Who offers high-yield savings accounts right now

Online banks offer the highest rates because they have lower overhead than brick-and-mortar branches. Banks like Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank, and Capital One 360 typically lead the market for APY on savings accounts. Rates change weekly or daily, so the leader this month may not be the leader next month.

Traditional banks—Chase, Bank of America, Wells Fargo, Citibank—offer savings accounts, but their rates are usually far lower, often under 0.5% APY. You pay for the convenience of a physical branch and ATM network with a smaller return on your money.

Credit unions also offer savings products, and some have competitive rates, though they vary widely by institution. Your rate depends on which credit union you join and what membership tier you hold. The National Credit Union Administration (NCUA) insures deposits up to $250,000, the same as the FDIC does for banks.

Key Takeaways

  • Online banks consistently offer the highest APY on savings accounts because they operate without physical branches and pass the savings to depositors.
  • Traditional brick-and-mortar banks offer lower rates but provide in-person service and local ATM access if that matters to your banking habits.
  • Credit unions may offer competitive rates depending on the institution, but you must be a member to open an account, which often requires living or working in a specific area.
  • Rates change frequently, so the highest-paying account today may not be the highest next week—check current rates before moving money.
  • All deposits are insured up to $250,000 by either the FDIC (banks) or NCUA (credit unions), regardless of which institution you choose.

How online banks keep rates high

Online banks have no physical locations, no tellers, no security guards, and no rent on a downtown office building. That cuts their operating costs dramatically compared to a bank with 500 branches. They pass part of that savings to customers through higher interest rates on deposits.

An online bank also tends to attract customers who are comfortable managing money through an app or website, which means fewer phone calls to customer service. Lower customer service costs mean more room in the budget for deposit rates.

The trade-off is that you cannot walk into a branch to deposit cash or speak to someone face-to-face. Most online banks let you deposit checks by photograph through their app, and some partner with ATM networks so you can withdraw cash without a fee. If you never carry cash and rarely need to deposit physical checks, this trade-off costs you nothing.

What traditional banks offer and why their rates are lower

A traditional bank's savings account rate reflects the cost of maintaining branches, employing tellers, and running a physical infrastructure. You are paying for convenience—the ability to walk in, deposit cash, speak to a person, and use thousands of ATMs nationwide.

These banks also make money by lending out deposits at higher rates than they pay you. A bank that pays you 0.01% APY on savings and lends that money out at 6% APY keeps the difference. Online banks operate on thinner margins because they compete directly on rate, so they cannot afford to pay you 0.01% and stay competitive.

If you already have a checking account at a traditional bank and rarely move money between institutions, opening a savings account there is simple. But if you are opening a new account specifically to earn interest, an online bank will pay you significantly more.

Credit unions and membership requirements

Credit unions are member-owned cooperatives, not corporations. They often offer savings rates that compete with online banks, and some offer better rates to members who meet certain conditions—like maintaining a minimum balance or setting up direct deposit.

The catch is membership. You cannot open an account at just any credit union. Most require that you live, work, or worship in a specific geographic area, or that you are related to a current member. Some credit unions have opened their membership to anyone in the United States, but these are exceptions.

If you already belong to a credit union through your employer or your neighborhood, check what savings rates they offer. If you do not, you can search for credit unions in your area using the CO-OP Network locator or ask your employer whether they sponsor a credit union.

Money market accounts as an alternative

A money market account is a hybrid between a savings account and a checking account. It typically offers a higher rate than a regular savings account, but it also comes with a debit card and check-writing privileges—though usually with limits on how many checks you can write per month.

Money market accounts are offered by both online banks and traditional banks. The rates follow the same pattern: online banks pay more, traditional banks pay less. The FDIC insures money market accounts the same way it insures savings accounts, up to $250,000 per depositor per bank.

A money market account makes sense if you want to earn interest on money you might need to access quickly and do not want to transfer it back to a checking account first. If you just want to park money and let it grow, a regular high-yield savings account is simpler.

Certificates of deposit (CDs) for locked-in rates

A certificate of deposit (CD) is an account where you agree to leave money untouched for a set period—usually three months to five years. In exchange, the bank locks in a fixed interest rate, which is often higher than what a savings account offers.

Online banks and traditional banks both offer CDs. If you open a CD when rates are high and rates later drop, you keep the higher rate for the full term. If rates rise and you want to move your money, you will pay an early withdrawal penalty, which is usually a few months of interest.

CDs work best for money you know you will not need for a specific period. If you have $10,000 sitting in a savings account and you will not touch it for two years, a two-year CD at a higher rate will earn you more. If you might need the money in six months, a savings account is safer because you can withdraw without penalty.

How to compare rates across institutions

Rates change constantly, so the best way to compare is to check the current rates on each bank's website. Look for the APY, not just the interest rate—APY accounts for how often interest compounds and gives you the true annual return.

Some sites aggregate current rates across multiple banks, like Bankrate, DepositAccounts, or the FDIC's National Rates and Rate Caps search tool. These sites update frequently, though not always in real time. A bank's own website is the most current source.

When comparing, also check the minimum balance requirement. Some banks require $1 to open; others require $25,000. A high rate means nothing if you cannot afford to meet the minimum. Also confirm whether the rate applies to all balances or only balances above a certain threshold.

Frequently Asked Questions

Can I move money between a high-yield savings account and my checking account?

Yes, but there are limits. Federal rules allow you to make up to six transfers or withdrawals per month from a savings account (this includes transfers to other accounts and ATM withdrawals). If you exceed six, the bank may charge a fee or convert your account to a checking account. Online banks are more flexible about this rule than traditional banks.

What happens if a bank fails and I have money in a high-yield savings account?

The FDIC insures deposits up to $250,000 per depositor per bank. If the bank fails, the FDIC pays you back in full. This protection applies to all savings accounts, checking accounts, and money market accounts at FDIC-insured banks. Credit union deposits are insured by the NCUA up to the same limit.

Do I have to pay taxes on the interest I earn?

Yes. Interest earned on savings accounts is taxable income. The bank will send you a 1099-INT form at the end of the year if you earned $10 or more in interest. You report this on your tax return. High-yield savings accounts earn more interest, so you will owe more in taxes, but the after-tax return is still higher than a traditional bank account.

Why do online banks' rates change so often?

Online banks compete directly on rate because they have no other way to attract customers—no branch network, no brand recognition from your parents' generation. When one bank raises its rate, others follow to stay competitive. Rates also track the Federal Reserve's interest rate decisions, which change several times a year.

Can I open a high-yield savings account if I have bad credit?

Yes. Banks do not check your credit score to open a savings account. They may check ChexSystems, which is a banking history report, to see if you have had problems with previous accounts (like overdrafts or fraud). A poor credit score does not prevent you from opening a savings account anywhere.