Bottom line: Open a high-yield savings account at an online bank rather than a traditional brick-and-mortar bank. Online banks pay several times more interest on the same deposit because they have lower overhead. The process takes 10 minutes, requires a government ID and Social Security number, and your money is FDIC-insured up to 250,000.
Quick answer
Open a high-yield savings account at an online bank — the process takes about 10 minutes, requires a government ID and Social Security number but no credit check, and your money is FDIC-insured up to $250,000 just like a traditional bank.
A savings account is a deposit account that holds money you are not using immediately while earning interest. The difference between a savings account at a traditional bank (often 0.01–0.1% APY) and a high-yield savings account at an online bank is enormous: the top account we track currently pays 4.20% APY, versus a national average of just 0.38%. On a $10,000 balance, that gap is several hundred dollars a year.
What to Look for in a Savings Account
APY (Annual Percentage Yield): The single most important number. APY reflects the actual annual return including compounding. Compare APYs directly, since they account for compounding frequency differences between banks. Once you have a rate in mind, run it through the compound interest calculator to see what your actual opening deposit turns into over one, five, and ten years.
Fees: Monthly maintenance fees, minimum balance fees, and excessive withdrawal fees all eat into your returns. The best high-yield savings accounts have no monthly fees and no minimum balance requirements.
FDIC insurance: All legitimate banks are FDIC-insured up to $250,000 per depositor per ownership category. Verify at BankFind.fdic.gov before opening. Credit unions have equivalent NCUA insurance.
Minimum opening deposit: Many online savings accounts require $0–100 to open. Traditional banks often require $25–100. Some high-yield accounts have higher minimums ($500+) for the advertised rate.
Withdrawal limits: Federal Regulation D previously limited savings accounts to six withdrawals per month; the Fed suspended this rule in 2020 but many banks still impose limits. Check for fees on excess withdrawals if you expect to move money frequently.
Access: Online banks have no physical branches. Most offer ATM fee reimbursement for debit withdrawals. Money moves in/out via ACH transfer to your linked checking account, typically 1–3 business days.
Where to open
- Choose
- An online bank
- Why
- No branch overhead means several times more interest
- Choose
- A traditional bank
- Why
- Convenience, but rates typically 0.01-0.5%
- Choose
- A credit union
- Why
- Often competitive rates and lower fees; membership varies
Where to Open a High-Yield Savings Account
Online banks and fintech institutions consistently offer the highest rates because they have lower operating costs than branch-based banks. Compare current savings rates before applying, since rates change frequently and the top accounts shift.
Traditional banks: JPMorgan Chase, Bank of America, and Wells Fargo savings accounts typically pay 0.01–0.5%, far below what online banks offer. The convenience of in-branch access rarely justifies the rate penalty for money sitting in savings.
Credit unions: Member-owned, often competitive rates and lower fees. Some credit unions offer high-yield savings products; membership requirements vary.
- Keep your primary checking account at a traditional bank for ATM access and branch convenience, but move your savings to an online bank for the rate. Link the two accounts via ACH: transfers take 1–3 business days, which provides a small friction benefit against impulse spending from savings.
- Promotional rates ('intro APY') are common among online banks: a high rate for 3–6 months that then drops to a lower ongoing rate. Read the fine print. The best accounts offer their advertised rate as an ongoing rate, not a teaser.
- You can have multiple savings accounts at multiple banks. Keeping separate savings accounts for different goals (emergency fund, vacation, car replacement) helps with mental accounting and prevents accidentally spending money designated for one purpose on another.
How to Open an Account: Step by Step
- Compare current rates on SwitchWize's savings comparison to identify your top two or three options
- Visit the bank's website directly. Do not use third-party links for security
- Click "Open Account" and select savings account type
- Provide personal information:
- Full legal name
- Social Security number (or ITIN)
- Date of birth
- Home address
- Email and phone number
- Verify identity: Upload a photo of your driver's license or passport
- Link a checking account for the opening deposit: Routing and account number of your existing checking account (ACH link)
- Fund the account: Transfer your opening deposit ($1–500 depending on the bank)
- Confirm the account: Most banks send a verification email; some make two small test deposits to verify the linked checking account
The process takes 10–15 minutes. The account is typically active within 1 business day.
What You Need to Apply
- Government-issued photo ID (driver's license or passport)
- Social Security number
- Routing and account number of a bank account to link for the initial deposit
- U.S. mailing address
- Email address and phone number
Most online savings accounts do not run a credit check, so low or no credit does not prevent you from opening a savings account.
Once your account is open, CD vs. savings account and money market account vs. savings account can help you decide where to keep money you will not need right away.
Sources
- FDIC BankFind — verify a bank's insurance status
- NCUA credit union locator — verify a credit union's share insurance
- SwitchWize methodology
What to do next
What to Do Now
Savings account APYs change frequently. Compare current rates before opening an account.
Frequently Asked Questions
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