Best High-Yield Savings Accounts of May 2025
Written by Theresa Stevens
Many banks offer high-yield savings accounts with rates that exceed those of traditional savings accounts. If you have $5,000 in savings, moving it from a traditional savings account to a high-yield savings account could result in hundreds of additional interest earnings each year.
These high savings rates are partly due to the federal funds rate, which is at its highest level since the early 2000s. Additionally, the number of high-yield savings accounts has grown over the years, especially in the online space. This increased competition has prompted banks and credit unions to increase their rates.
At DepositAccounts, we regularly add new high-yield savings accounts to our database, and we update rates daily to ensure we are showing you the best offers. But because the interest rate isn’t the only factor to consider when shopping for a high-yield savings account, we also track features such as minimum deposit and balance requirements, fees, and rate trends.
DepositAccounts strives to produce high-quality content that meets your needs and exceeds your expectations. Content is fact-checked to ensure accuracy and objectivity. DepositAccounts gathers thousands of savings account rates from banks and credit unions across the country to identify the best daily rates. Read more about our methodology here.
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What is a high-yield savings account?
Most high-yield savings accounts are online accounts that must be opened and managed online or through a mobile app. These accounts are offered by online-only banks as well as by other financial institutions with physical branches and traditional savings accounts.
Many online banks provide high-yield savings accounts because these institutions have lower overhead costs than traditional banks with physical branches. This allows them to pass on the savings to customers through higher interest rates. It also enables online banks to offer accounts with low minimum balance requirements and low or no fees.
Online banks have a long history of offering accounts with rates that are significantly higher than traditional savings account rates. Currently, the highest online savings account rate listed on our website earns an annual percentage yield (APY) of 5.00% — about 12 times the average savings account rate of 0.41% APY.
How do high-yield savings accounts work?
High-yield savings accounts pay interest just like traditional savings accounts. Interest generally accrues and compounds daily or monthly. At the end of each month, the total accrued interest for the month is credited to the account, making it available for withdrawal.
With compound interest, you earn interest on both the original amount and the interest earned from the previous period. Daily compounding maximizes interest earnings, but its effect compared with monthly compounding is minor. That said, its effects are more apparent with a high-yield savings account because of the higher interest rate.
For example, if a savings account has an interest rate of 5%, daily compounding results in an APY of 5.13%. For a $10,000 balance over one year, a 5.13% APY would result in $514 of interest—$14 more than what you would earn with a 5% interest rate and no compounding.
Are high-yield savings accounts safe?
Any savings account you open at a bank insured by the Federal Deposit Insurance Corp. (FDIC) is protected up to FDIC coverage limits. FDIC insurance applies regardless of whether the account is opened at a physical branch or through the bank's website.
Some credit unions also offer high-yield savings accounts. Credit unions have deposit insurance through the National Credit Union Administration (NCUA), and the coverage is essentially equivalent to FDIC insurance.
FDIC and NCUA deposit insurance protects accounts only if the financial institution fails. Federal regulations, however, limit your liability for losses on your savings account caused by certain types of fraud. You’re responsible for notifying the bank of an unauthorized withdrawal promptly, so it's important to review your bank statements monthly to check for unauthorized withdrawals.
Pros and cons of high-yield savings accounts
A high-yield savings account can be useful for growing an emergency fund or working toward short-term goals. However, it has some disadvantages compared with other types of accounts.
Here are the pros and cons to consider:
Pros
- Higher interest rates: High-yield savings accounts typically earn higher returns than other types of savings accounts.
- Flexible withdrawals: Unlike CDs, high-yield savings accounts allow multiple no-fee withdrawals each month.
- Safety for savings: High-yield savings accounts generally come with FDIC or NCUA insurance.
- Digital tools for easy account management: You can often open and manage your account online or through a mobile app.
Cons
- Variable interest rates: Like any savings account, the rate on a high-yield savings account is subject to change at any time.
- Access to funds: You typically must make an electronic transfer to a checking account to access your money.
- Limited customer service options: Customer service communication may be limited to phone or online chat.
- Withdrawal limits: Some banks cap your monthly withdrawals, though many removed this limit during the pandemic.
How to choose a high-yield online savings account
The interest rate is only one of many factors to consider when choosing a high-yield savings account. Here are four other important factors to weigh:
- Rate history: Besides the current interest rate, look at the account’s rate history. Does it have a pattern of offering above-average rates? Have its rates remained relatively stable over time?
- Account fees: Avoid high-yield savings accounts with monthly maintenance fees, even if the fees can be waived by keeping a minimum balance. Also, watch out for fees that apply if you exceed a certain number of withdrawals per month.
- Deposit requirements: Most high-yield savings accounts have a minimum initial deposit requirement of $100 or less, but a few require an initial deposit of $1,000 or more. Once opened, accounts may have minimum balance requirements to earn the advertised interest rate or to avoid monthly service fees.
- Access to your funds: Most banks allow you to link your high-yield savings account to your checking account, enabling you to transfer funds electronically. Make sure you review the features of a bank’s transfer system. Check the limits on the dollar amount of transfers, the limits on the number of transfers, the speed of transfers, and the hold time before deposits become available for withdrawals.
Alternatives to high-yield savings accounts
- Money market account: A money market account combines features of both savings and checking accounts. Like a high-yield savings account, it generally comes with FDIC or NCUA insurance to protect your deposits. The key differences are that money market accounts often include a debit card and check-writing privileges, and they generally earn a lower rate than high-yield savings accounts.
- CD: A high-yield savings account usually allows unlimited deposits and multiple monthly withdrawals without fees. However, a certificate of deposit (CD) typically permits only an initial deposit, and no additional deposits or free withdrawals are allowed until the CD term ends. Withdrawals before the end of the term are limited and customarily incur early withdrawal penalties. Additionally, a CD has a fixed rate until its maturity date, while high-yield savings account rates can change at any time.
- Money market fund: A money market fund is not a bank account but a type of mutual fund available through brokerage firms. It’s considered to have very low risk, but it’s not federally insured like high-yield savings accounts tend to be. Money market funds often have yields comparable to high-yield savings accounts. In certain situations, money market fund yields can be higher.
Methodology
The savings accounts in our rate table are ranked based on APY, with the highest APY listed on top. APYs are checked daily to ensure they match the APYs listed on the financial institutions’ websites.
If the savings account has tiered rates, the APY listed is based on the deposit amount specified in the rate table’s filter box. If the deposit amount is below the minimum balance required to earn the APY, the account may not be listed. If the selected deposit amount is above the maximum balance required to qualify for the APY, the account may also not be listed.
To be listed in our rate table, the savings accounts must be from either FDIC-insured banks or NCUA-insured credit unions. Also, the savings accounts must not require a checking account relationship to either open the savings account or qualify for the top-tier APY.
Frequently asked questions
Is a high-yield savings account worth it?
A high-yield savings account is a solid option if you’re looking to earn more on your savings than you would with a traditional savings account. When choosing a savings account, it’s important to compare the APY, fees, requirements and features so you can choose the right option for you.
How many high-yield savings accounts can I open?
There is generally no limit on the number of high-yield savings accounts you can open. However, some banks may reject your application if your ChexSystems report shows a negative banking history.
Do you pay tax on a high-yield savings account?
Interest earned on savings accounts is typically taxed as ordinary income. Banks and credit unions are required to report all interest earned on Form 1099-INT when the total interest earned on all accounts during the previous tax year is at least $10.