Both keep your money safe and accessible. The main difference is how much interest your balance earns, and the trade-offs that can come with it.
Key takeaways
- High-yield savings accounts usually pay more interest than traditional savings accounts, and are often offered by online banks.
- Savings account rates are usually variable and can change at any time.
- Check that the bank is FDIC-insured, or the credit union NCUA-insured, and review fees and transfer times.
- A regular savings account at your main bank can be more convenient for instant transfers.
A savings account is the simplest place to keep money you’ll need in the next few years. But savings accounts aren’t all alike. High-yield accounts can pay noticeably more interest, while traditional accounts at your main bank can be more convenient.
Side by side
| Factor | High-yield savings | Regular savings |
|---|---|---|
| Interest | Usually higher | Often low |
| Where offered | Often online banks and some credit unions | Traditional banks and credit unions |
| Access | Online and app; transfers may take a day or more | Branch, ATM and instant transfers within the bank |
| Fees and minimums | Often low or none, but check | Varies; some charge monthly fees unless you meet requirements |
| Deposit insurance | FDIC or NCUA, if the institution is insured | FDIC or NCUA, if the institution is insured |
Understanding interest
- APY, or annual percentage yield, shows what you’d earn in a year, including compounding.
- Rates are usually variable, so an advertised rate can change after you open the account.
- Compare the details: the APY, any balance requirements and how often interest is paid.
Deposit insurance basics
Deposits at FDIC-insured banks are protected up to $250,000 per depositor, per insured bank, for each account ownership category. Credit unions insured by the NCUA provide equivalent coverage. You can check whether an institution is insured on the FDIC or NCUA website.
Be aware
Some financial apps aren’t banks themselves; they hold customer money through partner banks. Read how deposit insurance applies before moving your savings into an app.
How interest is paid
- Many banks calculate interest daily and add it to your account monthly, so your balance grows a little faster over time.
- Interest is credited to the account automatically; you don’t need to do anything.
- Interest you earn on savings is generally taxable, and your bank may send you a tax form showing how much you earned.
What to check before opening an account
- Monthly fees, and how to avoid them.
- The minimum balance needed to earn the advertised rate.
- Transfer limits, and how long transfers take.
- How easily the account links to your checking account.
Money tip
Some people keep a small savings account at their main bank for instant transfers, and a high-yield account for their emergency fund and longer-term savings.
Which is right for you?
- Want more interest on money you won’t touch often? A high-yield account.
- Need instant access through your main bank? A regular savings account.
- Saving for a fixed future date? Compare with a certificate of deposit.
Whatever you choose, keep your emergency fund in an insured account you can reach quickly, and automate your deposits so the balance keeps growing.
Common questions
What is APY?
Annual percentage yield is the interest you’d earn in a year, including the effect of compounding. It lets you compare savings accounts on equal terms.
Are high-yield savings accounts safe?
Accounts at FDIC-insured banks or NCUA-insured credit unions are protected up to the standard coverage limits. Check that the institution is insured before opening an account.
How fast can I get my money out?
Transfers from an online savings account to an account at another bank often take one to three business days. Transfers within the same bank are usually faster.
Can savings account rates change?
Yes. Most savings account rates are variable, so the bank can raise or lower them over time.
This article is for general information and education only and isn’t personal financial, tax or legal advice. Rates, fees and rules change, so check current details with the provider or an official source before making decisions.