Best High Yield Savings Accounts: January 2020
Make your money work harder for you in a high-yield savings account. Here are the top savings accounts to grow your money.
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- Best for Active Savers - CIT Bank
- Customer Favorite - Ally
- Savings with ATM Card - Synchrony
- Big Bank - HSBC Direct
- With Bonuses - Discover Bank
- For High Balances - Popular Direct
- Non-Bank Savings - Betterment
Reasons to Use a High-Yield Savings Account
A high-yield savings account is ideal for short-term goals. You can grow your money but still have access when you need it.
Here are some great uses for a high-yield savings account:
- Emergency fund
- Money for a house down payment
- Saving for a car
- Special events like a vacation or wedding
- Putting tax money away for self-employed individuals
Online banks offer much higher interest rates - as much as 20x or more than traditional big banks. That can be a difference of hundreds - or even thousands - of dollars over the years.
No. As long as you choose a bank that is FDIC insured, your savings are safe. Even if the bank defaults, the government will pay back what is in your account (up to $250,000). You will always earn the advertised APY. High-yield savings accounts are very secure places to grow your money.
Top High Yield Savings
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We analyzed dozens of accounts to come up with a list of the top high-yield savings accounts currently on the market. Read on to find the right bank for every kind of saver.
High Interest for Active Savers: CIT Bank
Savings Builder High Yield Savings - 1.80% APY
Earn up to 1.80% APY. Here's how it works: Maintain a minimum balance of $25k OR make at least a $100 minimum deposit every month.
CIT Bank's Savings Builder encourages saving by rewarding active savers with a high APY. You can earn the top tier APY when you open an account with $100, and make a deposit of $100 every month.
It offers:
- $100 minimum opening deposit
- Motivates you to save at least $100 every month
- No monthly service fee
Customer Favorite: Ally Bank
Online Savings Account - 1.60% APY
$0 minimum opening deposit. No minimum balance requirement. No fees to open or maintain account.
With a user-friendly interface and live 24/7 customer service, Ally Bank gets very high satisfaction ratings. It's a full-service online bank with a wide ATM network, free checking account, multiple CDs, and investment services.
Ally's online savings account offers:
- Competitive APY
- No minimum opening deposit
- No monthly service fees
Best Savings With ATM Card: Synchrony
High Yield Savings - 1.70% APY
$0 minimum opening deposit. No minimum balance requirement. No fees to open or maintain account.
If you want a savings account with more flexibility, Synchrony's High-Yield Savings offers an ATM card. You can withdraw savings quickly (up to 6 per statement cycle) instead of having to wait a few days for electronic transfers.
Other benefits include:
- No minimum deposit
- No monthly service fee
Best Big Bank: HSBC Direct
- Earn 2.00% APY on all balance tiers
- No monthly maintenance fee
- Minimum balance to earn APY is $1
- Member FDIC
HSBC Direct Savings - 2.00% APY
HSBC Direct is the online division of HSBC, one of the largest global banks. Even though it's with a large traditional bank, this account is online only. You can't go to a branch to conduct business.
The online savings account offers:
- High APY
- No service fee
- Only $1 to open
Best Savings With Bonus: Discover
- No fees
- No minimum opening deposit
- No minimum balance required
Online Savings Account - Earn 1.70% APY
Discover is a full-service bank with checking, CDs, and credit cards.
Its savings account does not have the highest APY on our list. But it often offers cash bonuses to new customers who meet their requirements. This provides a nice little boost to your savings balance.
Discover's online savings account has:
- No service fee
- No balance requirements
- $0 to open
Discover Online Savings - $150 Cash Bonus
To get your $150 or $200 Bonus offer: What to do: Apply for your first Discover Online Savings Account by 2/3/20, 11:59 PM ET, online or by phone. Enter Offer Code CY120 when applying. Deposit into your account a total of at least $15,000 to earn a $150 Bonus or deposit a total of at least $25,000 to earn a $200 Bonus. Deposit must be posted by 2/17/20, 11:59 PM ET. Maximum bonus eligibility is $200.
What to know: Offer not valid for existing or prior Discover savings customers or existing or prior customers with savings accounts that are co-branded or affinity accounts provided by Discover. Account must be open when bonus is credited. Bonus will be credited to the account by 3/2/20. Bonus is considered interest and will be reported on IRS Form 1099-INT. Offer may be modified/withdrawn without notice. See advertiser website for full details.
Discover Online Savings - $200 Cash Bonus
To get your $150 or $200 Bonus offer: What to do: Apply for your first Discover Online Savings Account by 2/3/20, 11:59 PM ET, online or by phone. Enter Offer Code CY120 when applying. Deposit into your account a total of at least $15,000 to earn a $150 Bonus or deposit a total of at least $25,000 to earn a $200 Bonus. Deposit must be posted by 2/17/20, 11:59 PM ET. Maximum bonus eligibility is $200.
What to know: Offer not valid for existing or prior Discover savings customers or existing or prior customers with savings accounts that are co-branded or affinity accounts provided by Discover. Account must be open when bonus is credited. Bonus will be credited to the account by 3/2/20. Bonus is considered interest and will be reported on IRS Form 1099-INT. Offer may be modified/withdrawn without notice. See advertiser website for full details.
For High Balances: Popular Direct
- 1.90% APY
- $5,000 Minimum Opening Deposit
- $4 monthly service fee; waived with a daily minimum balance of $500
- Daily Compounding Interest
- FDIC Insured
Plus Savings Account
Popular Direct's Plus Savings Account offers one of the highest rates. But the minimum opening deposit is a whopping $5,000. You must also maintain a $500 balance in the account or face a monthly fee.
Non-Bank Savings Account: Betterment
- FDIC insurance covering up to $1,000,000 at program banks
- Access cash in 1-2 business days
- No minimum balance
- No fees on balance
- Unlimited withdrawals
Betterment Everyday - Earn up to 1.83% APY
Betterment, the popular robo-advisor, as expanded their services to include checking and savings. Their Everyday Cash Reserve account offers an amazing rate.
Advantages of using Betterment over bank savings accounts include:
- Unlimited withdrawals with no fees
- Faster transfers between your linked banking account within 1-2 business days
- FDIC insured up to $1,000,000
Anyone can sign up to be a Betterment customer and open this account without having to use their robo investing services.
Other Popular High-Yield Savings Accounts
These accounts also offer competitive rates:
American Express Personal Savings
Their rates are competitive with other high-yield savings accounts. There are no monthly fees and no minimum deposit. However, you must fund your account within 60 days of application approval.
Marcus by Goldman Sachs
Marcus is the online savings account offered by the investment giant Goldman Sachs. It offers a very competitive rate with no minimum deposit and no services fees.
However, there is no checking and no ATM network.
State Farm Money Market
State Farm Bank's money market account gives you free ATM card and checks. This is good for more flexibility, but there are some stipulations.
The minimum opening deposit is $1,000. And you must maintain a $500 daily balance or make 1 direct deposit/month to avoid a service fee.
The high APY is offered as an introductory rate for the first year. It also applies if you open a checking account and meet the balance/deposit requirements.
Investors eAccess Money Market
This is a money market account, but with no ATM access or check writing. However, the interest rate is one of the highest offered on the market.
There is no monthly service fee, opening deposit, or minimum balance requirement.
What to Look For in a High Yield Savings Account
- Required Opening Deposit
- Balance Requirements
- Monthly Service Fee
- APY Rate
- ATM Access
- Other Banking Services
- Required Opening Deposit
If you are just starting to build your savings, look for an account with no minimum deposit. - Balance Requirements
Some accounts have minimum daily balance or monthly deposit requirements. If you don't meet it, you get the advertised APY. However if you can, it could be worth it for a higher APY. - Monthly Service Fee
Most of the banks on our list have no monthly service fee. But a couple do require a minimum daily balance in order to avoid the service fee. This isn't necessarily a bad thing - if you can maintain the required balance, you may earn a higher APY. - APY Rate
Look for the highest APY rate on the account with requirements you can satisfy. Weigh the requirements against the APY.A slight difference in APY could make a big difference in how much you save.Imagine two banks with APYs of 2.20% and 2.40%. If you only have $1,000 to save, that's a difference of just cents over a year. But if you have $50,000, that's a difference of $100 every year.
A high yield savings account is a great spot to keep your emergency fund and to save for short-term goals. The hope is never to need to touch an emergency fund, so at the very least it should earn a competitive yield and generate some interest income.
Cynthia Flannigan, CFP®, MainStreet Financial Planning - ATM Access
Do you want to withdraw your savings through ATMs? If so, your choices are more limited. Not a lot of savings accounts offer ATM access, but there are a few options. You can also choose a money market account. - Other Banking Services
Looking for a checking and savings under one bank? Some online banks only offer savings accounts so you'll need to choose a full-service bank.
A money market account is similar to a savings account. But some offer flexible features like check writing or ATM access. Your funds are more fluid, though you're still limited to 6 withdrawals per month.
A CD requires you to deposit an amount of money for a fixed term. In some cases, it may offer a higher interest rate for your commitment. More on CDs below.
Advantages of a High-Yield Savings Account
A high-yield savings account gives you a safe place to grow your money. Some of the benefits are:
- Security
Your deposits are FDIC secured, which means that you are covered (up to $250,000) if the bank defaults. - Guaranteed returns
Unlike investing in stocks or bonds, your savings have reliable returns and no risk. However, the APY can change according to the market - you'll always earn the current advertised rate.If you want fixed returns, look into Certificate of Deposits instead. You'll be required to tie up your money for a certain time, but you will get a guaranteed fixed rate for the entire term. - Flexibility
You can transfer money in and out to access your savings when you need it. Note that federal regulation limits withdrawals/transfers to 6 per statement cycle, without penalty.
Yes. The interest you earn is treated as income. You will have to report it on your tax return every year. You will be taxed on it at your ordinary income tax bracket.
High-Yield Savings vs CDs
Unlike high-yield savings accounts, Certificates of Deposits (CDs) require that you tie up your money for a certain term. You cannot withdraw your funds before the term ends (or you'll face a penalty).
To reward you for tying up your funds, you will receive a guaranteed fixed rate that may be higher than a savings account (depending on the term). CDs tend to be better for those with long term savings goals (1-10 years).
See our list of the top CD rates.
CD laddering is when you divide your deposits into multiple CDs with different rates and maturity dates. For example, your ladder might look like this:
- $1,000 in a 1-year CD at 2.30%
- $1,000 in a 3-year CD at 2.70%
- $1,000 in a 5-year CD at 2.90%
As each CD matures, you can withdraw the funds (plus interest) and re-invest them in a 5-year CD. This is a very smart strategy. This way, every year, you can withdraw money if you need it. And you can always get the best current interest rate.
Bottom Line
A high-yield savings account is one of the best vehicles for growing your money safely. With so many banks competing for your business, there's no reason to stick with a traditional bank's nearly non-existent rates.
Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.
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