CompareOffers.com's guide to high-yield savings accounts
What is a high-yield savings account?
A high-yield savings account is a type of savings account that offers interest rates higher than the national average. These federally insured savings accounts can earn around 2.00% APY, whereas the national average is 0.24% APY.
Are high-yield savings accounts safe?
High-yield savings accounts are a safe and convenient option for storing emergency funds, saving for large expenses, or reaching short-term savings goals. These accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per FDIC-insured bank, per ownership category. This guarantees that your money is safe in the event of a bank failure, as long as it falls within the limits and guidelines set by the FDIC. You can confirm that your bank is FDIC-insured using the FDIC's BankFind Suite. If you bank with a credit union, make sure that it is backed by National Credit Union Administration (NCUA) insurance.
How to open a high-interest savings account
Opening a high-interest savings account can help you reach your savings goals, whether it's building an emergency fund or saving for a vacation or other large expense. Here's how to open a high-yield savings account:
- Shop around. High-yield savings accounts are offered by online banks, traditional banks with branches, and credit unions. Online banks often offer the highest rates because they don't have the overhead costs associated with maintaining branches. Compare the annual percentage yield (APY) and fees of different accounts to find the right fit for your finances.
- Fill out an application. Once you've chosen a high-interest savings account, you'll need to fill out an application, whether online or in person. The bank or credit union will likely ask for personal information, including your driver's license number, Social Security number, mailing address, and date of birth.
- Deposit your money. After your application is approved, you'll need to fund the account. This can be done by linking a checking account and transferring funds, or by depositing cash, making a wire transfer, or mailing a check. Some banks also allow mobile deposits.
Make sure you deposit enough money to meet the account's minimum deposit requirement, otherwise you may be charged a maintenance fee or earn a lower interest rate until the minimum is met.
What to do if you can't open a high-interest savings account
If you are unable to open a new account, ask the bank why this may have happened. Depending on the answer, you may want to visit ChexSystems' website and request a report to see if your banking history is the reason for the rejection. ChexSystems is a national consumer reporting agency that tracks some of your banking history, including check cashing history, suspected fraud activity, and closed accounts. These may appear on your ChexSystems report.