High-yield savings accounts pay the most, but the rate you get depends on where you bank
The savings accounts that pay the most interest are called high-yield savings accounts (HYSAs). They typically pay between 4% and 5.35% annual percentage yield (APY) right now, though that rate changes weekly based on what the Federal Reserve does with interest rates. A regular savings account at a big bank like Chase or Bank of America usually pays 0.01% to 0.05% — roughly 100 times less.
The catch is that the highest rates are almost never at the bank where you already have a checking account. They are at online banks and credit unions that have lower overhead costs and pass the savings to depositors. You do not need to move your main checking account — you can open a high-yield savings account at a separate institution and move money between them when you want to save.
The rate you receive also depends on how much you deposit. Some accounts have a tiered structure: you might earn 4.5% on your first $25,000 and 4.0% on anything above that. Others pay the same rate no matter the balance. A few require a minimum deposit to open the account, though many do not.
Key Takeaways
- Online banks and credit unions currently offer the highest rates, typically between 4% and 5.35% APY, while traditional brick-and-mortar banks pay under 0.1%.
- The rate you receive changes when the Federal Reserve adjusts interest rates, so the highest-paying account today may not be the highest next month.
- You can open a high-yield savings account at a separate bank without closing your existing checking account or moving your paycheck.
- Some accounts pay different rates depending on your balance, so compare both the rate and any balance tiers before opening.
- All deposits up to $250,000 are protected by FDIC insurance at banks or NCUA insurance at credit unions, regardless of the interest rate.
Online banks usually have the highest rates because they have no physical branches
Online-only banks have the lowest operating costs of any financial institution. They do not pay for building leases, tellers, or branch staff. Because of this, they pass most of the savings to customers in the form of higher interest rates. Banks like Marcus (owned by Goldman Sachs), Ally Bank, American Express Personal Savings, and Discover Bank have consistently offered rates at or near the top of the market.
The tradeoff is that you cannot walk into a branch or speak to someone in person. All transactions happen through a website or mobile app. Deposits come in through ACH transfer (moving money from your checking account at another bank) or by mailing a check. Withdrawals go back to your linked checking account. For most people who are simply parking money and letting it earn interest, this is not a problem.
Online banks are still insured by the FDIC, which means your money is protected up to $250,000 even if the bank fails. This is the same protection you have at Chase or Bank of America.
Credit unions often pay competitive rates and may have lower minimums
Credit unions are member-owned financial cooperatives, not corporations. They operate on a not-for-profit basis, which means they can offer higher rates than banks that need to generate profit for shareholders. Many credit unions have high-yield savings accounts that pay rates comparable to online banks, sometimes with lower minimum deposits or no minimum at all.
The challenge is finding a credit union you can join. Membership is usually restricted by employer, location, or affiliation. For example, some credit unions are only open to employees of a specific company, or to people who live in a certain county. A few large credit unions like Connexus Credit Union and Pentagon Federal Credit Union have broader membership rules. You can search for credit unions you may be able to join at CO-OP, which is a shared branching network.
Credit union deposits are insured by the NCUA (National Credit Union Administration) up to $250,000, the same as FDIC insurance at banks. The protection is equivalent, just administered by a different agency.
Money market accounts pay high interest but limit how often you can withdraw
A money market account is a hybrid between a savings account and a checking account. It typically pays interest rates close to high-yield savings accounts — often 4% to 5% APY — but it comes with withdrawal restrictions. Federal rules limit you to six withdrawals per month (though this rule is enforced inconsistently). Some money market accounts also come with a debit card or checkbook, which makes them feel more like a checking account.
Money market accounts make sense if you want easy access to your money but do not plan to withdraw often. If you think you will need to move money in and out frequently, a regular high-yield savings account is simpler because it has no withdrawal limits.
Certificates of Deposit (CDs) pay more if you lock your money away for months or years
A Certificate of Deposit (CD) is an account where you agree to leave your money untouched for a set period — usually three months, six months, one year, or five years. In exchange, the bank pays you a higher interest rate than a savings account. Right now, a one-year CD might pay 4.5% to 5.3% APY, while a five-year CD might pay 4.0% to 4.8%.
The tradeoff is that if you withdraw the money before the term ends, you pay a penalty. The penalty is usually a few months of interest. For example, if you open a one-year CD and withdraw after six months, you might lose three months of interest. This makes CDs best for money you know you will not need for a specific period.
CDs are FDIC-insured up to $250,000, and you can open multiple CDs at the same bank (each one is insured separately up to $250,000). Some people use this strategy to build a "CD ladder" — opening several CDs with different maturity dates so that one matures every few months and you can access your money without penalty.
Compare rates across multiple banks before you decide
Interest rates change constantly. A bank that pays 5.2% one week might drop to 4.9% the next. Because of this, there is no single "best" account — the highest rate today might not be the highest next month. The best approach is to check rates at several banks right before you open an account.
When you compare, look at the APY (annual percentage yield), not just the interest rate. APY includes the effect of compounding, so it tells you the real amount you will earn. Also check whether the rate applies to your balance size. If you plan to deposit $10,000, a rate that only applies to balances over $25,000 does not help you.
Sites like Bankrate, DepositAccounts, and the FDIC's own BankFind tool let you search for current rates at different banks. You can also visit each bank's website directly — the rate is usually listed on the savings account page without needing to log in.
Your existing bank may not be worth leaving for a high-yield account
If you have a checking account at a big bank and they offer a high-yield savings account, it might be worth opening one there for convenience — you can move money between accounts instantly and see everything in one login. However, big banks rarely offer rates that compete with online banks or credit unions. Chase's high-yield savings account, for example, currently pays around 4.35% APY, while several online banks pay 5% or higher.
The math is simple: if you have $10,000 in savings, the difference between 4.35% and 5.0% is about $65 per year. Over five years, that adds up to $325 in extra interest. Whether that is worth the small inconvenience of banking at two institutions is a personal choice, but the difference is real.
Frequently Asked Questions
Can I move money between my high-yield savings account and my checking account whenever I want?
Yes, if both accounts are at banks that are connected through the ACH network (which includes almost all banks). Transfers usually take one to two business days. If your high-yield account is at a different bank than your checking account, you set up a link between them once, and then you can transfer money back and forth as often as you need.
What happens to my interest rate if the Federal Reserve raises or lowers rates?
Banks adjust their savings account rates in response to Federal Reserve changes, but they do not have to match them exactly or move at the same time. When the Fed raises rates, banks usually raise savings rates within days or weeks. When the Fed lowers rates, banks often lower savings rates more slowly. Your rate can go up or down at any time, and the bank will notify you before the change takes effect.
Is my money safe in an online bank I have never heard of?
As long as the bank is FDIC-insured, your deposits are protected up to $250,000 even if the bank fails. You can verify FDIC insurance by searching the bank's name on the FDIC's BankFind tool. Online banks are regulated the same way as traditional banks — they just have no physical locations.
Do I have to keep a minimum balance in a high-yield savings account?
It depends on the bank. Many online banks have no minimum balance requirement — you can open an account with $1 and start earning interest. Others require a minimum deposit to open (often $500 to $2,500) or to earn the advertised rate. Check the account details before you open.
Can I have high-yield savings accounts at multiple banks?
Yes. You can open accounts at as many banks as you want. Each account is separately insured up to $250,000 by the FDIC or NCUA, so if you have $500,000 in savings, you could split it between two banks and have all of it insured. This is a common strategy for people with large savings.