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The Best High-Yield Savings Accounts of 2021

The Best High-Yield Savings Accounts of 2021

Looking for the best savings account with more than the national average 0.05% annual percentage yield, or APY, to put your emergency fund into? At Snowball we’ve done extensive, independent research on financial institutions to identify the best options for you.

Even though most institutions have cut interest rates in response to the Federal Reserve emergency rate cut (due to the coronavirus), you can still find bank accounts that will reward you for your savings. These high-yield savings accounts will help you grow your money faster than the average savings account, meaning that your emergency fund can earn money for you. For example, if you have deposited $10,000 in a year at a 0.50% APY, you would earn $50 after one year (an average account would earn you $10).

Read on for more details about Snowball’s top high-yield savings accounts. You can also check out our FAQ to see how these financial products work.

What can you use a high interest savings for?

  • Emergency fund (best practice is to have 3 to 6 months of living expenses)
  • Take advantage of compound interest (reinvesting interest and making more $ on it)
  • Have extra cash on hand for a large purchase (like a home or education)
  • Set aside money to hit your savings goals (and be a lifelong saver!)

How did we assess the best high-yield savings accounts?

  • Higher than average annual percentage yield, or APY than the national average 0.05%
  • Little to no fees based on minimum account balance Awesome customer service and current assets and/or customers
  • Easy to navigate and good digital experience

A trade-off for a higher interest rate is that many of these accounts are online banks only. Online banks can actually be a benefit, so that you aren’t tempted to use it, only if you have a real emergency (unlike a credit card). We suggest if you want easy access, to go for an account with a debit card option as well.

Here is a list with our top picks! These are also all FDIC insured, so you can have peace of mind (read more in FAQ).

First pick for high-yield savings accounts:

If you are looking for a solid APY with no account fees and accessibility, check out Ally Bank:

Ally Bank Online Savings - 0.50% APY
Great customer service
No monthly fee or minimum balance requirements
Great digital experience
ATM card with access and no ATM fees
Checking account with ability to transfer out
Second pick for high-yield savings accounts:

If having a higher APY is important to you, check out Alliant:

Alliant Credit Union High-Rate Savings - 0.55% APY
Great customer service
Great digital experience with ability to create savings funds
ATM card with access and no ATM fees
Why it was our second choice: monthly minimum balance requirements of $100, $1 charge if not paperless

Other good options for high-yield savings accounts:

American Express National Bank - 0.50% APY
Great customer service
No monthly fees or minimum balance requirements
Member FDIC
No physical location
Only two options (savings or CD)

Marcus Savings by Goldman Sachs - 0.50% APY
No monthly fees and $1/minimum balance requirements
No physical location
No mobile app
Member FDIC
No checking account offered (harder to transfer $ out, need to fund into another bank)
No ATM access

Synchrony Bank High-Yield Savings – 0.55% APY
No minimum balance requirements
Member FDIC

Discover Online Savings – 0.50% APY
No minimum balance requirements
Online transfers
Member FDIC

CIT Savings Builder – 0.45% APY (tiered)
Minimum of $25,000 or $100/mo balance requirements
Member FDIC
High rate

Barclays Online Savings - 0.40% APY
Member FDIC
No minimum balance requirements to start savings

Capital One Money Market – 0.40% APY
$10,000 minimum balance requirements
Member FDIC

Other FAQ

What is a high-yield savings account?

A high-yield savings account is a federal insured savings product that earns interest rates that are much better than the national average (or high interest rates). For example, the national savings average is 0.05% APY whereas a high-yield savings account can earn around 0.50% APY. This can be held at mortar banks (e.g., physical), online banks, credit unions, or nonbank providers (these can be apps that partner with a bank for the FDIC insurance).
Most high-yield savings accounts will have a variable APY, meaning the interest will change (for example, look at the rates from our 2019 post).

How do I choose the highest rates savings account?

You should look for accounts that have high interest rates and little to no fees (e.g., they won’t charge you for overdraft). Ideally, you want to make sure you don’t pay monthly maintenance fees. Some institutions don’t charge monthly maintenance fees, while others will waive the fee if you meet certain requirements (such as a minimum balance). An additional criteria that is helpful, is if you require ATM access to have nationwide coverage (e.g., you can access your account all across the US). Also, many online only or smaller institutions will offer good interest rates and low minimum deposit requirements vs. the traditional, large banks. Banks will sometimes also offer additional incentives if you do direct deposit (e.g., you automatically deposit checks your paycheck).
How do I open an account with the best interest rate?
You can usually open your account either online or in person, depending on who you are opening it with. You will need to provide them with your social security number, contact information, and at least one form of identification, such as a driver’s license or passport. You usually need to deposit money right away, or within a small time frame (especially if there is a minimum deposit). You can do that by depositing cash, checks, or a wire transfer.

What does it mean to be FDIC insured?

Accounts at banks are backed by the Federal Deposit Insurance Corp, or FDIC. Credit unions are backed by the National Credit Union Association, or NCUA. This means that if the financial institution fails, the government will make sure your money is safe and accessible. High-yield savings accounts at banks and credit unions are federally insured for up to $250,000 per depositor.

What does this mean?

Savings account: A deposit account at a financial institution that earns interest on your money deposited. This can sometimes be in conjunction with a checking account.

Interest: Money that a financial institution will pay into your account over time. A financial institution will usually share this number in the form of an interest rate.

Compound interest: This is the interest you earn on both your original deposit and the interest you are accumulating. If your account is compounding, the interest is added to your original principal at the end of each compounding period. Interest is calculated based on the interest rate. Each time interest is calculated and added to your account, you start earning interest on the larger balance. Think about the concept of Snowball rolling down a long hill - as you pick up more snow the Snowball (or your balance) gets larger.

Annual percentage yield (or APY): The annual percentage yield (or APY) is the amount of compound interest you can earn in a year. This is calculated based on your account’s interest rate and the number of times interest is paid each year.
Money market accounts: This is a type of savings account that offers an even higher interest rate. There is usually a much higher minimum deposit (e.g., $5,000) and there is a period of time you are locked into the account (e.g., 6 months). Money market accounts can be a good alternative for those who don’t need to access their money for a period of time.

Financial institutions we evaluated in detail included: Ally Bank, Alliant Credit Union, American Express National Bank, Marcus Savings by Goldman Sachs, Synchrony Bank, Discover Online Savings, CIT Savings, Barclays Bank, Capital One Bank.This post was updated January 26, 2021. Savings account rates (interest rates) may be subject to change.

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