If you want to save money, keeping cash in your regular checking account isn't always the best financial decision. While it may be convenient to have all your money in one place, you’re missing out on the opportunity to earn more interest and grow your savings faster. That's where high-yield savings accounts come in.
Because of their earning potential, high-yield savings accounts are excellent for reaching savings goals. Having a specific account for savings allows you to earn interest on your money while still having easy access to it.
The whole point of high-yield savings accounts is earning as much compound interest as you possibly can on your money. Ultimately, this is why many people choose to open a high-yield savings account over a traditional savings account.
So, what are the best high-yield savings accounts available in 2023? Here are three options to consider:
Best overall: Varo Bank · 3% to 5% · $0
Varo Bank's high-yield savings account is a great option for those looking for a high interest rate and no fees. They offer an impressive 3% to 5% APY (Annual Percentage Yield) on balances up to $10,000, making it one of the most competitive rates on the market. Plus, there are no monthly maintenance fees or minimum balance requirements.
Best interest rate: Capital One 360 · 3.4% · $0
Capital One 360's high-yield savings account has an impressive interest rate of 3.4%, making it a great option for those who prioritize interest rates over other factors. There are no monthly fees or minimum balance requirements, and you can open an account with as little as $1.
Best for no fees: Ally Bank · 2.2% · $0
Ally Bank's high-yield savings account is a popular choice for those who want a good interest rate and no fees. They offer a 2.2% APY, and there are no monthly maintenance fees or minimum balance requirements. Plus, they have a user-friendly mobile app that makes it easy to manage your account on-the-go.
Of course, these aren't the only high-yield savings accounts available. You can also compare other options, such as MySavingsDirect, UFB Direct, First Foundation Bank, and Bask Bank, to find the best one for you. Each of these banks has a high rating and offers competitive interest rates.
The Annual Percentage Rate (APR) for a regular savings account is currently around 0.33%, but a high-yield account can earn 3.50% to 4.50%. So, if you have $10,000 in a regular savings account, you'll earn around $33 in interest over the course of a year. But if you have that same amount in a high-yield savings account earning 4.50% interest, you'll earn $450 in interest over the same period.
A high-yield savings account may offer a higher rate of return than a traditional savings account. You're more likely to find a high-yield savings account at an online bank rather than a brick-and-mortar bank. Online banks have lower overhead costs, which allows them to offer higher interest rates.
High-yield savings accounts typically pay considerably higher interest than a conventional savings account. But the thing to know is you'll have to be okay with the tradeoff of not having immediate access to your funds. Banks may limit how many withdrawals you can make each month, and you may have to wait a few days for a transfer to go through.
Check out our list of the best high-yield savings accounts to find an account that meets your needs. It's never too late to start saving. You're never too young or old to start investing in your future. Start by making a small deposit today and watch your money grow over time.