High Yield Savings Accounts for 2021

Even as interest rates fall, you can earn a higher interest rate with one of these high yield savings accounts. See tips on finding the best savings account rates and what else to consider.
By Richard Barrington

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Falling interest rates could sharply cut your income this year unless you take action. Instead, you could switch to a high-yield savings account and stop some of the interest you earn from simply slipping away.

At a time when the best savings account rates are four or five times as high as the average, shopping for a higher interest rate makes sense and can really make a difference.

How do you find one of the best high yield savings accounts?

After years of research, MoneyRates has observed that a specific group of banks consistently offers the highest savings rates. So, spending a little time shopping for a better rate now – particularly at one of these banks – could pay off for years to come.

This article highlights the best savings accounts from the most recent MoneyRates America’s Best Rates survey. It also provides some background on high yield savings accounts and details about the very best accounts available.

In short, this article has everything you need to wind up with more money in your bank account at the end of the year.

Compare current savings account rates

What Is a High Yield Savings Account?

A high yield savings account has the same characteristics as an ordinary savings account but with one key advantage: the interest rate is significantly higher.

High yield savings accounts at FDIC-insured banks have federally insured principal and interest too. This insurance covers up to $250,000 per depositor at each participating institution.

How big a difference is there between a high-yield savings account and the average savings account?

In the fourth quarter of 2020, the MoneyRates.com America’s Best Rates survey found that the average savings account rate was 0.136%. In contrast, the highest-yielding savings account in the study paid roughly five times that amount.

Which Banks Have the Best High Yield Savings Accounts?

The best online savings accounts offer high yields consistently. These banks were chosen because their rates remained high over an entire calendar quarter.

  1. Summit Community Bank
  2. Salem Five Cents Savings Bank
  3. Axos Bank
  4. Synchrony Bank
  5. American Express National Bank
  6. Ally Bank
  7. Goldman Sachs Bank
  8. Discover Bank
  9. Sallie Mae Bank
  10. Barclays

10 Best High Yield Savings Accounts Details

1. SFGI Direct Savings Account

4th Quarter 2020 Average APY: 0.69%

Bank Profile: SFGI Direct is a division of Summit Community Bank based in Moorefield, WV. It was founded in 1995. Summit Community Bank currently has over $2.4 billion in deposits.

MINIMUM OPENING DEPOSIT: $500

MINIMUM TO EARN INTEREST: $1

ACCOUNT FEATURES: No monthly maintenance fee and 24/7 online access.

Read Review: SFGI Direct Savings Account

2. Salem Five Direct eOne Savings

4th Quarter 2020 Average APY: 0.68%

Bank Profile: Salem Five Direct is a division of Salem Five Cents Savings Bank, a bank headquartered in Salem, MA. Salem Five Cents Savings Bank was founded in 1855 and has over $4 billion in deposits.

MINIMUM OPENING DEPOSIT: $100

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: Online/mobile access. Top interest rate applies for deposits of up to $1 million.

Read Review: Salem Five Direct eOne Savings Account

3. Axos Bank High Yield Savings

4th Quarter 2020 Average APY: 0.63%

Bank Profile: Axos Bank was established in 2000 and is headquartered in La Jolla, CA. It currently has in excess of $11 billion in deposits.

MINIMUM OPENING DEPOSIT: $250

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: Online/mobile access and tools. Free ATM card upon request.

Read Axos Bank Reviews: Savings, Money Markets and CDs

4. Synchrony Bank High Yield Savings

4th Quarter 2020 Average APY: 0.63%

Bank Profile: Synchrony Bank is based in Draper, UT and was founded in 1988. It has over $66 billion in deposits.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: No minimum balance or monthly service fees.

Read Review: Synchrony High Yield Savings

5. American Express High Yield Savings Account

4th Quarter 2020 Average APY: 0.60%

Bank Profile: American Express National Bank, member FDIC, was established in 1989 and is located in Sandy, UT. Deposits are in excess of $84 billion.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: Online access plus 24/7 phone support.

Read Review: American Express High Yield Savings Account

6. Ally Bank Online Savings Account

4th Quarter 2020 Average APY: 0.60%

Bank Profile: Ally Bank was established in 2004. It is based in Sandy, UT. and has more than $130 billion in deposits.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: Online account access plus savings/budgeting organizing tool.

Read Review: Ally Online Savings Account

7. Marcus by Goldman Sachs Online Savings Account

4th Quarter 2020 Average APY: 0.55%

Bank Profile: Marcus is the retail brand of Goldman Sachs Bank, which is based in New York City and was founded in 1990. Goldman Sachs Bank has over $220 billion in deposits.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: No monthly service fee. $1 million account maximum balance.

Read Review: Marcus Online Savings Account

8. Discover Bank Online Savings Account

4th Quarter 2020 Average APY: 0.55%

Bank Profile: Discover Bank dates back to 1911. It is headquartered in Greenwood, DE and has more than $80 billion in deposits.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: Online access with no monthly service fee.

Read Review: Discover Bank 2021 Review: Savings, Money Markets and CDs

9. Sallie Mae Bank High-Yield Savings Account

4th Quarter 2020 Average APY: 0.53%

Bank Profile: Sallie Mae Bank was founded in 2005 and is based in Salt Lake City, UT. It has in excess of $23 billion in deposits.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: Online access and no monthly service fees.

Read Review: Sallie Mae High-Yield Savings Account

10. Barclays Online Savings

4th Quarter 2020 Average APY: 0.50%

Bank Profile: Barclays is an online bank based in Wilmington, DE that was established in 2001. It has over $25 billion in customer deposits.

MINIMUM OPENING DEPOSIT: None

MINIMUM TO EARN INTEREST: $0.01

ACCOUNT FEATURES: No monthly service fee, and a goal-based Savings Assistant tool available online.

Read Review: Barclays Online Savings Account

Methodology

Every calendar quarter, MoneyRates.com compiles data on savings accounts, money market accounts and CDs to find the best bank accounts in each category.

In order to identify accounts that offer competitive rates consistently, Money Rates averages rates throughout the quarter instead of just looking at a single snapshot in time. Rates available to customers with a $10,000 balance and no broader relationship with the bank are used for this survey.

To give a representative overview of banking conditions, this study is based on the MoneyRates Index. This is constructed to provide a consistent sample of accounts reflecting a cross-section of the retail deposit industry. The MoneyRates Index is comprised of 50 of the largest retail deposit institutions in the United States, plus 25 smaller banks and 25 medium-sized banks.

Best Uses for High Yield Savings Accounts

Here are just a few examples of good ways to use a high yield savings account:

1. Budgeting

Checking accounts are designed for frequent access – and this can make it too easy to overspend if all of your pay is held in a checking account. A simple budgeting technique is to have your pay deposited to a savings account instead, and then only transfer a budgeted spending amount to checking.

2. Emergency fund

Having money set aside for as much as six months’ worth of major expenses can save you from getting into debt when an emergency comes up. A high yield savings account is a good place to keep that emergency fund because it would allow immediate access when a need arises while paying you interest in the meantime.

3. Saving for a major purchase

If you’re saving bit by bit for a major purchase, a savings account is a good option because it allows you to add savings at any time. Also, the interest you earn will kick in a little bit toward your planned purchase.

4. Saving for a down payment on a house

Saving money for a down payment on a house requires you to accumulate a fairly large amount of money yet have access to that money at any time in case the right opportunity comes along. Savings accounts are well-suited to that job.

5. Vacation fund

Want true peace of mind when you go on vacation? Save up for it in advance rather than putting the cost on your credit card and having to face the debt when you come home. A savings account allows you to put aside money toward your vacation throughout the year and then access it when the time is right.

Are High Yield Savings Accounts Safe?

A variety of financial products advertise themselves as “high yield,” but most are not as safe as a high yield savings account offered through an FDIC-insured bank.

Since FDIC insurance began on January 1, 1934, no insured deposits have been lost due to bank failures. Today, the FDIC insures deposits for up to $250,000 per depositor, per bank.

All of the banks listed in this study are insured by the FDIC. To research whether a bank is covered by the FDIC, you can use the BankFind tool on the FDIC website.

What to Consider When Choosing a High Yield Savings Account

Here are some things to check out when comparing high yield savings accounts:

Annual percentage yield (APY)

This is the current interest rate paid on the account, compounded for a period of one year.

Some banks pay different rates depending on your balance, so make sure you compare rates that would apply to the amount you intend to deposit.

How often rates change

Interest rates on savings accounts are subject to change at any time. This means the rate you sign up for may not be the rate you actually get over the year ahead.

However, while rates on savings accounts can change frequently, the banks offering the best rates tend to stay near the head of the pack even as rates go up and down. That’s why it is still worthwhile to compare rates when choosing a savings account.

Monthly service fee

Some savings accounts charge a monthly service fee regardless of how you use the account. In today’s low interest rate environment, this kind of fee can easily wipe out the interest you earn.

Fortunately, there are still plenty of savings accounts that do not charge a monthly fee. Be sure to choose one of the ones that doesn’t.

Minimum deposit required

Some banks will not let you start an account unless you deposit at least a specified amount. When considering savings accounts, focus on those that either have no minimum account requirement or have one you can afford to meet.

Minimum balance required

A minimum balance requirement is different from a minimum deposit requirement. It is not just the amount you need to open an account, but an ongoing requirement.

Often, an account will require you to maintain a certain minimum balance in order for your money to earn interest, or earn interest at the advertised level. So you should only consider accounts with minimum balance requirements you will be able to meet easily on a continuing basis.

Transfer options

Traditionally, transfers of money from savings accounts to third parties were limited to six per month. In 2020, the Federal Reserve loosened that regulatory requirement. However, some banks may still limit the number of transfers you are allowed to make and charge a fee if you exceed their limit.

Depending on how you plan to use your savings, you may be wise to check for any limits on transfers before you select an account.

Also, some accounts offer features like debit cards and the ability to link to other accounts that make it easier to access your money.

How to Choose the Best High Yield Savings Account

Would you like to earn more interest on your savings? Here are six tips to help you do that:

1. Look for online savings accounts

Online savings accounts can help you earn a better interest rate in two ways:

  • They increase the number of choices available to you
  • Online savings accounts generally offer higher rates than traditional, branch-based accounts.

The extra choice is important because most banks are local or regional. In the past, the banking products you had access to depended very much on where you lived. Now you have access to best-in-class interest rates via online savings accounts and CDs no matter where you live in the U.S.

This is especially important given the size of the rate advantage online savings accounts have over branch-based accounts.

The latest MoneyRates America’s Best Rates survey found that the average online savings account offered an interest rate nearly ten times that of the average branch-based account.

All ten of the best high-interest savings accounts listed above are online accounts.

2. Go small to earn big

When you consider banking options, look beyond huge institutions with household names. They might have events and stadiums named after them, but these companies tend to offer the lowest savings account rates.

There are four banks offering retail savings accounts that have over a trillion dollars in customer deposits. As of the most recent America’s Best Rates study, each of these banks offered a savings account rate that was less than a third of the average rate – and less than a tenth of any of the top ten rates.

When you compare these numbers, it’s easy to see why it really pays to look beyond the mega-banks if you want a high-interest savings account.

An interest calculator can help you figure out how much you could earn on your deposit. Using this when comparing rates can help you see why it is worth switching accounts.

3. Pay attention to rate tiers

Banks sometimes offer different interest rates depending on how much money you give them. These are referred to as rate tiers, with different rates applying to different-sized accounts.

When shopping for rates, pay attention to the rate tier that would apply to the size of account you intend to open. Don’t be sucked in by an advertised rate that wouldn’t apply to your account size.

Instead, look for the best deal you can get for the amount of money you have to deposit.

4. You don’t have to accept falling rates

Even though interest rates overall are falling, the fact remains that most bank customers could still raise their interest rates.

That’s because there is such a huge gap between the best rates and average rates. So, most bank customers are accepting rates much lower than others that are readily available on the market.

The latest America’s Best Rates survey found that the top high interest savings account rate was more than five times the average rate. Big differences in rates can also be found among high-interest CDs and money market accounts. So be choosy, because it really pays to get one of the best high-interest savings accounts instead of settling for average.

5. Think long term

As usual, most long-term CDs are paying higher interest rates than savings accounts, money market accounts and short-term CDs. With interest rates falling recently, long-term CDs offer the added advantage of allowing you to lock in an interest rate for a few years. That could make it even more rewarding to commit your money for a longer period in a high-interest CD.

Remember, though, there is typically a penalty if you take your money out before the CD’s maturity date. So, only commit to a CD with a longer term if you don’t think you’ll need the money before the CD’s term ends. Also, try to find a high-interest CD that carries a fairly small early withdrawal penalty or a no-penalty CD just in case.

6. Minimize your checking account balance

As low as savings account rates may seem, the best ones are still much better than most checking account interest rates. Therefore, you may want to keep a tighter rein on your checking-account balance so more of your money can be earning higher interest in a savings account.

One approach you can try is to have your paycheck directly deposited into savings rather than checking so you can have more money earning a better interest rate for as long as possible.

Low interest rates can be discouraging for savers. However, with the rate of inflation now higher than savings account rates, you need to protect the value of your money by improving your saving habits and shopping for the best savings interest rates you can get.

Key Takeaways: Find the Best Interest Account for Your Needs

Here’s how you can move forward with getting the right combination of safety and interest for your savings:

1. Decide whether you are willing to risk losing some of your money, or if you want absolute safety.

2. Figure out when you will need to access some or all of the money in question.

3. Based on your risk and timing needs, decide what type of income account you need.

4. You may find that you can choose from multiple types of accounts. For example, savings accounts, money market accounts and some cash management accounts all provide a combination of safety, immediate liquidity and interest.

5. Compare accounts with similar risk and timing characteristics to find the best yield for your money.

High Yield Savings Accounts Pros and Cons

As mentioned above, shopping for the best high interest savings accounts can really pay off.

However, to make the most of the money you have to invest, you should first ask whether a savings account is really the right vehicle to achieve your savings goals. 

The most important thing to know about savings accounts is that they are totally safe and liquid.

Savings account pros

Savings accounts are totally safe. Since the money you put on deposit is guaranteed by FDIC insurance, your principal is safe up to the legal limit of $250,000 (or $500,000 for joint accounts) per depositor.

If you have more than that to deposit, you can make sure it’s protected by spreading it among different FDIC-insured banks. The FDIC deposit limit applies the total a depositor has at each bank, so simply opening multiple accounts at the same bank is not a way to insure more than the $250,000 limit.

This is another reason to shop for the best savings account. Interest rates vary from bank to bank, so you should aim to have all your deposits at banks offering above-average yields.

Savings accounts are liquid. Your money is always available immediately, on demand. Though there may limits on the number of withdrawals you can make per month, other than that you are entitled to take out any or all of the account whenever you want.

You may be subject to some reporting requirements by withdrawing more than $10,000 in cash at a time, however.

Saving account cons

The flip side is that savings accounts offer relatively low returns compared to other investments. Also, the interest rate is subject to change at any time.

If you don’t need access to your money at all times, there are alternatives you can consider that might earn you more interest.

Frequently Asked Questions

Q: How much interest will I earn on a $1 million savings account?

If you go to the savings accounts page of MoneyRates.com, you can see the latest information on which banks are offering the best savings account rates.

Note that these rates are quoted in terms of annual percentage yield (APY), which means they reflect what the rate would be if compounded over the course of one year.

Calculating compound interest is not hard to do. You can calculate what this would translate to in dollars using this formula:

Compound Interest Formula

Here’s how to convert the APY on a savings account into the amount of interest that it would produce on any given amount over the course of a year:

Divide the APY by 100 and multiply the result by the amount you intend to invest.

For example, a 0.50% APY applied to a $1 million deposit would be calculated as:

(.50/100) x $1,000,000 = $5,000

When deciding which bank to choose, you should be aware that the best savings accounts often offer rates that are several times the average savings account rate.

The average savings account rate has been well under 1% for quite a while. That means a $1 million in savings would typically earn much less than $10,000 a year in interest. Low rates make it all the more important to do everything you can to earn as much interest as possible.

The difference is even greater if you are with a very large bank. High yield savings accounts offer yields that can be more than ten times the rates offered by the nation’s largest banks.

A higher APY can make a big difference in the amount of interest you earn, especially on a large balances. Because of compounding, any difference in APY will deliver an increasingly greater benefit the longer you invest.

You can use a compound interest calculator to see just how much interest you could expect to earn on a given amount over any time period you choose.

Q: How can I make the most of compound interest?

The nature of compound interest is such that choosing the highest yield (APY) from the beginning makes for the most profit.

Particularly where large sums of money are concerned and long periods of time are involved, your investments grow the most if they earn a high interest rate from the beginning. That’s why it’s so important to shop for a savings account that consistently pays the highest interest from the get-go.

There are three factors that maximize compound interest

If you want to maximize the return on your investment in a savings account, these are the three factors you need to know:

1. Interest on interest

Compound interest is the earning of interest on the principal in addition to the interest earned in prior periods. Therefore, the more interest your account earns from the beginning, the more money there will be to compound in subsequent periods.

2. Number of compounding periods

It’s also because of time that the power of compound interest has a chance to work. Since you are earning interest on interest, the longer your money is invested, the more these earnings have the opportunity to snowball.

3. Compound frequency

The difference between a simple interest rate and APY is that APY reflects the impact of compounding within the year. How much of a difference this makes depends on how often interest is compounded within a year.

Different accounts may be compounded daily, monthly or yearly. The more often an account is compounded, the greater the difference between a simple interest rate and the APY on the account.

A savings calculator can show you how this all would translate into dollars for any amount and time period you choose.

Q: What’s the difference between a high yield savings accounts vs. certificates of deposit?

If you are prepared to commit your money for a pre-set period, a certificate of deposit (CD) might be worth considering as an alternative.

The benefits of a CD

Certificates of deposit provide the same level of safety for your principal as a savings account but offer some distinct advantages as well.

1. CDs offer interest-rate security

One advantage that certificates of deposit offer over savings accounts is that the interest rate is locked in for the entire term of the CD. While this could work against you if rates rise, at least you can know when you sign up for a CD what it will be worth when it matures.

2. CDs may offer an interest-rate advantage

Generally, CDs also offer a rate advantage over savings accounts. Usually, the longer the CD term, the higher the interest rate and, for periods of one year or longer, the best CD rates are often higher than the best savings account rates.

Here again, it’s important to shop around. As with savings account rates, the best CD rates are often a multiple of the category average. You can find the best CD rates on the MoneyRates CD page and easily find rates for the length of CD you want.

The drawbacks of CDs

CDs represent a trade-off: the longer you’re willing to lock your money into a CD, the higher the interest rate you can typically find.

The problem is, being locked into an interest rate for a long time can work against you if rates rise.

Also, if you need to take money out before the CD’s term is up, you will typically have to pay an early withdrawal penalty.

There are a handful of banks offering CDs with no early withdrawal penalty. However, these are typically available for relatively short-term CDs.

Still, if you’re confident you won’t need your money for a few years, a multi-year CD is one option to consider. The $250,000 FDIC insurance limit applies to CDs, so if you have more than that to deposit you may need to spread your money around to CDs at different banks.

If you’re willing to take on more risk, there are other interest-bearing investments to consider such as bonds.

More FAQs

Unless a high yield savings account is in a tax-advantaged vehicle like an IRA, interest on savings accounts is typically taxed at the ordinary income rate for the tax year in which it is earned.

Technically, a high yield savings account is no different from an ordinary account. However, the term “high yield” is used to describe those savings accounts whose interest rates are well above average.

High yield savings accounts work the same way as ordinary savings accounts, only they pay more interest. Their principal value does not fluctuate and they earn interest continually throughout the year. You can access your money at any time, though the number of third-party transactions per month may be limited.

High yield savings accounts make money from the interest rates offered by their banks. This is the only way high yield savings accounts can make money, which is why it’s so important to compare interest rates when choosing a high yield savings account.