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Guide to Choosing and Opening a High-Yield Savings Account

Guide to Opening a High-Yield Savings Account
Jennifer Calonia
Jennifer CaloniaUpdated March 14, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
A savings account is a great place to store money you don’t need right away. These accounts keep your money safe and allow it to grow over time, especially if you choose a high-yield savings account. High-yield savings accounts are simply savings accounts that offer an annual percentage yield (APY) that exceeds the national average for savings accounts. For example, many high-yield savings accounts are currently paying over 3.50% APY versus the national savings average of 0.35% APY.However, not all high-yield accounts are created equal. APYs, fees, minimum balance requirements, and other features can vary depending on where you open the account. Read on to learn how to find and open the best high-yield savings account for your needs. 

What Is a High-Yield Savings Account?

By definition, a high-yield savings account is a savings product that earns a higher interest rate than a traditional savings account. While brick-and-mortar banks sometimes offer these types of accounts, they are more commonly associated with online banks. Due to lower overhead costs, online institutions are often able to offer high APYs.Like other savings accounts, high-yield savings accounts are designed for saving, rather than day-to-day money management (that’s what checking accounts are for). As a result, these accounts typically don’t come with checks or debit cards. You may also be subject to monthly withdrawal limits. While federal rules restricting savings account owners to six withdrawals per month have been suspended, banks can still cap the number of withdrawals you’re allowed to make and charge fees if you exceed the max.Whether you open a high-yield savings account at a traditional or online bank, the money you deposit is federally insured up to $250,000 per institution, per account holder. 

How Does a High-Yield Savings Account Work?

The interest you earn on a high-yield savings account is expressed as an annual percentage yield, or APY. What exactly does that mean? An account’s APY tells you how much you stand to earn on your money in one year. It includes compound interest, which is the interest you earn on both your original money and on the interest you keep accumulating. Interest is added to your account at the end of every compounding period, which might be daily or monthly. Each time interest is calculated and added to the account, the larger balance earns more interest.

Who Is a High-Yield Savings Account Ideal For?

Since it can be difficult to find a high-yield savings account at a brick-and-mortar bank, this type of account can be ideal for someone who is looking to get the best possible return on their savings and doesn’t mind putting their money in an online bank. While online institutions don’t have physical branches, they still allow easy access to your money, either through online transfers to another account or by withdrawing cash at a local ATM. They generally provide access to customer service both online and by phone. If you prefer face-to-face interactions, however, a high-yield account at an online bank may not be for you.

Tips for Choosing a High-Yield Savings Account to Open

When shopping around for the best savings account for your needs, here are some factors you may want to consider.


The APY tells you how much interest you can expect to earn on the money you keep in your account over the course of a year. Generally, the higher the APY, the faster your savings will grow. Keep in mind, however, that APYs on savings accounts are usually variable, which means they can fluctuate over time depending on the bank and health of the overall economy.

Balance Requirements

Some high-yield savings accounts require a minimum deposit to open your account. Some also require you to maintain a certain minimum balance to avoid fees. If you’re just starting to save, you may not be able to meet a high minimum opening balance, or a high ongoing balance requirement.


Some savings accounts charge monthly account fees, fund transfer fees, ATM fees, and other fees. which can eat into the interest you’re earning. Even if an account offers a high APY, it may not be the best deal if you’re going to have to pay regular fees.

Access to Your Funds

If you’re looking at high-yield savings accounts at online banks, it’s a good idea to find out if the bank offers access to a large network of fee-free ATMs in your area. You’ll want to make sure you can get cash easily (and for free) when you need to.

Availability of Other Accounts

If you like the idea of having your savings and checking at the same bank, find out if the institution offers both types of bank accounts. If that proves difficult, keep in mind that it’s generally easy to transfer money from a savings account to a checking account (or vice versa) even if the accounts are at two different banks.

Customer Service Options

You may also want to find out how you can contact a representative should you have any questions or issues related to your account. Some institutions favor digital help options, while others offer 24/7 access to a live customer service representative over the phone. If you prefer face-to-face interactions, you may want to open an account with a bank that has physical branches.

Federal Insurance

You’ll want to verify that the high-yield savings account is protected by the federal government through either Federal Deposit Insurance Corporation (FDIC) at banks or the National Credit Union Administration (NCUA) at credit unions. Both provide up to $250,000 in protection per account holder. If you have more money than the insured limits, you might want to spread the funds across different financial institutions to gain more coverage.

What to Do When Opening a High-Yield Savings Account

Once you find an institution that meets all of your needs, you can start the process of opening a high-yield savings account.

Applying for Your New Account 

Depending on the bank, you may be able to open an account either online or in person. Typically, you’ll need to provide your contact information, Social Security number, and at least one form of identification, such as a driver’s license or a passport. (For a joint account, everyone wanting access to the account must provide this information and ID.) 

Funding Your Account 

You may be required to deposit money into the new account right away. You can typically do that by depositing cash or a check or setting up an electronic transfer of funds from an outside account into your new account. Whether you do it during the application process or later, transferring money from an existing bank account will typically require providing the other account’s routing number and account number

Setting Up Online Banking

You may be able to enroll in online banking right away or you may have to wait until you get an email with your account information in a day or two. Once you’re ready to access your account online, you’ll need to go to the bank’s website and set up a username and password. After you set up your online account, you can download the bank’s app to your mobile device and log in there as well.

Establish Beneficiaries

If this wasn’t part of the application process, it’s a good idea to log into your account and designate beneficiaries who would inherit the funds in your account should anything happen to you (and any joint account holder). Often, people will choose a spouse as the primary beneficiary and children as secondary beneficiaries.

Turn on Alerts and Paperless Statements

When you’re logged into your account, you may also want to personalize your account alerts, such as alerts when a deposit hits the account or when your account balance goes below a certain threshold. You can typically choose whether you want to be alerted by text, email, or app notification.Also consider whether you'd like to opt for paperless statements. Some accounts may require that you opt into e-statements or charge a monthly fee if you request paper statements.

The Takeaway

A high-yield savings account can be a great place to start accumulating money for future purchases or emergencies. Interest rates typically run well above the national average for savings accounts. When shopping for a new high-yield savings account, you’ll want to compare APYs, as well as fees, balance requirements, and other features to make sure the account is a good fit for your needs and lifestyle.If you’re not sure where to start your search, Lantern by SoFi can help. With our online banking marketplace, it’s fast and easy to compare high-yield savings accounts based on APY, fees, and balance minimums. Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

Are there any fees associated with opening high-yield savings accounts?
Is a high-yield savings account worth it?
What factors should I consider when choosing a high-yield savings account?
Can I get a high-yield savings account online?
How easily can I withdraw money from my high-yield savings account?
Photo credit: iStock/supersizer

About the Author

Jennifer Calonia

Jennifer Calonia

Jennifer Calonia is a Los Angeles-based finance writer who has covered the gamut, including student loans, credit card rewards, consumer loans, and debt. Her work has been featured in outlets like Bankrate, NerdWallet, Business Insider, Yahoo Finance, and U.S. News.
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