Best High-Yield Savings Accounts of April 2024: Up To 5.25% APY

High-yield savings account rates

Unless otherwise stated, your savings account doesn’t have a fixed APY. Most interest rates tied to savings accounts will fluctuate, sometimes drastically, in accordance with changes in the Fed rates. This is called a variable rate.

When the economy is doing well, the Federal Reserve tends to raise rates and banks and credit unions follow suit. The Fed’s goal is to help stabilize the economy and even out consumer buying and spending.

When the economy is struggling, the Fed tends to lower rates and banks and credit unions react accordingly. This makes it easier for consumers to borrow money and funnel cash back into the marketplace, thereby stimulating the economy. Unfortunately, what’s good for the economy isn’t always the best for your savings account.

Savings account interest rates may also change just because the bank wants to change them. Traditional banks tend to be more conservative with their rates, but online banks may boost interest rates to stay competitive and attract new clients.

APY across U.S. banks plummeted during the 2020 pandemic, but they’ve slowly and steadily been making a comeback. According to the Federal Deposit Insurance Corporation (FDIC), the average savings APY in April 2022 was just 0.06%. By January 2024, the average rate rose to 0.47%. Online banks often offer a high APY closer to the national savings rate cap, which since November 2023 has been set at 6.08%.

Best high-yield savings accounts for April 2024

Not all banks offer high-yield savings accounts. Here are some of the top rated banks offering high-yield savings accounts:

Other high-yield savings accounts:

7% interest savings accounts

As of April 2024, no banks are offering 7% interest rates on savings accounts. For more information, please see our guide 7% interest savings accounts.

5% interest savings accounts

It is possible to find a 5% interest savings accounts, especially if you’re willing to work with an online-only bank. Some of the banks offering the highest APY on savings accounts do require minimum deposit amounts and minimum average balances to ensure those high-interest earnings.

Are high-yield savings accounts safe?

Your online savings are safe as long as you’ve stowed them away in an FDIC-insured account. The FDIC protects consumer deposits for up to $250,000 per depositor, per institution. Anything up to $250,000 in a single account at a U.S. bank covered by the FDIC will be reimbursed to you if your bank or credit union fails.

If you have more than $250,000 to place in savings, it’s a good idea to maximize your protection by utilizing multiple accounts across multiple banks.

Otherwise, the only way you can lose money from your savings account is by paying out more in fees than you accrue in interest. Read the fine print on your account so you know exactly how much you’re paying in maintenance fees and other costs. Then, find out if there’s a way you can avoid those charges such as by raising your minimum balance or reducing your average number of monthly transactions.

What is a high-yield savings account?

High-yield savings accounts are designed to help people stockpile money while also generating extra funds courtesy of the best APY.

Imagine you’ve paid all your bills for the month and find yourself with some money left over. Or perhaps you’re intentionally building savings for a specific purpose, such as paying college tuition or completing a home remodel. Putting your cash in an interest-bearing online bank account helps maximize your return. Instead of just sitting there, your money is actually working for you.

Here’s how different online savings accounts and high APY can impact your savings*.

*This chart demonstrates the basic difference between standard and higher-interest savings accounts, assuming interest compounds daily. The actual amount of interest accrued depends on various factors, including whether there are additional deposits, if the account terms include simple or compound interest and how often interest is compounded.

Note that most higher-interest accounts are offered by online banks and credit unions, as these institutions have less overhead compared to brick-and-mortar banks and can offer better rates for these types of savings accounts.

High-yield savings account terminology

As you get to know the ins and outs of high-yield saving accounts and how they work, it’s important to familiarize yourself with some of the most common and significant terminology.

• Annual percentage yield (APY): Your APY is the interest rate you earn based on an annual rate of return. APY is rarely locked in. Instead, it can change alongside fluctuations in the federal funds rate as determined by the Federal Reserve.
• FDIC insurance: When you see “member FDIC” listed beside a credit union or bank’s name, it means they’re FDIC-insured and you have federal coverage safeguarding up to $250,000 per depositor for that institution.
• Compound interest: Compound interest is desirable because it stacks earnings on top of earnings. You not only earn interest on your initial deposit, but also on the total value of your account as it continues to earn interest. This means that the same APY will earn you more in interest the longer you keep money in your account.
• Minimum deposit requirement: Your minimum deposit is how much money your bank or credit union requires for you to open a savings account.
• Monthly maintenance fee: Some banks and credit unions charge a monthly maintenance fee to cover administrative costs associated with your account. You may be eligible to pay lower fees if you have an online account versus an account with a brick-and-mortar bank. Your financial institution may also waive the monthly service fee if you maintain a high minimum balance or complete a certain number of direct deposits each month.
• Wire transfer: This is one way you can transfer money into your savings account. Wire transfers are safe and easy, especially if you’re looking to move money from one account to another. But they’re often subject to fees and it can take up to five business days for transferred money to hit the destination account.

How to choose the best high-interest savings account

Before you choose where to open your online savings account, consider these factors:

• Interest rates/APY: Review multiple banks to see which one has the most competitive rates.
• Deposit requirements: Ask about minimum deposit and overall balance requirements so you know how much you have to transfer to open an account and how much you need to leave in the account to avoid fees.
• Access points: Will you be able to access your account online? How about through an ATM card or via your bank’s mobile app?
• Account fees: Know in advance what you’ll be paying in terms of maintenance fees and monthly service fees, as well as what penalties may apply for failing to meet minimum balance requirements.
• Compounding frequency: Interest can compound daily, monthly, quarterly or yearly, and that frequency can heavily influence your long-term savings.

Pros and cons of a high-yield savings accounts

Below are some pros and cons of having a high-yield savings account.

Understanding the pros and cons of high-yield savings accounts can help you decide if a high-yield savings account is right for you, so you can start earning more interest than a regular savings account.

How to open a high-yield account

It’s fairly easy to open a high-yield online savings account.

You just need to provide basic information, such as your legal name, an up-to-date address and your Social Security number. For joint accounts, both parties need to provide the required information.

Next, you’ll need to fill out an application. Once you’re approved, you can make your initial minimum deposit and start earning interest!

What if I can’t open a high-interest savings account?

Banks sometimes deny online savings account applications if the applicant has a negative ChexSystems report or their credit score is too low. Even if you can’t open a high-interest account, you may get a better-than-average APY simply by opening a traditional online savings account.

Is a high-yield savings account worth it?

High-yield accounts are worth it if you’re looking to maximize your interest earnings and you don’t mind dealing with a few restrictions. Look for surcharge-free accounts and flexible terms to make the most of your banking relationship.

Alternatives to high-yield savings accounts

High-yield online savings accounts aren’t the only option for stowing away money and earning interest at the same time.

Here are some alternatives worth exploring:

• CDs: Certificates of deposit (CD) offer great interest rates but lock up your funds for a predetermined amount of time – often one, three or five years.
• Money market accounts: Money market accounts combine the best aspects of checking and savings accounts, often offering flexible banking, direct deposit, overdraft protection, above-average interest rates and more reasonable minimum deposit requirements.
• Interest-bearing checking accounts: Some checking accounts, particularly those offered by online-only banks, offer interest rates that fall somewhere between traditional checking and high-yield savings accounts.