As people get smarter about their savings, more banks are offering a high-yield savings option. High-yield accounts generally offer 1.5% to 2% interest on your savings ... which is about 15 to 20 times more than the typical traditional savings account. The money isn't invested, meaning there's no risk, and you can take it out earlier than you plan if you must, unlike with a CD. If you're still making up your mind about high-yield savings, we've collected seven of our most helpful stories to explain what these accounts are, how people use them, and the best ones available right now. See Business Insider's picks for the best high-yield savings accounts »
By now, everyone knows that keeping your money under the mattress is a bad move. However, did you know that saving large sums in a checking account, or even a traditional savings account, isn't much better? It's more secure than your mattress, sure — but it's not growing. Checking accounts, and even traditional savings accounts offered by big banks, generally offer a fraction of a percent in interest, meaning over time, your cash is worth less as inflation marches on. You could invest your money in the stock market (and in many cases, that's the right move), but experts generally recommend against investing cash you'll need within five years. In such a short time frame, there probably wouldn't be time to recoup any losses as the market fluctuates. Enter high-yield savings accounts, which:
generally offer 1.5% to 2% interest on your savings ... about 15 to 20 times more than the typical traditional savings account don't invest your money, meaning there's no risk allow you to take your money out earlier than you plan if you must, unlike with a CD can be opened online or from your phone, in a matter of minutes
But we get it: You want to do your research. It can feel hard to know if a high-yield savings account is for you. That's why we've gathered a handful of Business Insider's stories about high-yield savings accounts, to give you an idea what to expect, how people use them, and which ones to choose. The best high-yield savings accounts right now If you're ready to go ahead and pick a high-yield savings account, Business Insider compared dozens of offerings to figure out which accounts are the best. Each of the best high-yield savings accounts is free of monthly maintenance fees, FDIC-insured, and appropriate for modest and super savers alike. (If you want to cut right to the chase: Wealthfront is our pick for best overall account. While it's technically a cash account, it offers a relatively high interest rate with a user-friendly app, and you can open it with $1.) The only difference between regular and high-yield savings that matters is the one that earns you 20 times more on your money High-yield savings accounts and standard savings accounts are more similar than they are different: They're both offered by banks, federally regulated, and liquid. The main difference is that high-yield savings accounts earn up to 20 times more interest, with interest rates generally between 1.5% and 2% — which means high-yield savings are almost always a better choice than traditional savings for money you'll need within the next few years. Here's how much your money could grow if you put $10, $100, or $1,000 a month in a high-yield savings account Not convinced a 2% interest rate is all that impactful? We've done the math for you. Find out how a $10 initial deposit could grow at a 1.75% interest rate in a high-yield savings account if you contribute an additional $10, $100, or $1,000 a month. 4 reasons to open a high-yield savings account while interest rates are down Despite interest rate cuts over the last few months, a high-yield savings account will still help you earn 20 times or more on your money without risking it in the market and help you save for specific goals. It's always a good time to build a habit of saving, and when interest rates inevitably go back up, you'll earn even more. As long as you choose an account with no fees, low minimum balance requirements, and an APY that's higher than a traditional savings or checking account, there are no downsides. I built my emergency fund $100 at a time, but I didn't make real progress until I opened a high-yield savings account When Business Insider's Tanza Loudenback was struggling to build up an emergency fund a few years ago, she opened a high-yield savings account at Ally (also a favorite among the financial planners we surveyed) and kept her checking account at a different bank. The high APY combined with regular automatic deposits — starting with $100 per paycheck and moving up to $200 — helped her reach her goal that much sooner.
After switching to a high-yield savings account to save for a home, I don't think I'll ever use a regular savings account again After finding out how disappointing interest on a typical savings account can be, Business Insider's Liz Knueven switched to a high-yield savings account to save for a down payment on her first home. After earning $80 in interest over four months, she writes, she couldn't imagine ever having a typical savings account again. I opened high-yield savings accounts at two different banks to start earning 20 times more on my money, and I can tell you they live up to the hype Business Insider contributor Elizabeth Aldrich writes that it took her a while to jump on the savings account train, but once she did, she pushed ahead full-throttle. She opened a high-yield savings account last year, and she's already earned $250 in interest in 2019. Her favorite things about high-yield savings accounts, she writes (apart from the high interest rates), are the fact that they're completely free and can be opened online within minutes.
See all of Business Insider's stories on high-yield savings accounts »
More savings and retirement coverage How to retire early How to save more money When to save money in a CD When to save money in high-yield savings Join the conversation about this story » NOW WATCH: Nintendo Switch is the fastest-selling console of the current generation — here's why Nintendo is dominating video games