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The Best High-Yield Savings Account Options for 2020

Are you in the market for the best high-yield savings account? You’ve come to the right place.

These high-interest options came to be when competition among the traditional savings account providers skyrocketed. Nowadays, a high-yield account can earn you anywhere between 20 and 25 times the national average interest rate. No matter whether you're starting to save for a dream home, an exotic vacation, or your child's college fund, a high-yield account can be a powerful tool.

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The Best High-Yield Savings Accounts - Top 3 Picks

Top 3 Picks

FitnessBank

Market-leading rates available nationwide

An incentive to exercise more

Excellent mobile banking

Open Account READ REVIEW

Brio Direct

State-of-the-art online and mobile banking

No monthly fees

High rates on low balances

Open Account READ REVIEW

First Foundation Bank

Highly-rated mobile app

Free ATM card

No monthly fees

Open Account READ REVIEW

7 Best High-Yield Savings Accounts

1. FitnessBank

A subsidiary of Affinity Bank, FitnessBank is a unique online financial institution that provides industry-leading rates and virtually no fees on its high-yield option. It helps you stay active by growing your savings.READ REVIEW

Market-leading rates available nationwide

An incentive to exercise more

Excellent mobile banking

Open Account

show more


APY

2.20%

Minimum deposit

$100

Minimum balance

$0

Fees

$10 monthly fee, waived with a daily balance of $100

2. Brio Direct

BrioDirect is the online division of Sterling National Bank. It offers high-yield savings accounts and certificates of deposit to customers looking for high-interest rates and low fees. READ REVIEW

State-of-the-art online and mobile banking

No monthly fees

High rates on low balances

Open Account

show more


APY

2.00%

Minimum deposit

$25

Minimum balance

$0

Fees

$10 monthly fee, waived with a daily balance of $100

3. First Foundation Bank

First Foundation is a California-based, FDIC-insured bank established in 2008. It offers several financial products and services including high-yield saving accounts to customers in all 50 states. READ REVIEW

Highly-rated mobile app

Free ATM card

No monthly fees

Open Account

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APY

2.00%

Minimum deposit

$1,000

Minimum balance

$0

Fees

$20 early closure fee, $20 excessive withdrawal fee

4. UFB Direct

Powered by Axos Bank, UFB Direct is an online bank that offers high-yield savings accounts and other financial products with competitive rates. It's an excellent choice for those looking to deposit a five-digit amount and avoid fees.READ REVIEW

Excellent online, mobile, and SMS banking features

Round-the-clock customer support

Free ATM card

Open Account

show more


APY

1.90%

Minimum deposit

$10,000 to earn the APY

Minimum balance

$10,000 to earn the APY

Fees

$35 for an outgoing wire

5. Elements Financial

Elements Financial is a credit union that operates as a bank. It offers a range of financial services including high-yield savings accounts to customers nationwide. High interest rates make it a great choice for those looking to grow their savings quickly. READ REVIEW

Highly rated mobile app

Free ATM card

No monthly fees

Open Account

show more


APY

1.90%

Minimum deposit

$2,500

Minimum balance

$2,500

Fees

$5 monthly inactivity fee

6. CIT Bank

CIT Bank has been providing various financial products to US customers since 2000. Its high-yield account, Savings Builder, is a competitive savings option that comes with a bonus offer and makes the process of saving towards your goal much easier. READ REVIEW

Interest compounded daily

Easy-to-use mobile app

High-APY introductory offer for all users

Open Account

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APY

1.75%

Minimum deposit

$100

Minimum balance

$25,000 or a $100 deposit every month

Fees

$10 outgoing wire fee on balances below $25,000

7. Discover Bank

In addition to various banking products such as credit cards, personal and student loans, Discover Bank offers a very competitive high-yield savings account. Its main advantage is an attractive APY of 0.95%, available to customers with all balances. It should also be noted that there are no fees, and their mobile app is excellent.READ REVIEW

Daily compounded interest

Excellent customer services

No monthly fee and no min. balance

Open Account

show more


APY

0.95%

MINIMUM DEPOSIT

N/A

MINIMUM BALANCE

All balances qualify

FEES

None

How We Determine The Best High-Yield Savings Account Offers

Fortunly’s team of researchers has evaluated dozens of nationally available high-yield savings accounts offered both by online and branch banks. To determine the ones worth your attention, we’ve created our own ranking method. Before we present our in-depth reviews, here are the factors you should take into account when choosing the best savings option for you.

Minimum initial deposit

The minimum initial deposit is the funding required to open an account with a bank, credit union, or a similar financial institution. Opening deposits can vary significantly even with the best high-yield savings account options. Some financial institutions have no such requirements, while others ask for five-digit amounts.

Minimum account balance

The minimum account balance is the amount of money you need to keep in your savings account to earn a high APY and, in some cases, to avoid fees.

Just like the minimum initial deposit, the minimum account balance is another area where high-yield account providers compete to attract new account holders. Based on our research, this criterion can vary widely, and high minimum balances are usually rewarded with high interest rates. For the sake of diversity, we’ve also included options for the best high-yield savings account with no minimum balance requirements.

Fees

Given that they’re usually provided by digital banks, high-yield accounts are typically unencumbered by service fees. And while most providers charge little to nothing in terms of fees, we suggest you always read the fine print. In some cases there are ways to avoid fees by maintaining a certain minimum balance. Also bear in mind that the federally mandated number of free withdrawals is limited to six transactions per month.

APY

Before you open a high-yield savings account, you should know that savings account rates are flexible and can be changed for the better or for the worse at any time.

To stay on top of the highly competitive market, some providers offer incredibly high interest rates as a promotion or an introductory offer. However, even if we put the promotional offers aside, as a rule, high-yield opportunities come with compound interest and can earn you much more than a traditional savings account. As far as our list goes, some of the best high-interest savings account options pay up to 25 times the national average saving account interest rate.

User experience and customer support

Most high-yield accounts offer no ATM cards or check-writing privileges. Some account holders even appreciate the fact that the banks make it inconvenient for them to withdraw money from their savings too often. However, if this doesn’t match your financial habits, you can also find a high-interest savings account that provides an ATM card and a wide network of free ATMs.

When it comes to the best high-yield savings accounts, the banks that provide them usually operate online, which means that they have few or no physical branches. Remember that, as long as the account provider is FDIC-insured, it doesn’t matter that it has no brick-and-mortar branches. We only include FDIC-insured providers on our list.

The other user experience features we evaluate include online and mobile banking platforms, as well as complimentary money management tools. We also examine the diversity of customer support channels each account provider offers.

The Best High-Yield Savings Accounts – In-Depth Reviews

At a Glance

  • APY: 2.20%
  • Minimum deposit: $100
  • Minimum balance: $0
  • Fees: $10 monthly fee, waived with a daily balance of $100

Launched in 2002 as Atlanta Business Bank, FitnessBank became a subsidiary of Affinity Bank eight years later. It’s a one-of-a-kind financial institution that combines the industries of finance and fitness to help its account holders improve not only their wealth but also their health. FitnessBank’s unique approach consists of offering the highest-yield savings rates to the users who stay active and take at least 12,500 steps a day.

Minimum initial deposit

The minimum deposit required to open and maintain an account with Fitness Bank is $100. There are a few different ways to make the initial deposit and any subsequent ones. You can send funds via another bank’s online banking platform, schedule an external transfer within FitnessBank’s own online banking platform, or even dedicate parts of your payroll to this highest-APY savings option.

Minimum account balance and APY

How does this lifestyle bank stay true to its motto of making every step count? Well, while most savings account providers base their tiered interest rates on balance amounts, FitnessBank takes a different approach.

This bank’s rates are dependent on how physically active you are; the deal gets more generous as you take more steps. As one of the best banks for high-yield savings account options, FitnessBank offers five tiers based on how many steps you take every day:

12,500 steps or more: 2.20% APY
10,000 – 12,499 steps: 2.00% APY
7,500 – 9,999 steps: 1.75% APY
5,000 – 7,499 steps: 1.25% APY
4,999 steps or fewer: 0.50% APY

As a welcome offer, all users get the highest APY in the first month, regardless of the number of steps they take. After the promotion period ends, your APY will be calculated based on the daily average number of steps that you’ve taken throughout the previous month. That means you can enjoy a few rest days without worrying about losing out on your APY.

FitnessBank’s savings account also comes in a senior version. This option comes with smaller step requirements and is meant for those over 65 years of age.

With a minimum balance of only $100 for all tiers, this APR structure can be an excellent motivator if you’re struggling to stay true to your fitness goals. However, if the 12,500-step daily requirement is too much to fit into your schedule, you’d better off with another savings product.

Fees

Here’s another reason why FitnessBank is one of the best banks with high-yield savings accounts: it doesn’t charge anything for incoming wires. There is a $10 monthly fee, but it can be avoided with a daily balance of $100. You can make six fee-free transactions per month, while any additional payments, withdrawals, or automatic transfers incur a $10 fee.

All transactions are completed as electronic transfers via the bank’s online and mobile banking platforms. There are no ATM cards or check-writing privileges with FitnessBank’s savings product, so if you find the convenience of ATM and branch access important, this online bank isn’t for you.

User experience

Opening FitnessBank’s highest-yield savings account is quick and easy; account setup is 100% online and doesn’t take more than two minutes. After you’ve provided your basic contact information, Social Security number, and a copy of your passport or driver’s license, you’ll just need to fill out funding details before you can start earning.

To finish the setup, you’ll be required to download the bank’s step-tracking app. Once you’ve synced the step-tracking app with your Apple Health, FitBit, Garmin, or Google Play account, you’ll be able to set your daily step goal. Here’s a piece of advice – make sure you have the app running at all times so that it captures every step you take.

Customer support

As far as support goes, there are several different ways to reach out to this provider of the best high-yield savings account rates. Apart from the contact form available on the website, you can also send an email, or give the bank’s customer service a call Monday through Friday from 9 a.m. to 4 p.m. ET. FitnessBank is also active on social media.

Reasons to Buy

The highest rate on a savings account available in all 50 states

Excellent online and mobile banking

High rates on low balances

An effective stimulus to exercise more

Multiple support channels

At a Glance

  • APY: 2.00%
  • Minimum deposit: $25
  • Minimum balance: $0
  • Fees: $10 monthly fee, waived with a daily balance of $100

BrioDirect offers one of the best interest savings accounts on the market. If you haven’t heard of this financial institution before, that’s because BrioDirect is an online banking brand powered by Sterling National Bank.

Established in 1895, Sterling has grown to hold more than $30 billion in assets and is currently the 67th-largest bank in the US. It’s also one of “America’s 100 Best Banks” according to Forbes. Its online division is considered one of the best online banks for certificates of deposit and savings opportunities.

Minimum initial deposit

The minimum deposit required to open a high-yield savings account with BrioDirect is $25. Although the bank’s preferred funding option is an ACH payment (automated clearing house payment), you can also transfer money to your BrioDirect savings account via check or wire transfer.

Although deposits are usually processed in one or two business days, some users have complained of waiting longer than they anticipated. According to these account holders, the initial deposits can take up to seven days to clear.

Minimum account balance and APY

BrioDirect provides one of the best savings account interest rates offered nationwide. The deal is simple – a minimum account balance of only $25 is enough to start earning an APY of 2.00%. Note that all BrioDirect’s products and services are provided by Sterling National Bank and insured with the same financial institution. In other words, you become a Sterling client when you apply for a BrioDirect savings account and make the initial deposit.

Fees

As far as charges go, BrioDirect provides one of the best high-yield online savings account opportunities. There are no monthly maintenance or other service fees that you need to worry about. The bank’s easy-to-use online and mobile banking platforms also come free of charge. When it comes to withdrawals, you’re allowed the federally regulated six transactions per monthly statement cycle.

User experience

Setting up a new account with BrioDirect takes less than five minutes. The online application is straightforward and the only thing information you’ll need to provide are your contact details, Social Security number, and your driver’s license, state ID, or US passport. After that, you’ll need to make the initial deposit of at least $25, then you’re ready to start earning the disclosed APY.

Apart from just about the highest savings rates offered nationwide, another great thing about BrioDirect’s savings opportunity is that it comes with state-of-the-art online and mobile banking platforms. Through the Sterling National Bank’s mobile apps developed for Android and iOS users, you can manage your savings account virtually anywhere and anytime.

Customer support

If you have any questions or encounter any issues, you can call BrioDirect’s client service. The bank’s support is available from 8 a.m. to 8 p.m. ET on weekdays and from 8:30 a.m. to 3 p.m. ET on Saturdays. This online bank also has a comprehensive FAQ page with detailed answers to almost any question you can think of.

Reasons to Buy

Excellent online and mobile banking platforms

No monthly service fees

High rates on low minimum balance

Helpful customer support

Quick and easy online application

At a Glance

  • APY: 2.00%
  • Minimum deposit: $1,000
  • Minimum balance: $0
  • Fees: $20 early closure fee, $20 excessive withdrawal fee

Established in 2008, First Foundation has since grown to hold more than $6.3 billion in assets. It’s currently the 21st-largest California-based bank.

The company’s banking, financial planning, investment management, and other financial services are available to customers nationwide via First Foundation’s online platforms. As a bonus, if you reside in Nevada, California, or Hawaii, you can visit any of the bank’s 21 brick-and-mortar locations.

Opening deposit

This bank’s high-interest savings option comes with an opening deposit requirement of $1,000. Bear in mind that initial deposits need to be made from any external US savings, checking, or money market account. Transferring the funds from an existing First Foundation account won’t fulfill the requirement.

There are three different ways to make a deposit with this bank. You can use the check deposit feature on the First Foundation mobile app, transfer funds from an external account of any type via mobile or online banking, or make the transaction at any of the bank’s physical locations.

Minimum account balance and APY

As one of the best online high-yield savings accounts out there, First Foundation’s offer comes with a 2.00% APY on end-of-day balances of at least $1,000. If your daily balance falls below the $1,000 mark, you’ll earn an APY of 1.00%. The maximum balance you can store in the account is $3 million.

When this California-based financial company first made its appearance on the online banking scene, it offered an APY as high as 2.40%. Although those rates have since dropped, First Foundation remains among the banks with the best interest rates.

Fees

First Foundation’s high-yield savings option has no monthly service fees and comes with a free ATM card (upon request). As far as withdrawals go, you can make six transfers per month free of charge, while each subsequent item will incur a $20 fee. Should you decide to close your account within 90 days of opening, you’ll be charged a $20 early closure fee.

User experience

Applying for a savings account with First Foundation is simple and takes just a few minutes. First, you need to enter your email address and contact information. After that, you’ll be asked to choose the account type and transfer the funds. Once you meet the minimum initial deposit requirement, you’re good to start earning dividends.

As you’d expect from one of the best high-yield savings accounts, First Foundation’s offer includes both online and mobile banking. However, if you prefer to make larger transactions at physical branches, you can visit any of the bank’s full-service brick-and-mortar locations in the states of Nevada, California, and Hawaii. Just keep in mind that actually opening an account can only be done online.

Customer support

As far as support goes, you can get in touch with the company’s client service via email or telephone. Working hours are 5:00 a.m. to 8:00 p.m. PT Monday through Thursday, 5:00 a.m. to 6:00 p.m. PT on Fridays, and 6:00 a.m. to 2:30 p.m. PT on Saturdays.

If you wish to discuss savings accounts or any financial products and services provided by this company, you can set up a meeting with a local advisor using the contact form on the bank’s website.

Reasons to Buy

Highly rated mobile app

ATM card upon request

No monthly fees

No minimum balance requirements

Excellent customer support

At a Glance

  • APY: 1.90%
  • Minimum deposit: $10,000 to earn the APY
  • Minimum balance: $10,000 to earn the APY
  • Fees: up to $35 for an outgoing wire

UFB Direct is an online bank powered by Axos Bank. Its financial products include checking and savings accounts with some of the best interest rates on the market. If you’re looking for low fees and competitive interest for your five- or six-digit chunk of savings, this is the best bank to turn to.

Opening deposit

While there is no minimum initial deposit requirement to open the account, to make the most of this bank’s savings account interest rates, you’ll need to deposit at least $10,000.

There are a few different ways to add money to your UFB account. These include the most commonly used wire transfers, ACH transfers, and mailed checks, with the addition of mobile-deposited checks.

Minimum account balance and APY

Balances of $10,000 or more are eligible for UFB Direct’s 1.90% APY. Despite the five-digit minimum balance requirement, this bank still has one of the best high-yield savings accounts offers. It’s also worth mentioning that there is no maximum deposit limit at UFB Direct. That’s great news if you have a large amount of money that you’re looking to grow as quickly as possible.

Fees

As a digital bank, UFB Direct has no branch-related costs. That’s why it can offer accounts with high savings rates and charge little to nothing in the way of fees.

First of all, there are no monthly service fees. Transfers between direct deposit accounts are also free of charge. Domestic inbound wires incur no charges, while a domestic outbound wire comes with a fee of up to $35.

User experience

As is the case with the best online savings account – FitnessBank – UFB Direct’s option is easy to open, taking no more than 15 minutes. Once you provide all the required personal information and your initial deposit gets processed, you can start earning the APY and making the most of the additional features that come with this account. These include a free mobile deposit feature that allows you to deposit checks 24/7 and free money management tools that help you gain control over your funds.

If you favor easy access to your funds, this is the best high-yield savings account for you. Apart from the standard online and mobile banking features, UFB Direct’s account comes with the convenience of SMS banking, which allows you to manage your money even when you have no internet coverage. Another convenient feature of this account is a free ATM card that you can use to withdraw funds at any time.

It’s also worth mentioning that UFB Direct takes cybersecurity very seriously. Apart from the SSL 128-bit encryption, all accounts are monitored for fraud and programmed for automatic logouts.

Customer support

Not only does UFB Direct offer one of the best high-yield interest savings account options, but also it has the customer support to match. Should you encounter any personal banking-related issues, you can get in touch with the bank’s customer service by sending a secure message via the online banking app, phone, or email.

UFB Bank’s support agents are available 24/7. If you happen to have any questions, we recommend that you first browse through the bank’s comprehensive library of online banking tutorials and frequently asked questions.

Reasons to Buy

Excellent online, mobile, and SMS banking features

Round-the-clock customer support

Free ATM card

Market-leading interest rate

No monthly service fees

At a Glance

  • APY: 1.90%
  • Minimum deposit: $2,500
  • Minimum balance: $2,500
  • Fees: $5 monthly inactivity fee

Founded in 1976, Elements Financial is an Indiana-based credit union that operates as a bank. It offers a range of financial services, including some of the best high-yield savings options to more than 112,000 users nationwide. Elements Financial is currently the fourth-largest credit union in Indiana and the 184th largest credit union in the US.

Opening deposit

The minimum initial deposit needed to start earning dividends on this account is $2,500, while $250,000 is the maximum deposit allowed. Note that you are required to fund your account by transferring the money from another financial institution. Any deposits made into other Elements Financial accounts over the past 90 days and transferred to your new Helium Savings account won’t make you eligible for the high APY.

Minimum account balance and APY

Helium Savings is one of the best online high-yield savings account options with a one-year promotional period. To qualify for the promotion and earn the 1.90% APY, you’ll have to be a new Helium Savings account holder with a daily balance between $2,500 and $250,000. Note that daily balances below $2,500 don’t earn dividends at all. After the one-year promotion ends, the APY will reset to its standard rate.

Fees

Elements Financial doesn’t charge monthly maintenance fees for its Helium Savings account. However, if you don’t make any transactions for 12 months, you’ll incur a $5 monthly inactivity fee. As far as withdrawals go, you can make the standard six transactions per month. Elements Financial’s savings option comes with an ATM card, but there are no check-writing or debit card privileges.

User experience

Convenience-wise, apart from some of the highest savings account rates on the market, Helium Savings comes with more than 5,000 shared physical branches nationwide and 78,000 fee-free ATMs all around the world. Elements Financial also offers highly rated online and mobile banking platforms.

When it comes to opening a new Helium Savings account, applications can be made in-branch or online. The online application takes only five minutes, but you won’t be able to proceed with it unless you’re at least 18 years old.

To complete the application, you’ll be asked to provide your Social Security number and details from your government-issued certification of choice, as well as making the initial deposit. One of the best things about Elements Financial is that it strives to offer a consistent, state-of-the-art banking experience across all digital channels.

Customer support

Should you have any questions about your high-interest savings account, there are several ways to get in touch with Elements Financial. You can contact the company via live chat, email, Facebook, Twitter, and phone. Although phone support is available around the clock, the credit union’s website comes with a comprehensive FAQ page we suggest you consult before deciding to make a call.

Reasons to Buy

5,000+ shared physical branches nationwide

A global network of 78,000 fee-free ATMs

Multi-channel customer support

State-of-the-art online and mobile banking platforms

No monthly service fees

At a Glance

  • APY: 1.75%
  • Minimum deposit: $100
  • Minimum balance: $25,000 or a $100 deposit every month
  • Fees: $10 outgoing wire fee on balances below $25,000

CIT Bank is a California-based, FDIC-insured financial institution that has been operating since 2000. It’s currently the 42nd-largest bank in the US. Its products and services include certificates of deposit, home loans, small business loans, money market accounts, and the Savings Builder, a competitive high-yield savings account with a bonus offer.

Not only does this account’s tiered savings structure offer excellent rates without charging fees, but also it makes the process of saving towards your goals much more enjoyable.

Opening deposit

A minimum initial deposit of $100 is required to start earning dividends with the Savings Builder. The options to deposit funds into your account include wire transfer, electronic transfer, and a check sent by mail. However, if you want to make the most of this savings account bonus opportunity, be prepared to deposit at least $50,000 for a $200 cash bonus or $25,000 for a $100 cash bonus.

Minimum account balance and APY

As a part of CIT Bank’s introductory offer, all new account holders earn 1.735% APY. Following the one-month promotional period, you can keep earning up to 1.75% APY if you maintain a balance of $25,000+ or make at least $100 in deposits every month. If you fail to meet any of the upper-rate requirements, you’ll still earn a base rate of 1.15% APY.

Not only does CIT Bank’s unique offer come with one of the highest savings account interest rates, but this option also encourages you to make a habit of saving towards your goals. That’s because of its requirement that you deposit at least $100 every month into your account. If you’re determined to get serious about saving for a down payment on your future home, a college fund, or even a dream vacation, this account can be a powerful tool.

Fees

Given that CIT Bank has no brick-and-mortar locations, it can afford to keep its service fees as low as possible. The bank doesn’t charge its Savings Builder account holders for account opening, monthly maintenance, or any other services apart from a $10 outgoing wire fee on balances below $25,000. In line with a federally mandated rule, you’re allowed six electronic transfers per statement cycle.

User experience

As one of the best online savings account options, CIT Bank’s Savings Builder is easy to set up. The application is done online and consists of just a few easy steps. First, you’ll need to enter your basic information. Then you’ll be asked to provide your phone number, email, address, and Social Security number. Once you’ve submitted all the required contact information, you’ll just need to make the initial deposit and you’ll be ready to start building your savings.

Unfortunately, the lack of nationwide physical branches makes this bank far from ideal for account holders who prefer to do their transactions in person. However, CIT Bank’s smartphone app has several features that can ease the transition from in-branch to mobile banking. As one of the best high-yield savings accounts on the market, Savings Builder comes with an app that lets you check your balance anytime, make quick transfers between linked accounts, and deposit checks remotely.

Customer support

As far as customer support channels go, you can contact CIT Bank by phone or email. Support agents are available seven days a week – Monday through Friday from 8:00 a.m. to 9:00 p.m. (ET), between 9:00 a.m. and 5:00 p.m. (ET) on Saturdays, and between 11:00 a.m. and 4:00 p.m. (ET) on Sundays. The website also offers a comprehensive FAQ page that we suggest you go through before trying to get in touch with a customer support representative.

Reasons to Buy

A high-APY introductory offer for all users

Interest is compounded daily

Easy-to-use mobile app

Few to no fees

Helpful customer support

Frequently Asked Questions

1. Which bank has the best high-yield savings accounts?

If you find yourself wondering what are the best high-yield savings accounts, we suggest you compare and evaluate the offers by taking a few different factors into account. These should include the minimum initial deposit, the minimum balance requirement, fees, and of course, APY (annual percentage yield). Our list of both branch and online banks with the most competitive overall offers include:

FitnessBank: best for those who stay physically active;
BrioDirect: best for high rates on a low balance;
UFB Direct: best for large deposits;
Elements Financial: best for fee-free ATM access;
First Foundation Bank: best for no minimum balance;
CIT Bank: best for those saving for a specific goal.

2. What is the catch with high-yield savings accounts?

There’s no reason to question the legitimacy of high online savings account rates. High-yield accounts are usually offered by digital banks that have no local branches, so they can cut down on the costs traditional brick-and-mortar banks have to deal with. However, the biggest downside of these online accounts is also the aforementioned lack of physical branches. In most cases, this means that the options to make cash deposits are either expensive or non-existent.

3. How much interest will I get on $1000 a year in a savings account?

If you make a deposit of $1,000 into an account that offers a 1% interest per year, you’ll have a total of $1,010 by the end of the year. That’s how simple interest paid on the principal works. However, money in the best savings accounts earns compound interest. To calculate the compound interest, you have to add all accumulated interest to the principal.

4. What type of savings account earns the most interest?

Choosing the best place to park your savings is not an easy task. Interest-wise, there are so many options that work better than a regular savings account at your local bank. These include money market accounts, certificates of deposit, and high-yield savings accounts. All of these account types come with upsides and downsides. Overall, the best interest rates on savings are usually offered by high-yield account providers.

5. Are high-yield savings accounts taxed?

Yes, they are. However, keep in mind that only the interest that you earn on your savings account is taxable and must be included on your income tax return. You don’t have to pay any extra tax on the principal.

6. Are high-yield savings accounts safe?

Many people stay away from high-yield accounts because they consider them unsafe. As long as you deposit your money with an FDIC-insured institution, your savings are as secure with an online bank account as they are in an account provided by a local branch.

All the best high-yield savings account options come with this kind of coverage. If a bank is FDIC-insured, that means that you won’t lose your money if it goes out of business. For each bank, the Federal Deposit Insurance Corporation covers up to $250,000 in deposits per account holder.