Opening a high-yield savings account this April? Here are 3 things to know first

It's a great time to be a saver right now. Interest rate hikes in 2022 and 2023 pushed savings account annual percentage rates (APYs) up, and while rates today aren't quite as high as they once were, the Federal Reserve's ongoing rate pause has kept APYs at a level that can still generate big returns over time. 

Those high rates are likely to remain the norm this April, as the Fed noted at its March meeting that it doesn't plan to lower rates right now. Because of that, high-yield savings accounts remain a solid option for savers. Rates above 4% are readily available on these types of accounts, which is higher than many certificates of deposit (CDs) offer. 

"One of the better things about the Fed not cutting rates is the returns for high-yield savings accounts remain pretty good," says Bobbi Rebell, a certified financial planner (CFP) and personal finance expert. "You can get something in the 4-percent range and there's [virtually] no risk."

That said, there are a few things you need to know before opening up a high-yield savings account this April. 

See how much your savings could earn today.

3 important things to know before opening a high-yield savings account this April

Here are a few things you should consider before opening a high-yield savings account this April:

How the rates work

High-yield savings accounts use variable rates to calculate your returns, which means your bank adjusts your rate over time based on the overall rate environment. So, while your high-yield savings account rate could be 4.75% this April, it could be higher or lower the following month if rates shift. Variable rates are beneficial when interest rates are rising or are paused at high rates, but can result in lower returns when they fall. 

Another important factor to consider about high-yield savings account interest rates is that the interest compounds over time. That means you earn interest on the principal and any prior interest on a daily, monthly, quarterly or annual basis. So, a compounding interest rate generally results in a better return than a simple interest rate, which only offers returns on the principal balance. 

It's also worth considering that high-yield savings account rates are much higher than traditional savings account rates right now. For example, traditional savings accounts currently offer average rates of just 0.41%, but many of the top high-yield savings account APYs range from 4.35% to 4.75% currently. Over time, that difference can add up significantly. 

"The truth is many of us passively keep our savings in a traditional savings account and we make less than 1%, but we could shift it into a high-yield savings account," Rebell says. 

Start earning more interest with a high-yield savings account today.

What the fees are

There are plenty of fee-free high-yield savings account options to consider, but not all high-yield savings accounts come without fees. For example, many banks or credit unions tack on a monthly maintenance fee to high-yield savings accounts if the balance is lower than what's required. Or, some may charge you a fee if you withdraw money from your high-yield savings account more than six times in a month. 

"Understand every account may have different limitations — some may charge a fee if you take more than a certain number of withdrawals a month," Rebell says. 

Reading through the fee schedule before opening an account will help you identify any potential fees the bank may charge you. You may also find that some will waive monthly fees if you meet certain criteria.

How accessible your money will be

Unlike other types of interest-bearing accounts, like CDs, high-yield savings accounts offer flexibility in terms of access to your money.  To earn the high rate that most CDs offer, you'll need to agree to leave your money deposited in the account for the full term. Otherwise, you may end up paying an early withdrawal fee.

With a high-yield savings account, though, you typically maintain access to your funds and can deposit money, withdraw or transfer into or out of the account without much hassle (up to the monthly limits). That flexibility is an important feature to consider, especially if you plan to use the account as your emergency fund. 

The bottom line

The high rates and liquidity that come with high-yield savings accounts make them a smart choice for savers looking for ways to earn a return on their money this April. While your rate could go down if the rate environment shifts, the low-risk nature of a high-yield savings account makes it a good fit for people who want a safe place to put their money amid today's economic uncertainty and volatile stock market, Rebell says.

"You're taking on the downside risk but, in return, you're getting liquidity and the potential upside because your rate could also go up," Rebell says.