The American Express High Yield Savings Account offers a competitive interest rate with no monthly fees, but whether it is right for you depends on your savings habits and how you bank

American Express Bank's high yield savings account pays interest on your balance without charging a monthly maintenance fee. The interest rate changes with the market—it is not locked in—so what you earn today may be different in three months. There is no minimum balance requirement to open the account, and you can withdraw your money whenever you need it. The tradeoff is that American Express is an online-only bank, meaning you cannot walk into a branch or deposit checks by mail.

Whether this account is a good fit depends on three things: whether you want to keep your savings separate from your checking account, whether you can live without in-person banking, and whether the current interest rate beats what your current bank offers. If you already have a checking account elsewhere and want a place to park money that earns more than a regular savings account, this account can work. If you need to deposit physical checks or prefer face-to-face service, it will not.

Key Takeaways

  • The American Express high yield savings account charges no monthly fee and has no minimum opening balance, so the only cost is the opportunity cost if the interest rate drops.
  • Interest rates on high yield savings accounts move with the Federal Reserve rate, so the rate you see today will change—sometimes up, sometimes down—over time.
  • You can withdraw money from the account at any time without penalty, but federal law limits you to six transfers or withdrawals per month (though this rule is no longer enforced, some banks still apply it).
  • American Express Bank is FDIC-insured up to $250,000 per account holder, so your money is protected if the bank fails.
  • The account works best if you want to separate savings from checking and do not need to deposit paper checks or visit a physical branch.

How the interest rate works and what it means for your money

The interest rate on this account is variable, which means American Express can change it at any time. When the Federal Reserve raises its benchmark rate, banks typically raise the rates they pay on savings accounts—but not always by the same amount or at the same speed. When the Federal Reserve cuts rates, banks lower savings rates, often faster than they raised them.

The rate you earn is compounded daily and deposited monthly, so interest starts earning interest as soon as it hits your account. If you have $10,000 in the account and the rate is 4.50% annually, you earn about $37.50 per month (though the actual amount depends on the exact daily balance and the number of days in the month). That same $10,000 in a regular savings account paying 0.01% annually would earn about $0.08 per month.

Before opening the account, check the current rate on the American Express Bank website and compare it to what your current bank pays and what other online banks offer. The difference between 4.00% and 4.75% may seem small, but on $50,000 it adds up to $375 per year. Rates change frequently, so a rate that is best today may not be best in six months.

What you can and cannot do with the account

You can deposit money into the account by electronic transfer from another bank account you own. You cannot deposit cash or paper checks directly. If you receive a paper check, you would need to deposit it into another account first, then transfer the money electronically to American Express.

You can withdraw money by transferring it back to another bank account you own. The transfer usually takes one to two business days. You cannot write checks on this account or use a debit card, so it is purely a savings tool, not a place to spend money from.

Federal law historically limited savings account withdrawals to six per month, though this rule is no longer enforced by regulators. American Express may still apply this limit, so if you plan to move money in and out frequently, check their current policy before opening the account.

Fees and what happens if your balance drops

American Express charges no monthly maintenance fee, no overdraft fees (because you cannot overdraft a savings account), and no fees for transfers. There is no minimum balance to keep the account open, so you could deposit $1 and leave it there indefinitely without penalty.

If your account sits unused for a long time, American Express may close it, but they will not charge you for inactivity. If you close the account yourself, there is no early closure fee. The only cost to you is the opportunity cost: if you keep money in this account earning 4.50% when another bank pays 5.00%, you are losing money by not moving it.

FDIC protection and what it covers

American Express Bank is FDIC-insured, which means the Federal Deposit Insurance Corporation will reimburse you up to $250,000 per account holder if the bank fails. This protection applies to your savings account balance as of the date of the bank's failure.

If you have multiple accounts at American Express Bank—for example, a savings account and a checking account—the FDIC protection is $250,000 per account type, not $250,000 total. A savings account and a checking account are separate for FDIC purposes, so you could have $250,000 in savings and $250,000 in checking and both would be fully protected.

If you are married and both spouses own the account jointly, the FDIC protection is $250,000 per spouse, so a joint account could be protected up to $500,000. Check the FDIC website or call American Express to confirm the exact coverage for your situation.

When this account makes sense and when it does not

This account is a good fit if you have money you do not need to touch for a while and want it to earn more than a regular savings account. It works well as an emergency fund, a down payment fund, or a place to park money while you decide what to do with it. It also works if you want to keep savings completely separate from your checking account to avoid the temptation to spend it.

This account is not a good fit if you need to deposit paper checks regularly, prefer to bank in person, or want to access your money instantly (transfers take one to two business days). It is also not ideal if you are comparing it to a money market account or certificate of deposit that might pay a higher rate, or if you need a place to spend money from rather than just save it.

If you already have a high yield savings account elsewhere and the rate is the same or higher, there is no reason to move your money. If you do not have a high yield savings account and want one, compare the current American Express rate to at least two other online banks before deciding.

How to open the account and what you will need

You can open the account online through the American Express Bank website. You will need to provide your Social Security number, date of birth, address, and employment information. American Express will run a soft credit check (which does not affect your credit score) and verify your identity.

The account opens immediately, and you can start transferring money in right away. Your first transfer will take one to two business days to arrive. After that, transfers typically complete within one business day.

You will need a bank account at another institution to transfer money from, since American Express cannot accept deposits directly from your employer or from cash. If you do not have another bank account, you would need to open one first.

Frequently Asked Questions

Can I use this account as my main checking account?

No. This is a savings account only—you cannot write checks, use a debit card, or set up automatic bill payments. You need a separate checking account for daily spending. Some people use American Express for savings and keep checking elsewhere.

What happens to my interest if the Federal Reserve cuts rates?

Your interest rate will drop, usually within days or weeks of a Federal Reserve cut. The bank is not required to pass the full cut to customers, so your rate might drop more or less than the Fed's cut. Check your account regularly to see if the rate has changed.

Can I transfer money to someone else's bank account?

No. You can only transfer money from this account to another bank account that you own. If you want to send money to someone else, you would need to transfer it to your checking account first, then send it from there.

Is my money safe if American Express Bank fails?

Yes. The FDIC insures deposits up to $250,000 per account holder. If the bank fails, the FDIC will reimburse you for your full balance up to that limit. This protection is automatic—you do not need to do anything.

How does this account compare to keeping money in a regular savings account?

A high yield savings account pays significantly more interest than a regular savings account. On $10,000, a regular account might pay $1 per year while a high yield account pays $400 to $500 per year. The tradeoff is that high yield accounts are usually online-only and do not offer check writing or debit cards.