Best High Yield Savings Accounts of February 2023

A savings account helps you grow your wealth safely while keeping your money close at hand. You can open one with most banks and credit unions, but the best online savings accounts are available through online banks. Here's a look at our picks for the top savings accounts, as well as some guidance on what to look for when choosing a savings account. These banks have some great APYs (Annual Percentage Yield) and are good options to explore.

A savings account is a type of bank account for money you don’t plan to spend immediately. You can open one of these with any bank or credit union, and you can usually deposit as much as you’d like to the account. You deposit money in-person, or through direct deposit, electronic transfer, check, or some other method.

With a savings account, your bank pays you interest on your money -- usually every month. How much interest you earn is determined by the account's annual percentage yield (APY). You'll earn more interest with an account that has a high APY.

Most savings accounts don't offer check-writing capabilities or a debit card -- so you have to transfer the funds to a checking account or withdraw cash in order to spend money. Often, banks limit the number of free withdrawals you can make in a month.

What does the bank do with my money?

Banks use your savings to fund loans for their customers. Borrowers then pay interest on the loan, and your bank sends some of that interest to your savings account.

A larger balance or a higher savings account interest rate results in more interest. It's always good to compare savings account interest rates before opening an account. The best savings account interest rates can add a nice bump in your funds without much effort on your part.

Pros and cons of savings accounts

There are advantages and disadvantages that come along with savings accounts. Before deciding if a savings account suits your needs, it's important to consider both.

Types of savings accounts

Here’s a look at the common types of savings accounts you’ll run into.

• Traditional savings account: These accounts are usually easy to open and easy to access. But APYs tend to be pretty low, and most of these accounts carry maintenance fees if your balance falls below a certain amount.
• High-yield savings account: These are similar to traditional savings accounts, but they offer much higher APYs and most don’t have monthly maintenance fees.
• Money market account:Money market accounts offer the APYs of a savings account with the easier access of a checking account. However, these accounts usually have higher minimum balance requirements than typical savings accounts.
• Certificate of deposit (CD) account: Certificates of deposit (CDs) usually offer some higher APYs than any of the savings accounts discussed above. If you're looking for the best APY on a savings account, CDs are definitely worth considering. But you have to agree not to withdraw your funds for the full CD term (which could be months or years).
• Specialty savings account:A specialty savings account is a savings account that's geared at a certain group of people or goals. Examples include kids' savings accounts, health saving accounts, and education savings accounts.

As you compare savings accounts, think about what you'll use the account for. Do you want to be able to withdraw your money at any time to cover unexpected expenses? Are you saving up for a major goal over several years, and could use every dollar of interest you can earn? Answering these questions will help you compare savings accounts and decide which is best for your needs.

Online vs. traditional banks

Savings accounts at online banks are slightly different from savings accounts at traditional banks. Here are some of the key differences between savings accounts at online and brick-and-mortar banks:

The best online savings accounts offer both convenience and high interest rates. If you don't want to open a savings account online, don't worry -- you can get a high interest savings account at a brick-and-mortar bank too. You might just need to look around a little more, since high interest savings accounts are more rare at brick-and-mortar institutions.

If you're not sure where to start looking for an online savings account, check our list above to find out which banks we believe offer the best online savings accounts.

The best high-yield savings accounts, both online and traditional, will meet the following criteria:

• FDIC insurance: Most banks offer FDIC insurance. It's unlikely you'll ever use it, but it's risky not to have it. If your bank fails and your funds aren't insured, you lose your money.
• High APY: APYs fluctuate from bank to bank and over time, so there's no solid definition of a high APY. You don't need the highest rate on the market, but you should choose one that's close to the highest around. This will earn you more interest.
• Low fees: Fees can eat into your profits and possibly cost you more than you're earning in interest. Check your bank's fee schedule to learn about any costs associated with the account, and avoid a monthly maintenance fee if you can. Also, check to see if there's a minimum balance requirement on the account.
• Accessibility: Make sure you're comfortable with the ways you can deposit money into your savings account and withdraw it when necessary. You likely also want a bank with an online portal and mobile banking so you can manage your funds remotely. The best bank to open a savings account at is one you're comfortable interacting with on a regular basis, whether that's online, in-person, over the phone, or at an ATM.

When you're looking for a high-interest savings account, the account's APY isn't the only factor to consider. Keep the items listed above in mind when you compare savings accounts to avoid any unpleasant surprises.

Some bank accounts also offer bonuses. If you're looking for a high-yield savings account with a bonus, check out our list of Best Bank Bonuses to see our top picks.

To open a savings account, visit a branch (if your chosen bank has them), or fill out an online application form. You will need to provide some personal information, including:

• Your address
• Your Social Security number
• A government-issued ID, like a driver's license or a passport

If you are opening a joint savings account, both parties will need to provide this information.

Your bank may also require a minimum deposit to open the account. This may be different from the ongoing minimum balance required to avoid monthly maintenance fees. If you're transferring the funds from another bank account, you'll need to know its routing and account number.

This process should be similar whether you open a savings account online or at a brick-and-mortar bank.

Here are a few key terms to know before you open a savings account. These are important terms for online savings accounts, traditional savings accounts, and high-yield savings accounts.

APY: This stands for "annual percentage yield." People often use this term interchangeably with interest rate, but the two aren't the same. APY takes into account the actual interest rate as well as how often that interest compounds. A higher APY means more interest for you.

When we say "compare savings account rates," we mean "compare APYs."

Monthly maintenance fee: This is a fee your bank charges to maintain your savings account. Some banks, especially online banks, don't charge this fee, and others will waive it if you meet certain requirements.

Liquidity: Liquidity refers to how easy it is to turn your money into cash. Highly liquid accounts make this simple, while low-liquidity accounts make it a lot more challenging to get cash when you need it.