How to pick the right high-yield savings account

Having a reliable and effective savings strategy is one of the most important parts of your financial plan. And, there are lots of useful tools that can help you stay on track with that strategy, from budgeting apps to savings automation, making it easier than ever to achieve your money goals.

But one of the most powerful tools at your disposal is a high-yield savings account. These accounts — offered by big banks, credit unions and online financial institutions — come with better interest rates than traditional savings accounts, helping your money grow faster over time. And, with the Fed raising rates over the last year to try to temper inflation, many high-yield savings accounts now offer excellent returns on your money.

However, with so many high-yield savings account options available, selecting the right high-yield savings account requires careful consideration. 

Find out more about the top savings account options available to you now.

How to pick the right high-yield savings account

If you're overwhelmed by the high-yield savings account options, here's how you can narrow down the choices to find the right one for you.

Compare the rates

The primary reason for opting for a high-yield savings account is the higher interest rate it offers compared to regular savings accounts. The higher the interest rate, the more your money will grow over time. 

Right now, there are numerous high-yield savings accounts offering rates of 4.5% or higher. Regular savings accounts, on the other hand, are offering an average rate of just 0.42%. 

Given how much rates can vary, it's important to research accounts and compare interest rates across different financial institutions to find the best one available to you. Online banks and credit unions typically offer better rates due to their lower operating costs, so be sure to consider what those financial institutions offer alongside what the big banks can provide.

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Consider fees and minimum balance requirements

While high-yield savings accounts generally have fewer fees compared to other types of accounts, it's still important to review the fee structure. Some accounts might charge maintenance fees, excessive withdrawal fees, or fees for falling below a minimum balance. 

Opt for an account with minimal fees, especially if you're just starting to save. There are plenty of low- or no-fee high-yield account options to choose from. 

And, you should also be sure that you can meet any minimum deposit fees or other account requirements before making a decision. Otherwise, it could end up a costly mistake.

Look at account accessibility and convenience

As you narrow down the options, consider how accessible and convenient the account is for your needs. Online banks often offer higher yields due to their lower overhead, but if you prefer in-person banking, look for local credit unions or brick-and-mortar banks offering competitive rates. 

Also, ensure the account comes with user-friendly online and mobile banking features to manage your funds easily.

Make sure the account is insured

Earlier this year, a series of bank collapses made it clear how important account insurance is for your money. As you search for a high-yield savings account, ensure that the financial institution offering the account is backed by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). 

This insurance protects your funds up to a certain limit ($250,000 per depositor, per account). That insurance coverage doesn't just protect your money; it also provides peace of mind — even in times of financial instability.

Understand any account limitations

Some high-yield savings accounts can come with certain limitations, such as a limit on the number of transactions or withdrawals you can make per month. Be sure to understand these limitations and assess whether they align with your saving habits. 

If you need more flexibility, look for accounts with higher transaction limits or no limits at all. This will save you from the headache that can come with these types of account limitations — and may also save you from excess fees if you have to make more than the allotted number of transactions per month.

Consider any additional benefits

Some high-yield savings accounts offer extra perks, like ATM fee reimbursements, linked checking accounts or tools to help you track your savings goals. While these shouldn't be the sole basis for your decision, they can add value to your overall banking experience — so consider any extra perks you may get as you narrow down the options.

The bottom line

Choosing the right high-yield savings account can have a positive impact on your finances. By carefully evaluating interest rates, fees, accessibility and other important factors, you can make an informed decision that aligns with your saving goals. 

Remember that the ultimate aim is to safeguard your hard-earned money while allowing it to grow steadily over time. By taking steps to ensure you've chosen the right account, you'll be well on your way to maximizing your savings potential.