Updated July 12, 2024

Is High Yield Savings Account Worth It

Editorial Note: This content is not provided by the companies mentioned. Opinions expressed here are author's alone, and have not been reviewed, approved or otherwise endorsed by the companies.
Ad Disclosure: This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. This compensation may impact how and where products appear on this site. You help support CreditDonkey by using our links. (read more)

Many high-yield savings accounts have attractive rates that are too good to pass up. But are they worth it? Read on to find out.

High-yield savings accounts continue to gain traction each day—and for good reason. It's a great way to earn money passively and grow your wealth.

But is it worth it or are there better options out there? Read on to find out.

How important are interest rates to you when picking a savings account?

Is a High-Yield Savings Account Worth It?

A high-yield savings account is great if you're looking to grow your money without a ton of effort. It'll make your money work harder, but its value depends on how you use it.

It's ideal for short-term goals like emergencies, vacations, or debt repayment. It's also good for diversifying investment portfolios with a liquid asset.

However, if you want better returns, a high-yield savings account may not be worth it. This is because your money might not grow enough to keep up with inflation.

What's your main goal for using a high-yield savings account?

Advantages of High-Yield Savings

Here are some advantages of high-yield savings accounts:

  • High interest rates
    A high-yield savings account stands out from a regular savings account by offering superior interest rates. This means you can grow your funds more over time.

  • Funds are accessible
    A high-yield savings account gives you convenient access to your money. You can easily make deposits and withdrawals for your daily banking needs at any time.

  • Protected by insurance
    High-yield savings accounts nowadays usually have FDIC insurance. This means your deposits, up to $250,000 per ownership category, are protected.[1] So, even if the bank goes under, you are guaranteed to get your money back.

Downsides of High-Yield Savings

High-yield savings accounts have many benefits, but they also have drawbacks, like:

  • Interest rates fluctuate
    High-yield savings accounts have variable interest rates, unlike CDs. This means your earnings can change so you won't exactly know how much you'll earn in a year.

  • Limited in-person options
    Online high-yield savings accounts often don't have physical branches, which can be a drawback for those who like traditional in-person banking.

  • Possible withdrawal limits
    Federal regulations limit savings account withdrawals to six per month,[2] but due to COVID-19, this rule was suspended.[3] Just note that some banks may still enforce limits, so stay aware.

Can you lose money in a high-yield savings account?
No. Generally, you can't lose money in a high-yield savings account because of FDIC insurance. However, paying fees and overdraft charges can eat into your earnings.

What's your main concern about opening a high-yield savings account?

How Do High-Yield Savings Accounts Work?

A high-yield savings account is like a regular one but pays more interest. Many online banks offer it because they have fewer physical locations and lower costs, allowing them to provide better rates.

Some institutions may ask you to maintain a minimum balance or to pay monthly fees, but the best ones usually won't. Also, as long as your chosen bank is FDIC-insured, your deposits are covered up to $250,000.

How to Choose a High-Yield Savings Account

When choosing from many high-yield savings accounts, here are some things to think about:

  • APY
    Choose a savings account with a good APY by checking different banks and credit unions. But, don't just blindly go for the highest rates as some may have restrictions that aren't worthwhile.

  • Monthly fees
    Some banks might charge you every month just to keep your account open. So, pick a bank with no monthly fees or choose one where you can avoid them by meeting conditions or keeping a certain balance.

  • Balance requirements
    Check if certain offers require a minimum balance for the best APY and read account details before deciding. Many banks offer high-yield savings accounts with competitive rates for all balance tiers.

  • Digital banking experience
    High-yield savings accounts are mostly from online banks, so find one with good online and mobile banking features. You can even check app ratings and features to help you decide.

How to Open a High-Yield Savings Account

Banks have various ways to open an account, but the online process is generally the same. Here's how it usually works:

  1. Go to the website of your chosen bank and select your preferred savings product.
  2. Fill out the application with your legal name, birth date, SSN, and contact details.
  3. Submit, set up your online banking credentials, and fund your account.

You can also open a bank account in person, over the phone, or by mailing your application, depending on your bank.

High-Yield Savings Offers

How Much Can You Earn?

If you're planning on getting a high-yield savings account, you can use this savings calculator to see how much you can earn:

High-Yield Savings Interest Calculator

How much can $1,000 make in a high-yield savings account?
$1,000 in a high-yield savings account with a 4% interest can earn you about $40 a year. The total amount will depend on factors like interest rate, initial deposit, contributions, and how long you save.

Alternatives to High-Yield Savings

If you are still on the fence about getting a high-yield savings account, here are some alternatives you can consider:

AlternativesIn Terms of RatesFunds AccesibilityMinimum DepositCommon Risks
Certificate of Deposit (CD)Higher rate than savings account and money market accountFunds on-hold for 1 to 12 monthsUsually need to meet a minimum depositNo access to the funds without penalty until maturity
Money Market AccountHigher rate than savings account but rates can be higher if you have bigger balance in the accountLimited up to six checks or withdrawal per monthNeeds to satisfy minimum balance to apply and avoid feesNo ATM or debit card and limited to writing checks
High-Yield Checking AccountHigher rate than traditional checking accountsUsually applicable for 10 to 15 transactions per month onlyUsually no minimum balance requirementsImposed fees such as overdraft fees, withdrawal fees, and more

Bottom Line

If you want to grow your money without much effort, opening a high-yield savings account is a good way to start. You can get an impressive APY on your balance, allowing you to slowly work toward your financial goals.

Just keep in mind that the interest rates aren't fixed, meaning they will likely change over time.


  1. ^ FDIC. Deposit Insurance, Retrieved 02/14/2024
  2. ^ Federal Reserve Board. Regulation D Reserve Requirements, Retrieved 02/14/2024
  3. ^ Federal Reserve Board. Federal Reserve Board announces interim final rule to delete the six-per-month limit…, Retrieved 02/14/2024

Write to Darlene Santos at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website 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. You do not have to use our links, but you help support CreditDonkey if you do.

Subscribe to CreditDonkey: Get updates on the latest deals and keep up with the best money moves.
Your privacy is important to us. Unsubscribe anytime

Best High Yield Savings Accounts

April 18, 2019 - By Donna Tang - Reviews
Make your money work harder for you in a high-yield savings account. Here are the top savings accounts to grow your money.
Save money and build wealth. Sign up to get our FREE email newsletter.

Next Page:

About CreditDonkey
CreditDonkey is a bank comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.

About Us | Reviews | Deals | Tips | Privacy | Do Not Sell My Info | Terms | Contact Us
(888) 483-4925 | 680 East Colorado Blvd, 2nd Floor | Pasadena, CA 91101
© 2024 CreditDonkey Inc. All Rights Reserved.