What to Consider in a High-Yield Savings Account

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When you’re looking for a new high-yield savings account, there are several points you should consider closely along the way. By doing so, you can more effectively compare various offerings from different banks and credit unions, making it easier to choose an account that will meet your overall needs and allow you to avoid unnecessary hassles or costs.

Precisely which points matter may depend on how you plan to use your high-yield savings account. If you aren’t sure where to begin, here’s a closer look at what to consider in a high-yield savings account.


The annual percentage yield (APY) is the real rate of return associated with the account. Along with a general interest rate, it accounts for the impact of compound interest, showing how quickly your money can grow.

The national average APY (as of April 2023) is around 0.37%. Usually, high-yield savings accounts offer far higher rates when compared to the national average, though the exact APY can vary dramatically from one institution to the next. As a result, it’s wise to compare APYs when choosing a high-yield savings account.

Account Fees

Before you select a high-yield savings account, it’s critical to look at the associated fees. Some institutions charge monthly maintenance fees, either by default or if a specific triggering action occurs. Low-balance or minimum balance fees are also possible, as are excessive withdrawal fees.

Ideally, you want to look at the fee structure and either select a savings account that’s fee-free or where the conditions for avoiding fees are manageable.

Deposit Minimums and Maintenance

Some high-yield savings accounts do require an initial deposit to open the account, while others don’t. Additionally, you may or may not have ongoing balance requirements, such as ensuring that the daily balance during a period remains above a specific amount.

In some cases, APYs are also associated with balance tiers. With those, whether you get the best APY is based on staying above a particular balance threshold. Otherwise, your earnings potential declines.

Withdrawal Options

Many high-yield savings accounts come with withdrawal limits due to Regulation D. As a result, making more than six withdrawals per month from those accounts can trigger penalties, such as excessive withdrawal fees. In some cases, it may even prompt an institution to convert an account to a checking account or close it entirely.

Before opening a high-yield savings account, look at any withdrawal limits and associated penalties for excessive withdrawals. That way, you can make sure that you’re comfortable with the restrictions – if there are any – before you sign up.

Compounding Rates

When you’re looking at high-yield savings accounts, the compounding frequency is a critical factor. Most banks use either daily or monthly compounding, though some may rely on quarterly compounding.

Generally, the more frequently compounding occurs, the more your money earns. As a result, finding a high-yield savings account with daily compounding is financially wise, suggesting it doesn’t have fees or other drawbacks that offset the benefit.