4 factors to consider when choosing a high-yield savings account

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By Kathryn Pomroy

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Kathryn Pomroy

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Kathryn Pomroy is a personal finance writer with over seven years of experience. Her work has been featured by GOBankingRates, MSN, Kiplinger, and Fox Business.

Updated October 16, 2024, 2:45 AM EDT

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High-yield savings accounts offer a higher interest rate than standard savings accounts — nearly 1% (or almost 10% higher). A high-yield account can help you build an emergency fund, afford a long-awaited vacation, fund home improvements, pay off a large purchase, and more.

4 factors to consider when choosing a savings account

Check out these 4 factors before making a final decision.

  1. Opening an account with an online or traditional bank
  2. High-yield savings account interest rates
  3. Flexible access to money
  4. Added bank fees

1. Opening an account with an online or traditional bank

In 2019, the number of online digital banking users surpassed 161 million in the U.S., according to Statista. That’s a 20% increase from 2014. That doesn’t mean people have turned their backs on traditional banks and credit unions, as most still prefer building a banking relationship and face-to-face interaction with a banking representative.

But more and more consumers are turning to online banks. They may lack the personal connection, but they generally offer better rates and terms because they have fewer overhead costs than on-site banks. Most online and traditional banks and credit unions are full-service and offer checking and savings accounts. Some online banks also offer CDs, money market accounts, loans, and more.

Most online banks offer account access via an app. You may also be able to schedule recurring deposits into your account.

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2. High-yield savings account interest rates

The majority of high-yield savings accounts are available online or at a physical location near you. All come with FDIC insurance, so your money is protected (up to $250,000 per account). When choosing a high-yield savings account, look for one that offers an annual percentage yield (APY) greater than on a standard savings account.

The APY controls how much interest you’ll earn in a year, so the higher the APY, the faster your savings will grow. As APY’s are variable (not fixed), they fluctuate with the federal rate and depend a great deal on the economy’s strength. So the more robust the economy, the better the average APY.

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3. Flexible access to money

Although APYs are low, high-yield savings accounts are still a good (and safe) way to build an emergency fund. But there’s a catch. Withdrawals from your account are limited to six per month by law. Go over the monthly limit, and you’ll face hefty fees.

HERE'S HOW MUCH A HIGH YIELD SAVINGS ACCOUNT PAYS

4. Added bank fees

Many online, traditional banks and credit unions charge fees, but certainly not all. Costs can really add up, especially when the average customer can pay more than $300 a year in bank fees. So to grow your money as fast as possible, it’s important to shop for a bank that charges few fees or no fees at all.

The many reasons you might be charged fees and penalties on high-yield savings accounts include:

  • For opting to receive paper statements.
  • For making more than six withdrawals from your account in one month.
  • To close your account before a specific time period.
  • If your balance falls below a specified amount during a statement cycle.
  • Monthly service charges or maintenance fees.
  • If you don’t maintain an average daily balance.

    Meet the contributor:
    Kathryn Pomroy
    Kathryn Pomroy

    Kathryn Pomroy is a personal finance writer with over seven years of experience. Her work has been featured by GOBankingRates, MSN, Kiplinger, and Fox Business.

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    Fox Money is a property of Credible Operations, Inc., which is majority-owned indirectly by Fox Corporation. This material may not be published, broadcast, rewritten, or redistributed. All rights reserved. Use of this website (including any and all parts and components) constitutes your acceptance of Fox's Terms of Use and Updated Privacy Policy | Your Privacy Choices.