Best High-Yield Savings Account Rates for July 2023

Pros and Cons of High-Yield Savings Accounts

Pros Explained

• Higher APY than traditional savings accounts: The top-earning high-yield savings accounts typically pay 10-12 times the national average rate, or even more, and likely pay substantially more than the standard savings account at your primary bank or credit union.
• Let you withdraw your funds at any time: Unlike certificates of deposit (CDs), savings accounts are liquid, meaning you can access your cash just about any time you wish (though balance minimums or withdrawal limits may apply).
• Additional deposits allowed at any time: After your opening deposit, you can add funds to your account whenever you like, including set-it-and-forget-it automated transfers from another account to help you save for a big goal or “pay yourself first.” 
• Extremely safe, with virtually no risk: If your account is at an FDIC-insured bank or NCUA-member credit union, your money is insured up to $250,000 per individual and per institution should the bank or credit union fail. Aside from any fees, there is almost no way for you to lose your principal funds or the interest you’ve earned.
• In times of rising rates, your APY may go up: Anytime the Federal Reserve increases rates, you stand the chance of being offered a higher APY on your high-interest savings account.

Cons Explained

• To earn a top yield, you may need to open an account with a new institution: If your primary bank or credit union does not offer a competitive high-yield savings account, earning a top return will require you to open an account at an institution that’s new to you. Also, since traditional brick-and-mortar banks generally aren't the top rate contenders, you'll need to consider online banks as well.
• Some accounts limit withdrawals to six per month - Though the federal regulation limiting withdrawals from savings and money market accounts to six per month has been suspended, some institutions still impose a limit as a way to keep their account transactional costs low.
• In times of decreasing rates, your APY may go down - Anytime the Fed lowers rates, the APY on your savings account will also likely decrease.
• Easy access can make it tempting to dip into savings - If you find yourself frequently tempted to spend instead of save, the easy access of a savings account provides little deterrent.
• Could incur fees: Some high-yield savings accounts have a minimum balance requirement, and if you fall below that on any day during the month, you'll be charged a monthly maintenance fee. So be sure to understand your account's rules and stay above any minimums if at all possible.

Alternatives to High-Yield Savings Accounts

High-yield savings accounts are just one vehicle for earning a competitive interest rate on money you can put away for the future, with several alternative types of accounts available for stashing your cash.

High-Yield Savings Accounts vs. Checking Accounts

The easiest alternative to keeping your savings in a high-yield savings account is to simply keep it in your checking account. While it's true that this option provides the ultimate in convenience, it two several major downsides. First, money kept in your everyday checking account is very easy to spend, so it can be difficult to earmark—and leave untouched—the funds that you want to save. Second, checking accounts tend not to pay any interest, or if they do, the rate is a pittance. A high-yield savings account offers an opportunity to earn substantially more interest on your money.

High-Yield Savings Accounts vs. Money Market Accounts

A money market account operates very much like a savings account, with the exception that it offers the ability to write checks. In the past, money market accounts required large balances but paid higher rates than savings accounts. This has shifted in recent years, however, with savings and money market accounts both having a variety of required minimum balances, including no minimum requirement. In addition, high-yield savings accounts often pay more competitive rates than money markets.

High-Yield Savings Accounts vs. Certificates of Deposit (CDs)

If some of your savings can be socked away and not touched for a period of time, you may be able to earn a higher rate with a certificate of deposit. CDs require you to commit your funds to remain on deposit for a number of months or years, imposing a penalty if you request to withdraw the funds before the CD’s maturity date. But in exchange, your interest rate is locked and guaranteed, even if the Fed lowers rates.

High-Yield Savings Accounts vs. I Bonds

The U.S. Treasury offers I Series savings bonds, known as I bonds, whose rate is indexed to current inflation rates. Though I bonds can sometimes offer very attractive rates, your return is unpredictable because the interest rate is recalculated every May and November. I bonds offer other advantages, such as tax flexibility, but they also require your funds to stay fully locked for the first 12 months, without exception.

High-Yield Savings Accounts vs. Treasuries

Another way to earn a return on your cash is to lend it to the U.S. government. This can be done with the purchase of a T-bill, which is a Treasury note having a duration of 1 year or less. Treasuries are considered one of the safest investments in the world, but their rates are not always as high as the best high-yield bank accounts.

High-Yield Savings Accounts vs. Bond Funds

Though it’s difficult to thoroughly research individual corporate or municipal bond offerings, you can put your money in a bond ETF, which represents a bundle of various bonds. Though you can easily enter and exit a bond ETF, bond returns are not guaranteed, and losses in value could erode your principal investment.

High-Yield Savings Accounts vs. Money Market Funds or Cash Reserve Accounts

If you have a brokerage account, you can also keep some of your cash in a money market fund or a cash reserve account. Just be sure you research the yields, as many of these options pay a far inferior return than what you can earn from a separate high-yield savings account. It is also easy to link a high-yield savings account for transferring funds in and out of your brokerage account.

How to Choose a High-Yield Savings Account

Once you've decided to open up a new high-yield savings account, you'll want to do your homework to make sure you're choosing the best one for your needs. Searching for a top APY is a good starting point when choosing a high-yield savings account, as you'll want to earn a competitive rate.

But beyond the interest rate, you'll also want to make sure the account either doesn't have a minimum balance requirement, or has one that you feel confident you can regularly maintain. You'll also want to check the rules of the account, such as whether it limits the number of withdrawals you can make in a month, and if you'll be assessed any fees. Lastly, check that the bank is an FDIC member (or an NCUA member if it's a credit union) so that your funds will be federally insured should the bank or credit union fail.

How to Open a High-Yield Savings Account

Once you've landed on your choice for a new account, the next step is to open the account online. The bank or credit union will ask you to provide various personal information, including your social security number, since your interest earnings will be reportable to the IRS. The bank's account opening process will also involve security measures designed to ensure you are who you say you are.

You'll also be presented with one or more options on how to fund your account. The most common method is by ACH transfer from another bank. You'll be provided with instructions on how to set this up. Alternatively, some institutions allow you to make your initial deposit with a debit or credit card, or even to send in a paper check.

Rate Collection Methodology

Every business day, Investopedia tracks the rate data of about 100 banks and credit unions that offer high-yield savings accounts to customers nationwide. We determine daily rankings of the top-paying savings accounts first and foremost by the annual percentage rate (APY) offered. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the savings account's minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best high-yield savings accounts, read our full methodology.