re limited to six withdrawals per month from your savings account because of . Can you lose money in a high-yield savings account
Like other savings accounts, high-yield savings accounts are , which means you’ll receive up to $250,000 in protection per account holder at the bank if it fails. If your bank, for some reason, can’t return the money you’ve deposited in the high-yield savings account, the FDIC will reimburse you for the loss. However, your savings can lose purchasing power over time because of inflation. For example, if your high-yield savings account pays 0.5 percent and the annual inflation rate is 2 percent, your money has lost 1.5 percent of its purchasing power. What to look for in a high-yield savings account
When you’re comparing high-yield savings accounts, there are two features to consider: annual percentage yield and fees. Annual percentage yield: APYs are the primary reason to open a high-yield savings account, so you want to find the account that pays a high rate of interest. These days, a competitive high-yield savings account pays at least 0.5 percent. Fees: Some banks charge monthly fees on their savings accounts. Usually, you can avoid these fees if you meet certain requirements, such as maintaining a minimum balance or making a minimum deposit each month. If possible, look for an high-yield savings account that doesn’t charge monthly fees. If you have to go with an account that charges fees, make sure that you can easily meet the fee waiver requirements each month. Top savings accounts
If you’re considering opening a high-yield savings account, these are some of the top options. Ally Bank
is an established online bank that offers a full set of financial services, including banking, lending and . Its savings account pays a competitive interest rate, with no monthly fee and no minimum balance. If you’re thinking about transitioning fully to online banking, Ally is a great option to consider. Bankrate named Ally Bank the . Live Oak Bank
is an online bank that consistently offers some of the best interest rates on the market. There is no minimum balance and no monthly fees for its savings accounts, so anyone can take advantage of its great rates. Chime
is a newer digital brand that offers a checking account and savings account. Its savings account pays a competitive rate and does not charge monthly fees or require a minimum balance, making it a good choice for people who want an easy-to-open bank account. Comenity Direct
is an online bank that offers a high-yield savings account and CDs. The savings account pays a competitive APY and there’s no minimum balance required to earn the APY or avoid fees. Marcus by Goldman Sachs
is an online bank that offers a savings account and CDs, as well as investing and lending products. The bank’s savings account offers a competitive APY and there’s no minimum balance required to earn the APY or avoid fees. Learn more
SHARE: TJ Porter is a contributing writer for Bankrate. TJ writes about a range of subjects, from to . Lance Davis is the Vice President of Content for Bankrate. Lance leads a team responsible for creating educational content that guides people through the pivotal steps in their financial journey. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers. Related Articles