Find the Bank with the Highest Interest Rate: Maximize Your Savings

In today’s financial landscape, making your money work for you is more important than ever. While traditional savings accounts offer minimal returns, high-yield savings accounts stand out as a powerful tool to grow your funds faster. If you’re looking to Bank With Highest Interest Rate, understanding high-yield savings accounts is your first step towards smarter saving.

Account	APY	Monthly Contribution	3-Month Earnings	6-Month Earnings	9-Month Earnings	12-Month Earnings	Balance After 12 Months
High-Yield Savings	4.75%	$100	$12.83	$29.32	$49.49	$73.41	$2,273.41
Traditional Savings	0.10%	$100	27 cents	62 cents	$1.05	$1.55	$2,201.55

Balance after 12 months reflects opening the account with $1,000.

How to Select the Best High-Yield Savings Account

Once you decide to boost your savings with a high-yield savings account, careful research is crucial to pinpoint the ideal choice for your financial goals. Focusing on securing a top Annual Percentage Yield (APY) is a smart starting point. A competitive APY ensures you earn the most on your deposited funds.

While interest rates are subject to change, prioritizing accounts with the highest rates available is a sound strategy. The higher the rate, the greater the interest earned each month and year. Furthermore, leveraging the power of compound interest means you earn interest not only on your principal but also on the accumulated interest. A higher APY significantly amplifies this effect, accelerating your savings growth.

Beyond just the interest rate, consider other key factors. Check if the account has a minimum balance requirement, and if so, ensure it’s a level you can comfortably maintain. It’s also important to verify if the advertised top APY is contingent on maintaining a specific minimum balance.

Why Interest Rates Vary Across Banks

Banks operate as businesses, each with unique deposit needs and operating within specific regional markets. Consequently, some banks may need to work harder to attract customer deposits. This is often the case with smaller, lesser-known banks.

A bank’s lending activities also play a significant role in determining interest rates. For example, if a bank is actively expanding its commercial lending portfolio, it will require increased customer deposits to fund these loans. To attract deposits quickly, banks might offer promotional APYs for a limited time. Once they’ve reached their deposit goals, these promotional rates may be lowered.

Key Savings Account Terms You Should Know

When researching high-yield savings accounts to find the bank with highest interest rate and the best fit for you, understanding common terminology is essential. Familiarize yourself with these terms:

Steps to Open a High-Yield Savings Account

After comparing the best high-yield savings account options and making your selection, the next step is opening the account, typically done online. Here’s a general overview of the process:

You’ll be asked to provide personal information, including your Social Security number, as interest earnings are reported to the IRS.
Banks implement security measures to verify your identity during the account opening process.
You’ll be presented with options for funding your new account. The most common method is an ACH transfer from an existing bank account. Instructions for setting this up will be provided.
Some institutions may also allow initial deposits via debit card, credit card, or even a mailed paper check.

Once your application is processed, you might gain immediate access to online banking. Alternatively, it could take a day or two for full account activation.

Transfers between different financial institutions usually take one to three business days to complete. To avoid any issues accessing funds, maintain a sufficient cash buffer in your checking account or a linked savings account at the same institution. This ensures you have readily available funds even if access to your high-yield account is temporarily delayed.

Pros and Cons of High-Yield Savings Accounts

Pros:

Higher APYs compared to traditional savings accounts, leading to faster growth of your savings.
Funds are readily accessible for withdrawal or deposit at any time, offering flexibility.
Extremely safe and low-risk, providing peace of mind for your savings.
Ideal for emergency funds or saving for significant financial goals due to their accessibility and growth potential.
In periods of rising interest rates, your APY may increase, further enhancing your returns.

Cons:

Securing the highest yields may require opening an account with a less familiar institution, potentially an online bank.
Some accounts may have monthly withdrawal limits, typically around six per month, which might restrict frequent transactions.
Easy access to funds could make it tempting to withdraw savings impulsively, potentially hindering long-term savings goals.
Certain accounts might have fees or minimum balance requirements, which need to be considered to maximize returns.
During periods of decreasing interest rates, your APY may decline, impacting the growth rate of your savings.

Who Benefits Most from a High-Yield Savings Account?

Essentially, anyone with savings beyond their immediate checking account needs can benefit significantly from a high-yield savings account. If you hold more funds in your checking account than necessary for daily transactions, transferring those surplus funds to a high-yield savings account is a smart move. It allows you to earn a notably higher annual percentage yield (APY) and grow your savings more effectively.

High-yield savings accounts are particularly suitable for individuals comfortable with online or mobile banking. Managing funds in an online savings account typically involves using a computer or a mobile banking app for transfers and account management.

When choosing the best savings account, always review the account rules. Pay attention to withdrawal limits per month and potential monthly maintenance fees. Crucially, verify that the bank is an FDIC member (or NCUA member for credit unions). This ensures your deposits are federally insured up to $250,000 per depositor, providing security even if the financial institution were to fail. Checking online reviews of a bank’s customer service can also offer valuable insights.

Alternatives to High-Yield Savings Accounts

While high-yield savings accounts often offer the most competitive APYs for easily accessible cash, several alternatives exist for parking your funds until needed.

High-Yield Savings Account vs. Checking Account

The most convenient place for excess funds might seem to be your checking account. However, this approach has two significant drawbacks. Firstly, funds in a checking account are easily accessible for spending, making it harder to earmark them strictly for savings. Secondly, checking accounts typically offer minimal to no interest, resulting in lost earning potential. A high-yield savings account provides a much better opportunity to earn a meaningful return on your money.

While some high-yield or rewards checking accounts exist with more competitive rates, they often come with conditions. These accounts may require meeting specific criteria, sometimes monthly, to earn the advertised high rate. Despite these requirements, if you frequently use a debit card, a rewards checking account might be a worthwhile option.

High-Yield Savings Account vs. Traditional Savings Account

There’s no formal standard defining what constitutes “high yield.” The distinction is largely at the discretion of each financial institution. Traditional banks and credit unions are more likely to offer traditional savings accounts, while online banks often feature high-yield savings accounts. However, these classifications are guidelines rather than strict rules.

Why Major Banks Are Often Absent from Top Rate Lists

We continuously monitor savings account rates from over 100 banks and credit unions daily. While we include major banks like Chase, Bank of America, Wells Fargo, Citi, and U.S. Bank in our rate checks, their rates are generally not competitive enough to rank among the top. Additionally, some institutions might not qualify for our rankings if they aren’t accessible to customers in at least 40 states or if they significantly cap the balance eligible for the high-yield APY.

High-Yield Savings Account vs. Money Market Account

A money market account functions similarly to a savings account, but typically offers check-writing privileges. Historically, money market accounts often required higher minimum deposits in exchange for slightly better rates than savings accounts. However, this distinction has blurred in recent years. Both savings and money market accounts now offer a range of minimum balance options, including no-minimum accounts. Interestingly, high-yield savings accounts frequently offer more competitive rates than money market accounts, although higher APYs can sometimes be found among the top-paying money market accounts.

Financial Advisor Insight

“For clients with funds they won’t need for 12 to 24 months, I advise leveraging a high-yield savings account or money market account. This strategy helps hedge against inflation and removes the temptation to spend from actively used checking accounts. Essentially, it’s a ‘hands-off account’ for savings growth,” advises Sibyl Slade, a member of Investopedia’s Financial Advisor Council.

High-Yield Savings Account vs. Certificate of Deposit (CD)

If you have savings you can set aside untouched for a specific period, a certificate of deposit (CD) might offer a higher interest rate. CDs require you to commit your funds for a fixed term, ranging from months to years, and impose penalties for early withdrawals before the maturity date. However, in return, your interest rate is locked in and guaranteed for the CD’s term, even if broader interest rates decline. Our daily ranking of the best nationwide CDs can guide you to the highest available APYs across various CD terms.

Frequently Asked Questions

Are High-Yield Savings Accounts Safe?

Concerns about losing money in a high-yield savings account are common. In the least favorable scenario, a savings account might pay no interest, meaning your funds won’t grow. However, you will not lose your deposited principal, except potentially through account fees. Choosing an account with easily avoidable fees is therefore important.

Regarding bank failures, the vast majority of banks, both traditional and online, are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects depositors by insuring up to $250,000 of their deposits per institution in case of bank failure. Similarly, the U.S. government backs credit union customers up to $250,000 through insurance provided by the National Credit Union Administration (NCUA).

This means whether you choose a traditional bank with physical branches or an online bank or credit union, and regardless of its size, your deposits up to $250,000 are equally safe and protected.
Which Bank Offers the Highest-Paying High-Yield Savings Account?

The institutions leading in savings account rates are constantly changing; no single bank consistently holds the top spot. Generally, online banks, whether subsidiaries of traditional banks or fully online entities, tend to offer the most competitive rates. To find today’s top rates, currently around 5.00%, and the institutions offering them, regularly consult our updated rankings within this article. For a bank-exclusive list (excluding credit unions), refer to our daily ranking of the best banks for savings accounts.
Are There Banks Paying 7% Interest on High-Yield Savings Accounts?

While a 7% interest rate on savings would be highly attractive, no banks or credit unions currently offer this on standard high-yield savings accounts. A 7% APY is presently available only on a savings account for kids, and even then, only on balances up to $1,000. Savings account rates did surge in 2023 and 2024 due to the Federal Reserve’s aggressive rate hikes. However, the highest savings account rate accessible nationwide peaked at 5.55% APY in April 2024.
How Are High-Yield Savings Account Earnings Taxed?

Interest earned from any bank account—savings, checking, money market, or CD—is considered taxable income and must be reported on your annual tax return. Your monthly statements or online account activity will show your monthly interest earnings. At the end of each calendar year, this interest income is taxed along with your other income sources.

While your bank won’t directly deduct taxes, in January each year, they will send you and the IRS a Form 1099-INT. This form details the total interest paid to you during the previous calendar year, which you must then report on your tax return.
Do High-Yield Savings Account Rates Fluctuate?

Yes, the APY on a savings account is variable. The rate at the time of account opening is likely to change in the future, and these changes can occur at any time without prior notice.

Rate fluctuations, whether increases or decreases and their frequency, are largely influenced by the Federal Reserve. When the Fed adjusts the federal funds rate, banks and credit unions typically follow suit in the same direction.

However, savings account rate changes are generally not daily or weekly events. Absent significant actions by the Fed, rates often remain stable for weeks or even months.
Is There a Risk of Losing Money in a High-Yield Savings Account?

The risk of losing money in a high-yield savings account is minimal. Banks and credit unions are generally insured by the FDIC or NCUA. While interest rates on these accounts are variable, they are guaranteed based on your account balance. The bank will not reclaim previously paid interest. Therefore, unlike stock market investments, high-yield savings accounts carry very little risk of losing your deposited funds (excluding your own spending).
What Are the Drawbacks of High-Yield Savings Accounts?

There are few significant downsides to using a high-yield savings account for a portion of your funds. The primary inconvenience is that your money will likely be held at a different institution than your primary checking account. This can mean that transfers between your high-yield savings and checking accounts aren’t instantaneous, typically taking 1-3 business days.

This minor inconvenience is easily managed by maintaining a sufficient cash cushion in your checking account at your primary bank. This ensures you have immediate access to funds if needed while still benefiting from the higher interest rates on your savings.
Which Banks Do You Track for High-Yield Savings Account Rates?

We monitor savings account rates daily for approximately 100 banks and credit unions that offer accounts nationwide. These include:

5Star Bank, Abington Bank, ableBanking, Affirm, Alliant Credit Union, Ally Bank, Amalgamated Bank, American Express, American Heritage Federal Credit Union, Axos Bank, Bank5 Connect, Bank5 Connect, Bank7, BankPurely, BankPurely, Barclays, Bask Bank, Blue Federal Credit Union, BluPeak Credit Union, BMO / BMO Alto, Bread Savings, BrioDirect, Capital One, CFG Bank, Chime, CIBC USA, CIT Bank, CIT Bank, CIT Bank, Citi, Citizens Access, CNB Bank Direct, CNB Bank Direct, Colorado Federal Savings Bank, CommunityWide Federal Credit Union, ConnectOne Bank, Credit Karma, Customers Bank, Digital Federal Credit Union, Discover, DollarSavingsDirect, E*TRADE Bank, Elements Federal Credit Union, Elements Financial, EmigrantDirect.com, EverBank, Evergreen Bank Group, First Foundation Bank, First Internet Bank, Fitness Bank, FNBO Direct, Forbright Bank, Hanscom Federal Credit Union, iGObanking, iGObanking, Ivy Bank, Jovia Financial Credit Union, Laurel Road, Lending Club, Live Oak Bank, Marcus by Goldman Sachs, MemoryBank, Milli, mph.bank, MutualOne Bank, My Banking Direct, MySavingsDirect, Nationwide by Axos, nbkc bank, Neighbors Bank, Newtek Bank, North American Savings Bank, Northfield Bank, Northpointe Bank, ONE, One American Bank, Panacea Financial, Pen Air Federal Credit Union, PenFed Credit Union, Popular Direct, Presidential Bank, Prime Alliance Bank, Primis Bank, Quontic Bank, Quorum Federal Credit Union, RBMAX, Rising Bank, Salem Five Direct, Sallie Mae Bank, SFGI Direct, SmartyPig, Synchrony Bank, TAB Bank, TotalDirectBank, UFB Direct, Upgrade, USAlliance Financial, Valley Direct, Vio Bank, VirtualBank, Web Bank, Western State Bank, and Workers Credit Union.
Where Can I Find a 12% Interest Rate on My Money?

Earning a 12% interest rate on savings in the U.S. is extremely rare and likely unattainable in an FDIC- or NCUA-insured account. While foreign bank accounts might offer such rates, proceed with extreme caution as your funds may lack the government-backed insurance present in the U.S. Investment platforms may offer potential 12% returns, but stock market investing inherently carries risk and is not a guaranteed path to returns. The most prudent approach is to maximize returns within safe, insured options like savings accounts or CDs currently offering around 5% before interest rates potentially decrease.

How We Identify the Best High-Yield Savings Account Rates

Investopedia tracks daily rate data from approximately 100 banks and credit unions offering high-yield savings accounts nationwide. Our daily rankings prioritize accounts based on the annual percentage yield (APY) offered. To qualify for our listings, institutions must be federally insured (FDIC for banks, NCUA for credit unions), and the minimum initial deposit cannot exceed $25,000.

Banks must operate in at least 40 states to be included. While some credit unions require a charitable donation or association membership for eligibility, we exclude those with donation requirements of $40 or more. For mobile app-only savings accounts, the app must be available on both iOS and Android platforms.

For a deeper understanding of our selection process for the best high-yield savings accounts, please read our comprehensive methodology.