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Best high-yield savings accounts for April 2024: How they work — and what to compare

Kelly Suzan Waggoner
Updated
Best high-yield savings accounts for April 2024 (Hispanolistic via Getty Images)

The arrival of spring brings with it warmer weather, longer days and renewed growth — as well as new opportunities to grow your nest egg.

High-yield savings accounts — or HYSAs — are a way to more quickly grow your savings investment at rates of up to 5% APY or higher. These high-interest accounts offer a safe, stable way to plan for a family vacation, contribute to a loved one’s college plan, save toward retirement or build an emergency fund for a rainy day.

Online banks and financial technology companies tend to offer the strongest rates, though you can find digital accounts offering 4.25% APY or higher through well-known brands like American Express and Discover. And you can link accounts at other banks to your HYSA to easily move and access your money among your digital and everyday accounts.

The Federal Reserve's benchmark rate of 5.25% to 5.5% continues to positively affect rates for high-yield savings accounts. FDIC-insured digital banks and online accounts consistently offer the highest variable rates of up to 5% APY or higher with no or low minimums.

These financial technology companies — or fintechs — partner with FDIC-insured banks to offer deposit accounts that are federally insured, like accounts at your neighborhood bank. Your money saved in these accounts is insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), if deposited with a credit union.

Many high-yield savings accounts don't charge monthly maintenance fees or require high minimum balances to earn high rates of interest, making them accessible to a wide range of savers. And while the Federal Reserve used to limit withdrawals from these accounts to six a month, that limitation is suspended in the wake of the pandemic, with many banks no longer limiting the withdrawals you can make.

  • High savings potential. Without the overhead of a brick-and-mortar bank, digital banks can offer significantly higher interest on your deposit investment — up to 10 times the national average when compared to a traditional savings account.

  • No or low fees. The best digital banks and online accounts come with few fees and low minimum deposit requirements, making it easy to maintain your account long term.

  • Convenient access to your money. View real-time balances and electronically deposit or transfer money through an app or your online account at any point.

  • Federally insured up to $250,000. High-yield savings account deposits are insured by the FDIC or the NCUA for up to $250,000 per person, per account.

  • Transfers may not be instant. Depending on the bank, you may need to wait up to three days for transfers to or from your account to clear. Many banks allow you to link accounts at other banks for faster transfers, so read the fine print to understand your options and wait times.

  • Limited deposit and withdrawal options. Online banks generally don’t have their own branches and ATMs — instead, they partner with existing ATM networks. To deposit cash into your high-yield savings account, you’ll need to find an in-network ATM that accepts deposits or deposit the cash into a linked account and then electronically transfer the amount into your savings.

  • Minimum opening deposit may be required. Some high-yield savings accounts require a high opening deposit to earn the best advertised APY. For example, Brio Direct requires a $5,000 minimum balance to earn its high APY. Carefully read the account’s terms and conditions before signing up.

Digital banking opens up more competitive rates and fewer fees than your neighborhood branch, and it offers apps that make it easy to move money among everyday accounts, including digital check deposits.

Yet while it's tempting to choose an account based only on its highest advertised APY, interest rates on high-yield savings accounts are variable, meaning rates can fluctuate after you open one and change over time. You could be earning a lower rate if the Fed cuts its benchmark interest rate later this year.

Instead, look for an account that fits the way you like to bank while weighing factors that include:

  • Promotional rates. Today's HYSAs earn up to 5% APY, making them a safe spot to grow your money toward a short-term goal or a rainy day. Yet some accounts offer promotional or limited-time rates to entice you to sign up before adjusting to a lower rate based on market conditions.

  • Low or no minimums. The best high-yield savings accounts require no minimum deposit or balance to earn high rates of interest, though other banks may require a minimum opening deposit or that you maintain a specific balance to avoid monthly service fees.

  • Ease of accessing your money. Look for flexibility that includes ATMs and mobile apps that accept checks for deposit — or branch access, if you prefer in-person banking.

  • FDIC or NCUA protections. Like other deposit accounts, HYSAs are federally insured for up to $250,000 per account, per person — which means your money is safe.

An HYSA offers flexible access to your money, but it isn’t the only low-risk way to earn interest on your savings. Look to these alternatives that offer safe, steady returns at rates that outpace traditional savings accounts:

  • Certificate of deposit. A CD guarantees a high fixed rate of return on a principal deposit at the end of an agreed-on term. CDs differ from an HYSA in that you risk a withdrawal penalty if you need to access your money before the CD matures — though a short-term CD ladder may be a way to leverage high-rates with rolling returns while interest rates are strong.

  • Money market account. Also called a money market savings account, the rate on an MMA can beat those of traditional savings accounts, with the same access to your money.

  • High-yield checking account. A high-yield checking account is like a money market account in that it combines high APYs with checking benefits, but with unlimited debit and check-writing privileges you won't find with an MMA.

  • Higher-risk investments. Stocks, index funds and mutual funds average higher returns than HYSAs, yet with higher potential losses.

Dig deeper: High-yield savings account vs. money market account: Which is best for growing your savings?

Savings rates strongly correlate with the target interest rate set by the Federal Reserve, the U.S.'s central bank. Called the fed rate, this target rate sets a benchmark that affects rates on deposit accounts, loans, mortgages and other financial products — and as the Fed rate rises, so do APYs on savings accounts, CDs and money market accounts.

At the conclusion of its rate-setting policy meeting on March 20, 2024, the Fed left the federal funds target interest rate of 5.25% to 5.50% unchanged, marking the fifth consecutive time it’s held rates steady since July 2023. In its post-meeting statement, the Federal Reserve maintained it wouldn't cut the key interest rate until it's confident “that inflation is moving sustainably toward 2 percent.”

March's Consumer Price Index data released on April 10 showed a month-over-month increase in consumer prices — a widely used indicator for inflation — matching February's increase and complicating the Fed's next move. A growing group of economists now doubt whether the Fed can cut interest rates this year — including Seema Shah, chief global strategist Principal Asset Management, who said in an email about the CPI report, "This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip," adding, "In fact, even if inflation were to cool next month to a more comfortable reading, there is likely sufficient caution within the Fed now to mean that a July cut may also be a stretch."

The same week brought with it the latest Producer Price Index, an economic indicator measuring changes over time in the prices producers receive for goods and services — or wholesale inflation. The April 11 data showed a lower rate of growth in March than economists expected, providing modest relief from continued inflation worries.

Responding to inflation concerns, Federal Reserve Chair Jerome Powell on April 16 cautioned that "recent data have clearly not given us greater confidence" that inflation is under control: “If higher inflation does persist, we can maintain the current level of [interest rates] for as long as needed.” The Fed holds its next policy meeting at the end of April, with a rate decision expected on May 1.

For savers, it means that the record-high rates we're seeing on HYSAs could stick around into the fall, offering a low-risk way to reach your financial goals with a larger nest egg. Many FDIC-insured banks and financial institutions continue to offer up to 5% APY or more, outpacing the inflation rate by up to 2 percentage points.

  • Annual percentage yield. Called the APY, this is the total amount of interest you'll earn on your deposit over one year, including compound interest, expressed as a percentage.

  • Member FDIC. When a bank or financial institution is advertised as a member of the FDIC, it means that your money is protected by the Federal Deposit Insurance Corporation. Funds held by member FDIC institutions are insured and federally protected for up to $250,000 per depositor, offering a layer of protection if the bank were to go out of business.

  • Monthly fee. Some banks charge fees each month for simply holding your money, but many of the best high-yield savings accounts charge no monthly maintenance fees if you can meet account requirements.

  • Minimum deposit. As with monthly fees, some banks require you to deposit a minimum amount of money when opening your account as a way for them to profit from fees if required balances aren't met. The best high-yield savings accounts require no minimum balances to earn high rates of interest.

  • Variable APY. APYs can be fixed or variable, depending on the type of deposit account. Fixed rates don't fluctuate when, say, the Fed rate changes, while variable APYs do. Confirm the type of rate for the account you're interested in to understand whether the rate is fixed or variable.

  • Federal Reserve. The Federal Reserve — or Fed — is the central bank of the United States and the anchor of the financial system. Its Board of Governors is appointed by the president and confirmed by the Senate with the goals of maximizing employment, stabilizing prices and moderating long-term interest rates.

Learn more about how high-yield savings accounts work when narrowing down the best for your budget, lifestyle and financial goals.

High-yield savings accounts provide significantly higher earning potential when compared to traditional savings accounts that average 0.46% nationally, allowing your money to grow more substantially over time. They offer the convenience of online accessibility and minimal fees, giving you a secure and efficient way to manage your money.

Compound interest is often described as earning interest on your interest. It’s a powerful way to boost your savings over time by earning interest on both your initial deposit and any interest you earn along the way. An account's APY is the total amount of interest you'll earn on your deposit over one year, including compound interest, expressed as a percentage, with many HYSAs compounding daily or monthly.

Yes. Interest you earn on your high-yield savings account is considered taxable income by the IRS. If you earn more than $10 in interest in a calendar year, your bank or financial institution will send you a Form 1099 to file with your annual tax return.  

Banks charge higher interest rates on money they lend out to borrowers than the interest they pay on customer deposit accounts. The difference is called a spread, and it’s what banks rely on to make money.

Online banks and digital accounts don't require the overhead of brick-and-mortar branches, allowing them to pass along savings to you in the form of even higher APYs than you might find in your neighborhood.

Yes. Financial technology companies — or fintechs — partner with FDIC-insured banks to offer deposit accounts that are protected by the government for up to $250,000. The FDIC insures the safety of your money, even if the fintech were to fail or go out of business. Look for terms like "member FDIC," "FDIC insured" or "NCUA insured" when comparing your options.

Yes. Look for high-yield savings accounts that are FDIC-insured up to the maximum limit, providing a level of security for deposited funds. For accounts at credit unions, the National Credit Union Administration insures balances up to a specific amount per share owner.

High-yield savings accounts typically offer easy access to funds through online banking, mobile apps and ATMs. However, some accounts restrict the number of withdrawals you're allowed each month. Read the fine print to understand how easily and often you can access your money.

Not with most high-yield savings accounts — though some HYSAs impose penalties or reduce interest rates for early withdrawals, so understand the terms and conditions on your specific account before making withdrawals.

Editor's note: Annual percentage yields and promotional rates for some products can vary by region and are subject to change.

Kelly Suzan Waggoner is personal finance editor at AOL. Before joining AOL, Kelly was managing editor at Bankrate and editor-in-chief at Finder, where she led a team focused on helping people to make unfamiliar financial decisions around banking, lending, credit cards, investments and more. In addition to Bankrate and Finder, Kelly’s expertise has been featured in Nasdaq, Lifehacker and other publications. Today, she's dedicated to empowering those planning for, newly entering or fully enjoying retirement to get the most out of their finances — whether that's saving money, managing debt, maximizing rewards or growing their wealth.

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