The Best High Yield Savings Accounts for July 2024: Earn Up to 5.55% APY

What Do the Best High Yield Savings Accounts Have in Common?

The best savings account interest rates are around 5%. At a brick-and-mortar bank, you’ll often find savings rates closer to the national average, which is currently 0.45%. If you have a $10,000 savings balance, choosing an account that pays 5% will earn you about $500 in a year, while an account paying you 0.40% APY would earn about $40. The difference increases the more you deposit and the longer you keep it in the account.

Why Should I Care About the Best High Yield Savings Account Rates?
If you have money left in your checking account each month — or you can adjust your budget so that you do — you should have a savings account with a high rate. It’s always helpful to have money set aside for emergencies, and it’ll earn you much more in an account that pays one of the best savings account rates than in a checking account. Just make sure you can keep enough in your savings account to avoid monthly fees. Most online savings accounts don’t charge these, but many traditional accounts do.

What Monthly Fees Do High Yield Savings Accounts Usually Have?
The best savings accounts typically don’t charge monthly fees. You make your deposit and watch your balance grow as your money earns interest.

How to Open a High Yield Savings Account
Similar to opening a savings account at a branch, you’ll need to provide some information to open an online account. You’ll provide your contact information and Social Security number, in addition to information from your ID (such as your driver’s license number). To make your initial deposit, you may need to link an external bank account to transfer money electronically.

Is My Money Safe in a High Yield Savings Account?
Yes, provided your money is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).

Do the Best high yield Savings Account Interest Rates Change Over Time?
Yes, rates are variable and can change over time. If you are looking for a fixed rate account and can set aside funds for a specific time period without making a withdrawal, consider opening a certificate of deposit (CD). CDs often offer higher rates in exchange for locking your money for a set term.

High Yield Savings Account Terms You Need to Know

• Savings account: A deposit account from a financial institution that typically earns interest.
• Interest: Money a financial institution pays into an account over time.
• Compound interest: Interest you earn on both your original money and the interest you keep accumulating. In an account that pays compound interest, the return is added to the original principal at the end of every compounding period, typically daily or monthly. Each time interest is calculated and added to the account, the larger balance earns more interest.
• Annual percentage yield (APY): The amount of interest an account earns in a year, based on the account’s interest rate and the number of times interest is paid during the year.
• Minimum balance: The lowest dollar amount you need in a bank account either to avoid fees or satisfy account requirements. The minimum can be an average balance or a fixed amount required either daily or monthly.
• Minimum opening deposit: The specific amount of money you need to open a bank account.

How Can I Earn High Interest Rates Besides a High Yield Savings Account?

Here are a few options:

• Money market accounts: These accounts are a type of savings account but might have higher minimum balances and offer perks such as check-writing, which is rare for savings accounts.
• Certificates of deposit (CDs): These accounts lock your balance away for a specified period of time — often between one year and five years — in exchange for a higher interest rate. But if you withdraw any money during the term, you’ll typically have to pay a penalty. CDs are also covered by FDIC insurance.
• High-yield checking accounts: Some checking accounts offer competitive interest rates, but they often come with specific requirements such as a minimum number of debit card transactions per month.

Is High Yield Savings Accounts Interest Taxable?

Yes, savings account interest is generally taxable. Your provider will probably send you a form reporting it if you earned more than $10 during the tax year. Note that you are likely to earn more interest with a high-yield savings account.

What’s the Difference Between FDIC and NCUA Insurance?

• FDIC Insurance: Protects deposits in banks up to $250,000 per depositor, per insured bank, for each account ownership category.
• NCUA Insurance: Protects deposits in credit unions up to $250,000 per share owner, per insured credit union, for each account ownership category.