The Federal Reserve lowered the federal funds rate twice in 2024, leading to decreased interest rates offered by banks for holding funds. Despite this, select high-yield savings accounts (HYSAs) continue to offer annual percentage yields (APYs) as high as 4.80%. In contrast, major national banks such as Chase and Bank of America only provide 0.01% APY. Our recommendations feature digital savings accounts from LendingClub, Barclays, Western Alliance Bank, and others, all backed by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor. Some accounts even offer higher FDIC coverage through partner banks.
To illustrate the impact of higher yields, consider a $10,000 savings balance over a year: A 0.01% APY would earn just $1 in interest, while a 4.00% APY would generate $400 in interest on the same balance. Here are the top high-yield savings accounts available:
1. LendingClub LevelUp Savings: Up to 4.50% APY
2. Barclays Tiered Savings: Up to 4.50% APY
3. Western Alliance High-Yield Savings Premier: 4.40% APY
4. CIT Platinum Savings: Up to 4.35% APY
5. BMO Alto Online Savings: 4.10% APY
6. Upgrade Premier Savings: Up to 4.14% APY
7. Wealthfront Cash Account: 4.00% APY
8. SoFi Savings: Up to 4.00% APY
Among these, LendingClub LevelUp Savings stands out with up to 4.75% APY for monthly deposits of $250 or more. This account offers easy fund access through unlimited ATM rebates and requires no monthly fees, minimum deposits, or balances. While it lacks physical branches, the online setup allows for hassle-free account management. Barclays Tiered Savings, on the other hand, offers an APY up to 4.80% on balances under $1 million, with no maintenance fees or minimum deposits. It is ideal for individuals with substantial savings balances seeking competitive returns.
For balances of $250,000 or more, the Tiered Savings account from Barclays offers high interest rates without a minimum balance requirement. However, there is a deposit limit of $1 million per account. If you have savings exceeding $1 million, you can spread your money across up to three Tiered Savings accounts to maximize interest earnings. Barclays, a longstanding bank in the UK, now operates in over 29 countries, including the US, with an online-only model. This means Tiered Savings account holders won’t have access to physical branches and can make deposits only through bank transfers and checks.
On the other hand, Western Alliance Bank’s High-Yield Savings Premier boasts an impressive 4.46% APY with no minimum balance requirement and no monthly maintenance fee. While it lacks physical branches and cash deposit options, it provides a stable and high-yield savings opportunity for account holders. Founded in 1994, Western Alliance Bank ranks as the 33rd largest bank in the US with over $80 billion in assets. This account can be opened online in minutes, but a $500 minimum opening deposit is required, and there’s a five-day hold period on incoming funds before they can be withdrawn.
Lastly, CIT Bank’s Platinum Savings account offers a competitive 4.55% APY on daily balances of $5,000 or more, with no minimum balance requirement. However, falling below the $5,000 threshold by the end of the day results in a significantly lower 0.25% APY. Although there is a $100 minimum opening deposit, the account comes with no monthly maintenance fee. CIT Bank, an online division of First Citizens Bank, provides client support via email and phone but lacks in-person assistance at branch locations.
Overall, these accounts offer attractive interest rates and features, catering to different savings needs and preferences.
Discover the BMO Alto High-Yield Online Savings Account, which boasts an impressive 4.45% APY on all balances with no minimum opening deposit required. This account, part of BMO Bank’s offerings, provides a competitive rate that applies to your entire balance, regardless of whether it’s $5 or $500,000, making it an excellent choice for those seeking a simple HYSA without minimum requirements. Enjoy the added benefits of $0 monthly maintenance fees, $0 minimum opening deposit, and $0 balance requirement, allowing you to start earning interest on your initial balance immediately without any monthly costs. While BMO Bank supports 988 branches in 22 states and has over $260 billion in assets, BMO Alto customers are serviced exclusively through online and phone channels. It’s important to note that BMO Alto Online Savings does not accept cash deposits, necessitating depositing cash into another bank account before transferring funds to BMO Alto. Upgrade Premier Savings, on the other hand, offers up to 4.41% APY on balances of $1,000 or more. Upgrade, a financial technology company established in 2016, collaborates with Cross River Bank to provide this competitive high-yield account, enabling faster savings growth compared to traditional bank accounts. With Upgrade Premier Savings, there are no monthly maintenance fees or minimum balance requirements after the initial $1,000 deposit. Additionally, your funds are safeguarded by FDIC insurance coverage up to $1 million through Upgrade’s network of partner banks, offering four times the typical coverage provided by most banks. Experience a user-friendly online banking interface that allows you to easily monitor interest earnings and transfer funds between accounts, accessible 24/7 through Upgrade’s website or mobile app. However, keep in mind that you won’t earn interest on days when your balance falls below $1,000, emphasizing the importance of maintaining the minimum balance to maximize your earnings. Wealthfront Cash Account, another top choice, offers a 4.25% APY on all balances along with debit card and checking features. This cash management account combines the benefits of a high-yield savings account with the convenience of a checking account, providing a competitive APY while allowing easy access to your funds through a debit card.
Wealthfront is a registered brokerage that was established in 2008 and partners with Green Dot Bank to provide its Cash Account. This account offers a $0 monthly maintenance fee and requires only a $1 minimum opening deposit. There is no minimum or maximum balance required to earn a competitive 4.25% APY, making it a convenient option for all savers. Additionally, Wealthfront offers up to $8 million in FDIC insurance through its network of partner banks, significantly more than what most banks provide. With its combination of high yields and checking features, Wealthfront’s Cash Account is an attractive choice for growing your savings with easy access. However, it is important to note that Wealthfront operates as an online-only platform and does not have physical branches. Cash deposits of up to $3,000 a day can be made at select retailers like Walgreens or CVS for a fee of up to $5.95 per deposit.
On the other hand, SoFi Savings offers up to 4.00% APY with direct deposits. This bank’s Checking and Savings bundle is particularly appealing for individuals on fixed incomes. The savings account allows you to earn up to 4.00% APY with any direct deposit, such as your payroll, pension, or Social Security payments. Meanwhile, the checking account provides access to a debit card and a network of over 55,000 fee-free ATMs. SoFi Checking and Savings do not require a monthly maintenance fee or minimum opening deposit. While direct deposits offer the highest APY rate, you can also qualify for competitive rates by receiving $5,000 or more in monthly deposits, which include bank transfers and check deposits. Without meeting these requirements, the APY on your savings drops to 1.20%. SoFi Savings also comes with Vaults, a tool that allows you to create up to 20 separate savings goals. Additionally, SoFi offers up to $2 million in FDIC insurance. Similar to Wealthfront, SoFi operates as an online-only bank and does not have physical branches. Cash deposits can be made at partner retailers such as CVS or Target for a fee of up to $4.95 per transaction.
Benefits of a high-yield savings account include high savings potential, low or no fees, convenient access to your money, and federal insurance coverage up to $2 million.
$50,000 in high-yield savings account deposits are insured by either the FDIC or the NCUA for up to $250,000 per individual per account.
When considering how much to keep in a high-yield savings account, it’s important to be aware of the drawbacks. While transfers may not be instant, some banks offer faster transfer options by linking accounts at other banks. Additionally, high-yield savings accounts may have limited deposit and withdrawal options, often requiring a minimum opening deposit.
While it’s unlikely to lose money in a high-yield savings account, it’s essential to be cautious. Interest rates on these accounts are variable and can change over time. It’s wise to consider promotional rates, minimum deposit requirements, and accessibility options when choosing a high-yield savings account that suits your banking preferences.
Apart from high-yield savings accounts, there are alternatives to consider, such as certificates of deposit (CDs) and money market accounts, which offer safe and steady returns at rates that may outperform traditional accounts. CDs guarantee a fixed rate of return over a specified term, while money market accounts provide competitive interest rates with some liquidity restrictions.
Unlock higher returns than traditional savings accounts while maintaining easy access to your funds with a high-yield checking account. Enjoy the benefits of both high APYs and checking features, including unlimited debit and check-writing privileges not typically found in high-yield savings accounts or money market accounts. For those seeking even greater returns, consider venturing into higher-risk investments such as stocks, index funds, and mutual funds, though be mindful of the potential for increased losses.
Delve deeper into the comparison between high-yield savings accounts and certificates of deposit (CDs) to determine the best strategy for maximizing your money. Explore common questions about high-yield savings accounts to better align your financial decisions with your budget and goals. Additionally, peruse our extensive library of personal finance guides to assist you in earning, saving, and growing your wealth.
High-yield savings accounts offer substantially higher earning potential compared to traditional savings accounts, which typically yield around 0.43% nationally. Take advantage of online accessibility and minimal fees with high-yield savings accounts for a secure and efficient way to manage your finances.
Understand the concept of compound interest, a powerful tool that enables you to earn interest on both your initial deposit and any interest accumulated over time. Learn about an account’s Annual Percentage Yield (APY) and the benefits of compounding interest, with many high-yield savings accounts compounding interest on a daily or monthly basis.
Remember that interest earned on high-yield savings accounts is considered taxable income by the IRS. If your annual interest exceeds $10, you will receive a Form 1099 from your financial institution for tax reporting purposes. Banks profit from high-yield savings accounts by charging higher interest rates on loans than what they pay out on customer deposits, resulting in a profit margin known as a spread.
Rest assured that your funds are safeguarded with online-only banks and digital accounts, many of which are FDIC-insured or partner with traditional banks to ensure deposits up to $250,000. Utilize online banking, mobile apps, and ATMs for convenient access to your high-yield savings account, keeping in mind any withdrawal restrictions that may apply.
For a comprehensive understanding of high-yield savings accounts and how to choose the best option for your financial needs, we meticulously evaluate data from both traditional and online banks to provide editorial recommendations.
Here is the revised text:
A compilation of the top high-yield savings accounts was meticulously curated to assist individuals seeking optimal methods to increase their passive income. Each savings account was thoroughly assessed based on a range of criteria, with a keen focus on the following key factors:
Annual Percentage Yields (APYs) were a pivotal consideration in the evaluation process. The significance of even a slight variance in APY cannot be overstated, as it can have a substantial impact on one’s savings over an extended period. Hence, the primary function of the savings accounts in question was determined by the annual yields they offered.
Monthly maintenance fees were scrutinized due to their potential to erode savings over time. To mitigate this, preference was given to High-Yield Savings Accounts (HYSAs) that imposed zero monthly fees or ongoing costs.
Minimum balance requirements were also taken into account, recognizing that high minimum balances could pose a barrier for individuals aiming to bolster their savings. Consequently, accounts with low or no minimum balance requirements were favored, although a select few options catering to higher balances were included in the assessment.
FDIC insurance played a critical role in safeguarding depositors’ funds, with the standard coverage of $250,000 per depositor being a common offering by most banks. Notably, the evaluation encompassed financial institutions extending higher FDIC insurance limits through collaborative partnerships with a network of banks, thereby enhancing the protection of depositors’ assets.
The accessibility of funds through debit cards and ATMs was evaluated, acknowledging the inconvenience posed by limited access to savings. Emphasis was placed on the level of ATM accessibility and debit card provisions for each savings account under review.
The final compilation featured a diverse array of digital accounts from prominent banks and modern financial technology firms that operate without physical branches. While traditional banks were considered during the research process, their APYs did not meet the requisite threshold for classification as “high yield,” nor were their fees deemed competitive enough in comparison to stronger-performing accounts.
Given the non-exhaustive nature of the evaluation, readers are encouraged to view the curated list as a foundational resource for conducting their own comprehensive research when selecting the most suitable bank account aligned with their financial objectives, lifestyle preferences, and budget constraints.
Sources referenced for the compilation include data from the FDIC on National Rates and Rate Caps, accessed on December 4, 2024, as well as information from the Federal Reserve on Large Commercial Banks, accessed on the same date. It is important to note that annual percentage yields and promotional rates may vary by region and are subject to change over time.
About the Author:
Yahia Barakah, a seasoned personal finance writer affiliated with AOL, brings more than a decade of expertise in finance and investing to his work. As a Certified Educator in Personal Finance (CEPF), he adeptly combines his knowledge in economics with a fervor for promoting financial literacy to demystify intricate topics related to retirement planning, banking practices, and credit management.
