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How to find and open a high-yield savings account

Kat Aoki
Updated
How to open a high-yield savings account (AsiaVision via Getty Images)

Are you looking for a safe place to park your cash while earning a more competitive rate than your typical account? An FDIC-insured high-yield savings account might be the best place to grow your savings.

Offering interest rates of up to nine times higher than the 0.45% national savings average of a traditional account, a high-yield savings account can help you grow your money faster with virtually no risk. In fact, you could earn over 5.00% APY on your deposits right now with some of the best high-yield savings accounts.

In this guide, we walk you through the five steps of opening a high-yield savings account, from shopping around for an account that fits your needs to maximizing your account's potential and protecting your savings.

A popular vehicle for saving money, high-yield savings accounts are offered at traditional banks, credit unions and online financial institutions. But because every account is different, it pays to compare a few key features to make sure you’re getting the best deal for your budget.

Maximize your earnings by choosing an HYSA with the highest APY for your initial deposit. Online banks tend to offer the highest rates because they don’t have the overhead of brick-and-mortar banks — and it’s easy to transfer your money to one, once you link an external account.

However, keep in mind that APYs on HYSAs can change at any time, based on market conditions and the bank’s discretion. And some advertised rates may be “intro” rates only, so be sure to check the terms and conditions before you transfer your money.

Compound interest is a powerful way to boost your savings by earning interest on both your account balance and any interest you earn along the way. While monthly compounding is common, some banks — including American Express and Ally — compound interest daily on their HYSAs.

While you won’t see much difference with small deposits, the impact of daily compounding on large deposits is more noticeable. It adds up to a higher balance on which you’ll earn continuous compounding.

The best online banks and credit unions won’t require a minimum opening deposit or balance to earn high APYs.

Many traditional banks will require a minimum deposit to open an HYSA or a minimum monthly balance to avoid maintenance and other fees. These minimums can range anywhere from $25 to $5,000 or more, depending on the account.

Think about how you want to access your money. You can link even digital HYSAs to an everyday checking account, allowing for quick transfers when you need to withdraw money. However, some banks offer additional access through debit cards or check writing privileges.

While most HYSAs have no monthly maintenance fees, it’s wise to confirm there aren’t any hidden fees that could eat into your savings. For example, some accounts charge a fee for paper statements, out-of-network ATMs or falling below a stated monthly minimum balance.

Also, while the Federal Reserve has lifted withdrawal limits on savings accounts indefinitely, some traditional banks haven’t yet caught up. Read the fine print to make sure you understand how often you can access your money without triggering a penalty (if any).

Choose a bank that offers user-friendly online and mobile banking platforms and has a solid reputation for customer service. This is especially important if you choose a fully online bank.

You can visit sites like Trustpilot, Reddit and the Better Business Bureau to read unbiased customer reviews and check for consumer alerts.

Dig deeper: High-yield account vs. traditional savings: Why it’s worth the switch

While every institution requires slightly different information, be prepared to provide the following personal and financial details before opening an HYSA:

  • Social Security number or Individual Taxpayer Identification Number (ITIN).

  • Government ID — like a driver's license, state ID or passport to verify your identity. Fewer banks ask for a second form of ID, such as a birth certificate, Social Security card, permanent resident card or a military ID.

  • Utility bill, lease agreement or other document confirming your current residence.

Most banks will let you apply for an HYSA online, allowing you to submit your application and documents electronically for greater convenience.

General steps for opening an HYSA online include:

  1. Visit the bank's website and navigate to the high-yield savings account you’re interested in.

  2. Fill out the online application form with your personal information, including your Social Security number or Individual Taxpayer Identification Number.

  3. Scan and upload clear copies of your ID and proof of address, if required. (If you’re opening a joint account, you’ll need to provide the same ID and address information for all account holders.)

  4. Submit the application and wait for the bank to review and approve your account. Some banks approve accounts in minutes.

  5. Review your confirmation email with account details and instructions for accessing your online banking portal.

If applying in person, visit your neighborhood branch for the account you’re interested in. You’ll need to have your Social Security number handy, as well as originals of your government-issued IDs and proof of address.

The process of funding an HYSA varies depending on whether you choose a traditional brick-and-mortar bank or an online bank.

Many traditional banks require a minimum opening deposit to activate your HYSA. This initial deposit may be necessary to meet the minimum opening balance requirement set by the institution.

You can fund your HYSA at a physical location by:

  • Writing a check for your deposit amount

  • Depositing cash

  • Initiating an electronic funds transfer from another account, either at the same bank or from an external account

Online banks offer a streamlined process for funding your account by linking an external bank account online during or soon after opening your account. You’ll need your external bank's routing and account numbers handy for linking it to your new account.

You may also have the option of mailing a check to fund your account, although this method will take longer to process. If you mail a check, send it by certified mail, UPS or FedEx so that you can track its delivery.

After you’ve opened and funded your new HYSA, take a few additional steps to protect your money, stay on top of your finances and maximize your earnings.

Set up a username and password for access to your account through an online portal. That way, you can easily manage your HYSA and transfer funds into and out of your account as needed. You can also download your bank's mobile app to your phone or smart device for greater convenience and access to your account away from home.

Set up alerts to stay informed about activity in your HYSA for greater peace of mind. Most banks offer alerts by email, text message and through a mobile app. For example, you can set up alerts to let you know if you’re nearing a minimum balance threshold or when withdrawals are made from your account.

Many banks allow you to opt out of paper statements to instead receive electronic statements — or e-statements. E-statements can provide an added layer of security against identity theft, as they eliminate the risk of sensitive financial information being stolen from your mailbox or recycling bin. You might also save a little money by opting into e-statements only, depending on your bank.

Consider setting up automatic transfers from a checking account to your HYSA to ensure consistent savings and to help you reach your financial goals faster. Choose a frequency — weekly, biweekly, or monthly — depending on your savings goals.

Avoid complications down the line by taking the time to designate a beneficiary on your account. Establishing a beneficiary ensures your savings are passed on in accordance to your wishes after you die. Your beneficiary won’t have access to your account until then. Make a note to revisit your beneficiary designations periodically, especially after major life events like divorce or the birth of a grandchild.

Unlike certificates of deposit, which come with fixed rates that won’t change over the life of your term, interest rates on high-yield savings accounts are variable and can go up or down with market conditions.

Most banks do not alert you after a rate decrease, which means you’ll want to keep an eye on your HYSA's interest rate. If your bank lowers the rate on your HYSA or you find a better deal elsewhere, you can always transfer your savings to a higher-yielding account to maximize your returns.

Dig deeper: CD vs. high-yield savings account — what to know when rates are high

The easiest way to withdraw money from your HYSA is to link it to an existing checking account either at the same or at a different bank. After you’ve linked the accounts, you can transfer money from your HYSA to your checking account for free when you need to pay bills or otherwise use your savings.

Some banks offer additional withdrawal options for their HYSAs, including:

  • Debit cards linked to the HYSA so you can withdraw cash from an ATM.

  • Check-writing privileges on the HYSA.

HYSAs are primarily designed for saving money, rather than making transactions, and so not all banks offer methods beyond digital transfers. Check with your bank to learn what withdrawal options they offer and about any associated fees.

🛑 Watch out for monthly withdrawal limits

While federal regulations no longer limit how often you can withdraw from a savings account every month, some banks impose their own limits on withdrawals — sometimes six monthly withdrawals or transactions. Be sure to check your bank's current policy to avoid unnecessary withdrawal or other fees that can eat into your earnings.

Dig deeper: High-yield savings account vs. money market account: Which is best for growing your savings?

In a nutshell, yes. Deposit accounts like HYSAs are protected by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) for up to $250,000 per depositor, per insured bank. Due to these protections, you’re unlikely to lose money with an HYSA due to a bank failure.

Dig deeper: Can you lose money in a high-yield savings account? It’s unlikely — but here’s what to watch out for

Learn more about how these high-yield accounts work when comparing your options.

HYSA rates can change at any time, but they typically adjust after the Federal Reserve's rate-setting meetings, when the central bank sets the federal fund target rate — the rate banks use to borrow and lend money to one another.

If the Fed cuts rates later this year, it means you'll find lower APYs on deposit accounts like certificates of deposit, high-yield savings accounts and money market accounts, decreasing the amount of interest you can earn on your balances.

The Federal Reserve meets eight times a year to set the federal funds target rate that U.S. banks charge to borrow money and lend money to one another. At its last rate-setting policy meeting, on June 12, 2024, the Fed left its benchmark rate unchanged, marking the seventh time it’s held rates steady since July 2023. The Fed signaled at least one rate cut by the end of the year.

Opening deposits vary by the institution. Many online banks and digital accounts won’t require a minimum opening deposit, though traditional banks may require minimum opening deposits from $25 to $20,000 to open an HYSA or to earn the highest rates.

HYSAs are ideal for anyone looking to earn extra cash while earning a competitive rate on their long-term savings. Many people use these accounts for building an emergency fund or for setting aside money for a major purchase.

Interest on HYSAs is typically compounded monthly, although there are a fair number of banks that offer daily compounding. The more often interest is compounded, and the longer it’s compounded for, the more you can earn over time.

Say you invest $10,000 in an account that pays 5% interest. After one year, you’d have earned $500 in interest — for a total of $10,500 in your account. If you didn’t touch your account for another year, you’d have earned $525 in interest — $500 on your initial deposit and another $25 on the interest you earned in year one — for a new total of $10,525. Year three, you’d earn $526.25 in interest — $500 on your initial deposit and another $26.25 on the interest you earned. And so on each year, even without additional contributions to that initial $10,000.

Potential downsides to opening an HYSA include limited accessibility when compared to checking accounts and variable rates that can adjust at any time, but that goes for all types of savings and deposit accounts.

If you’re looking for a low-risk, FDIC-insured investment with a guaranteed rate that won’t change, consider opening a CD instead. Learn more about how certificates of deposit work.

Kat Aoki is a seasoned finance writer who's written thousands of articles to empower people to better understand technology, fintech, banking, lending and investments. Her expertise has been featured on sites like Forbes Advisor, Lifewire and Finder, with bylines at top technology brands in the U.S. and Australia. Kat strives to empower consumers and business owners to make informed decisions and choose the right financial products for their needs.

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