It doesn’t matter if you’re working class or very wealthy — everyone needs an emergency fund, and there’s no better place to park the money you’re saving than in a high-interest savings account.

High-yield savings accounts are used for emergency funds and storing savings for future events. They pay a yield that’s higher than average, allowing savers to reach their financial goals faster. CDs are deposit accounts that tend to pay higher yields than traditional savings and money market accounts.

The average savings account pays 0.08 percent annual percentage yield (APY). Many of the country’s biggest banks pay less than that.

Sick of earning a yield around that average? Consider making a change and you’ll find yields about seven times higher at some online banks. Compare rates among today’s best widely available, high-interest savings accounts to find the right account for you.

• Best Savings Account Rates
• What is a High-yield Savings Account?
• How can you Open a High-yield Savings Account?
• When should you use a savings account?
• What is the Difference Between a Checking and Savings Account?
• Is Money Safe in a Savings Account?
• Where are the Safe Places to Save Your Money?
• How much money should I keep in my Savings Account?
• Do you gain Money in a Savings Account?
• How To Use a Savings Account

Best Savings Account Rates

1. Citibank – 0.70% APY (only available in certain states/markets), $0 minimum opening deposit

The Citi Accelerate Savings account has a competitive APY in select markets. It’s not available in some larger states, such as California and New York. The savings account doesn’t require a minimum balance to open the account.

Read Also: Best Money Market Account Rates

There is a $4.50 monthly service fee if your savings account isn’t linked to a Citi checking account. You can avoid this fee by keeping an average monthly balance of at least $500 in your savings account, if it’s not linked to a Citi checking account.

There is a $10 monthly service fee if you have a checking and savings account linked and don’t meet the requirements to have the fee waived.

2. Vio Bank – 0.66% APY, $100 minimum opening deposit

Vio Bank, established in 2018, is the national online division of MidFirst Bank. MidFirst Bank has been an FDIC-insured bank since 1934 and was established in 1911. Vio Bank offers both a High-Yield Online Savings account and CDs.

Vio Bank’s High-Yield Online Savings account has one of the top yields around, and all balances receive this APY.

3. PNC Bank – 0.65% APY, $0 minimum opening deposit

PNC Bank has approximately 2,300 branches and 9,100 ATMs. Its corporate headquarters is located in Pittsburgh.

PNC Bank has been around for more than 160 years. PNC has branches across the mid-Atlantic, Midwest and Southeast.

The PNC High Yield Savings account is available in eligible markets. The account doesn’t require a minimum balance, so it’s an option if you’re just starting to save. The account also doesn’t have a monthly maintenance fee.

You’ll want to keep your PNC High Yield savings account open for at least 180 days. Closing it before this will result in a $25 fee.

4. Popular Direct – 0.65% APY, $5,000 minimum opening deposit

Popular Direct offers a savings account and term CDs. Both the Popular Direct savings account and its CDs are for established savers, since the Ultimate Savings account requires a $5,000 minimum deposit and its CDs have a $10,000 minimum deposit requirement.

All Popular Direct deposit accounts are opened through Popular Bank.

5. CIBC Bank – 0.62% APY, $1,000 minimum opening deposit

CIBC Bank USA, formerly The PrivateBank and Trust Company, was founded in 1991 and is based in Chicago. It was rebranded as CIBC Bank USA.

The Agility Savings Account requires $1,000 to open the account. But once the account is opened you don’t have to worry about maintenance fees or going below a certain balance. All balances $0.01 to $1,000,000 earn this APY. The account balance can’t exceed $1,000,000.

6. Salem Five Direct – 0.61% APY, $100 minimum opening deposit

Salem Five Direct is an online division of Salem Five. Salem Five was founded in 1855 in Salem, Massachusetts.

Salem Five Direct customers with the eOne Savings account earn a competitive yield on all balances up to $1,000,000.

Salem Five Direct customers can conduct a transaction at a Salem Five branch, but it will cost you $9.95. Residents of all 50 states can open a Salem Five Direct account.

7. Ally Bank – 0.60% APY, $0 minimum opening deposit

Ally Bank started in 2004 and is headquartered in Sandy, Utah. In 2009, GMAC Bank was transformed into Ally Bank.

Around 8.5 million people are Ally customers, according to its website. This includes banking, auto loans, investing and other financial services.

Ally Bank also offers a checking account, a money market account, term CDs, a no-penalty CD and two terms of a Raise Your Rate CD.

8. American Express National Bank – 0.60% APY, $0 minimum opening deposit

American Express is well-known for its credit cards and it also has an online bank. It offers both a savings account and CDs.

It also doesn’t require a minimum balance, so it may be a good fit for new and experienced savers.

9. Live Oak Bank – 0.60% APY, $0 minimum opening deposit

Live Oak Bank was founded in 2008. The online bank offers a competitive yield on its savings account. Like most online banks, Live Oak Bank’s Online Savings account doesn’t have a monthly service fee. It also doesn’t require you to keep a minimum balance.

In addition to its savings account, Live Oak Bank also offers seven terms of CDs. Live Oak Bank has its headquarters in Wilmington, North Carolina.

10. Synchrony Bank –  0.60% APY, $0 minimum opening deposit

Synchrony Bank’s High Yield Savings account doesn’t require a minimum balance and all balance tiers earn the same competitive yield.

Synchrony Bank also has a money market account and it offers many CDs to choose from. It offers 12 CD terms, with terms ranging from three months to five years.

11. Pentagon Federal Credit Union – 0.60% APY, $5 minimum opening deposit

Pentagon Federal Credit Union (PenFed) has a Premium Online Savings account that offers a competitive yield. You only need $5 to open the account.

PenFed has been around since 1935 and it has more than 2.1 million members. Members of the military from any branch, and Department of Defense and Department of Homeland Security employees, can join PenFed. Besides military affiliation, you may be able to join PenFed through your employment or through an association membership.

12. Comenity Direct – 0.60% APY, $100 minimum opening deposit

Comenity Direct is an online bank that has both a high-yield savings account and CDs.

What is a High-yield Savings Account?

High-yield savings accounts are a type of deposit account that can be found at both online and brick-and-mortar institutions. These financial tools typically pay a higher interest rate than traditional savings accounts and almost always offer better returns than traditional checking accounts.

But it’s not just higher interest rates that set high-yield savings accounts apart from other savings products.

Here are just a couple of the biggest financial benefits of high-yield savings accounts:

• Higher APYs: High-yield savings accounts generally offer significantly higher interest rates than traditional savings products. That means you can earn more on your money and meet your savings goals faster.
• No or low fees: High-yield savings accounts tend to come with no monthly fees and low fees for things like having non-sufficient funds. That’s especially so with high-yield savings accounts found at online banks.

How can you Open a High-yield Savings Account?

Whether you want to build your emergency fund or save for a vacation or something else, a high-yield savings account can help you reach your goals. Opening a high-yield savings account is relatively simple, too. Here’s what you’ll need to do:

1. Shop around– High-yield savings accounts are offered by online banks, traditional banks with physical locations, and credit unions. The most important part of the process is to shop around to find the best high-yield savings account with the features you want (like a well-reviewed mobile app or no-fee account).

You’ll likely find higher APY offerings at online institutions because they don’t have as much overhead to support and pass the savings along to savers.

As you consider your options, think beyond APY, too. Compare the rates, fees and services offered to find the right fit for you.

2. Fill out an application– Once you’ve chosen a high-yield savings account, you’ll need to fill out an application. It might sound like an inconvenience. But it should only take a few minutes. The bank or credit union will likely ask for personal information, including your driver’s license number, Social Security number, mailing address, and date of birth.

In many cases, you’ll be able to fill out the application online.

3. Fund your account– Once you’ve been approved, it’s time to fund your account. You have a few options. You can fund your account by linking a checking account to your new savings account and transfer money from checking to savings. Some banks will also allow you to snap a picture of a check and make a mobile deposit to your new account. Depending on the bank, you might also be able to fund your new savings account with cash, through a wire transfer or by mailing in a check.

You’ll want to make sure you deposit enough money into the account to meet the minimum deposit requirement. The bank could charge you a maintenance fee or slap you with a lower than expected interest rate until you meet the minimum balance required.

When should you use a savings account?

A savings account is an ideal place for an emergency fund, but you can use it to save for any financial goal. This may include saving money for a down payment on a house, a vacation or cash for retirement.

Here are some instances when you may want to consider opening a new savings account:

• You need a place to stash cash for your emergency fund.
• You’re saving for a specific financial goal.
• You’d like to earn a higher APY on your savings.
• You’re seeking an account with some liquidity.
• You’re currently earning no or low interest on your current savings account.

Nearly everyone should have some sort of emergency fund and additional savings. You may even want to open separate savings accounts for your different goals. This way you know that money meant for one goal isn’t being used on something else.

Of course, it’s smart to deposit some of your excess money into a savings account, but not necessarily all of it. Reserving some cash for other types of investments and accounts is a wise move.

Your savings account should be a part of a diverse portfolio that also includes CDs for longer-term funds needed in five years or less, as well as investments like stocks to build your retirement nest egg.

As a general rule, savings accounts are for money that you may need in the short term and that you don’t want to expose to any risk that could cause you to lose any principal. CDs are generally better-suited for money that you don’t need to touch for one, three or five years. That’s because CDs generally have early withdrawal penalties if you need to access your funds before the CD term ends.

Some of the best investments — those that offer the highest returns like stocks — are more volatile and don’t have the low-risk profile that a savings account at a bank or credit union offers. But you may earn a higher return on your investment for taking on more risk.

But keep in mind that investing in dividend-paying stocks or below-investment grade bonds, for example, is not as safe and stable as a savings account. Most savings accounts have variable APYs, but these yields usually don’t fluctuate much.

You should also keep a little extra money in your checking account, so that you don’t accidentally overdraft your account. But after creating that cushion, put the rest of your cash earmarked for safety in a savings account.

Savings accounts aren’t for everyone. For example, a savings account is not worth it for someone who can’t keep the minimum balance in the account – especially if that means incurring a fee. Fortunately, it’s possible to find savings accounts without a minimum balance, making it easy to find a savings account that fits your circumstances.

Uses for a savings account

For more information, Bankrate’s experts have compiled the following reasons for opening a savings account.

• Saving for a child’s future education: Saving for college is one of the biggest expenses a parent faces. Saving for students should be a marathon, not a sprint.
• Saving for retirement: A savings account is one of the vehicles that should be used to prepare for retirement. It should be a part of your retirement plan.
• Other short-, mid-and long-term goals: Different savings circumstances are going to require different savings plans.
• Build emergency savings: It’s critical to have an emergency savings account. This account should be able to cover at least six months’ worth of expenses.
• Being prepared is a top reason to save: There are many reasons that you need to save. The most important is because you never know what the future holds.

What is the Difference Between a Checking and Savings Account?

Checking and savings accounts serve different roles.

Generally, checking accounts are used for your ongoing cash flow needs, as they allow you to make as many transactions as you would like. A checking account is typically where your paycheck is deposited and where your money to pay bills is kept. However, they often come with a low APY, if they carry an APY at all.

Savings accounts, on the other hand, are meant for stashing cash. Their liquidity is more limited, but they typically carry a higher APY.

There are, of course, exceptions to those generalities. Some checking accounts offer higher APYs than high-yield savings accounts. But checking accounts that offer higher APYs usually come with stricter rules to earn the interest rate, such as balance caps or transaction minimums.

Here are some of the biggest differences between checking and savings accounts:

• Purpose: Checking accounts are meant to be transactional — you can frequently take out money with few restrictions. Savings accounts aren’t as liquid — they are meant to house your cash for longer periods of time.
• Fees: Though there are exceptions, checking accounts often carry fees for services and slip-ups, such as maintaining too low of a balance or spending more than what’s in the account. Savings accounts typically charge very few fees, if any.
• Interest: Many traditional checking accounts don’t pay interest. Savings accounts do pay interest, but the yields might not be as robust as those found on CDs or in the bond market or returns you might enjoy by investing in riskier assets like stocks

It’s a good idea to have both a checking account and a savings account.

Checking accounts and savings accounts both play an important role in your financial life. Remember, a checking account is a transactional account mainly for writing checks, accessing your money and paying bills. A savings account is more for accumulating money and earning interest.

Is Money Safe in a Savings Account?

Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for bank accounts or the National Credit Union Administration (NCUA) for credit union accounts.

Deposit insurance covers $250,000 per depositor, per institution, and per account ownership category. As a result, most people don’t have to worry about losing their deposits if their bank or credit union becomes insolvent.

If you’ve come into some extra money through an inheritance, a bonus at work, or made a profit selling your house, perhaps you are considering other safe options for stashing your cash, in addition to a savings account.

Where are the Safe Places to Save Your Money?

Both certificates of deposit (CDs) and U.S. government securities are relatively safe places to invest your money. Both of these options will offer you some return on your money, but if your first priority is keeping your money safe, you’ll likely want to prioritize a high degree of liquidity and relatively low fees above high returns.

Certificate of Deposit (CD)

Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance. The main difference between a savings account and a CD is that a CD requires you to lock up your investment for a specified period of time, from several months to several years.

CDs pay a slightly higher interest rate than savings accounts. Under typical market conditions, CDs with longer maturities pay interest at higher rates than CDs with shorter maturities. The catch is that if you want access to your money before the CD matures, you’ll pay a penalty. The penalty varies depending on the issuing institution’s policies but it is typically several months’ worth of interest.

One strategy to further grow your earnings is called CD laddering. With CD laddering, a person may choose to open several CDs with different maturities. This strategy may offer you greater flexibility and less risk than opening one CD (with one maturity date).

Having both short- and long-term CDs can also allow you to take advantage of higher interest rates without also taking on too much risk (while also having the flexibility of taking advantage of higher rates in the future).

U.S. Government Securities

The federal government offers three categories of fixed-income securities to consumers and investors. U.S. government securities–such as Treasury notes, bills, and bonds–have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Like CDs, Treasury securities typically pay interest at higher rates than savings accounts do, although it depends on the security’s duration.

U.S. Treasury Bills

U.S. Treasury bills, also referred to as T-bills, are federal, short-term debt obligations with a maturity of one year or less. The longer the maturity, the more interest the investor earns. Investors can purchase T-bills through the secondary market in a variety of different ways, such as through a broker or investment bank, or at auction on the TreasuryDirect.gov website.

U.S. Treasury Bonds

U.S. Treasury bonds also referred to as T-bonds, take the longest to mature of the three types of government-issued securities. They also pay the highest interest rates of the three types of government securities. They are offered to investors in a term of 30 years to maturity.

Investors can purchase T-bonds at monthly online auctions held directly by the U.S. Treasury; they are sold in multiples of $100. Purchasers of T-bonds receive a fixed-interest payment every six months.

U.S. Treasury Notes

U.S. Treasury notes, also referred to as T-notes, are similar to T-bonds. The difference is that T-notes are offered in a wide range of terms (from two years to no longer than 10 years). While T-notes do not generate as high of a yield as T-bonds, they also generate a payment for investors twice a year (or every six months).

For all U.S. government securities, if you sell a security before it matures, you’ll lose money, so it’s important for investors to consider their investing timelines carefully before buying.

How much money should I keep in my Savings Account?

Everybody has an opinion on how much cash you should keep in your bank account. The truth is, it depends on your financial situation. What you need to keep in the bank is the money for your regular bills, your discretionary spending, and the portion of your savings that constitutes your emergency fund.

Emergency money has been particularly necessary in the coronavirus crisis, so your sense of how much you should have within easy reach may have changed. Even if you have an emergency fund, use the lessons of this situation to rethink what feels comfortable and necessary going forward.

Everything starts with your budget. If you don’t budget correctly, you may not have anything to keep in your bank account. Don’t have a budget? Now’s the time to develop one—or refine the way you’ve planned up to now. Here are some thoughts on how to do it.

The 50/30/20 Rule

First, let’s look at the ever-popular 50/30/20 budget rule. Senator Elizabeth Warren introduced the rule in the book, All Your Worth: The Ultimate Lifetime Money Plan, which she co-authored with her daughter. Instead of trying to follow a complicated, crazy-number-of-lines budget, you can think of your money as sitting in three buckets.¹

Costs that Don’t Change (Fixed): 50%

It would be nice if you didn’t have monthly bills, but the electricity bill cometh, just like the water, internet, car, and mortgage (or rent) bills. Assuming you’ve evaluated how these costs fit into your budget and decided they are musts, there’s not much you can do other than pay them.

Fixed costs should eat up around 50% of your monthly budget.

Discretionary Money: 30%

This is the bucket where anything (within reason) goes. It’s your money to use on wants instead of needs.

Interestingly, most planners include food in this bucket because there’s so much choice in how you handle this expense: You could eat at a restaurant or eat at home, you could buy generic or name brand, or you could purchase a cheap can of soup or a bunch of organic ingredients and make your own.

This bucket also includes a movie, buying a new tablet, or contributing to charity. You decide. The general rule is 30% of your income, but many financial gurus will argue that 30% is much too high.

Financial Goals: 20%

If you’re not aggressively saving for the future—maybe funding an IRA, a 529 plan if you have kids, and, of course, contributing to a 401(k) or another retirement plan, if possible—you’re setting yourself up for hard times ahead. This is where the final 20% of your monthly income should go. This funding is essential for your future. Retirement funds like IRAs and Roth IRAs can be set up through most brokerages.

If you don’t have an emergency fund, most of this 20% should go first to creating one.

How Much Money Should I Keep in My Savings Account?

How much money you should keep in a savings account depends on your budget. Savings accounts are designed to receive deposits, rather than frequent withdrawals. In fact, you’re generally allowed no more than six withdrawals a month from a savings account. They provide you a place to put money that is separate from your everyday banking needs—such as building an emergency fund or achieving a big savings goal like a dream vacation.

How Much Money Should I Keep in My Checking Account?

Checking accounts are designed to handle many transactions, such as paying bills or withdrawing cash you need on hand for daily expenses. The amount of money in your checking account should be enough to pay your monthly bills, withdraw cash for other expenses, and so that you don’t get hit with overdraft fees.

It should also include a buffer. David Ramsey recommends that the amount of the buffer should make you feel comfortable, but also not be an amount that would tempt you to overspend.

Federal Reserve data from the 2018 Survey of Household Economics and Decision Making revealed that 40% of American’s said they would struggle to come up with $400 to pay for an unexpected expense. That doesn’t leave much room for saving.

Most financial gurus would probably agree that if you start saving something, that’s a great first step. Plan to raise that amount over time.

Do you gain Money in a Savings Account?

It may come as no surprise that a savings account is a good place to store your money. Savvy savers know that savings accounts tend to offer higher interest rates than checking accounts. This means that with a savings account, you’re earning more money with your money.

The interest rate determines how much money a bank pays you to keep your funds on deposit. However, Michael Griffin, a certified public accountant and finance professor at the University of Massachusetts Dartmouth, says you should use the annual percentage yield (APY) to compare savings accounts and other savings products.

“The simple way to look at the APY—it’s what you will get on your money,” Griffin says. Meaning, you can use the APY to determine how much you’ll actually earn in interest each year because the APY relies on two inputs: the interest rate and how often the interest compounds.

Both are important components of how interest works on a savings account because they impact how much money you’ll earn overtime. Your savings account interest could compound daily, monthly, quarterly or annually.

Suppose you deposit $5,000 into a savings account, don’t deposit or withdraw any more money and the interest rate doesn’t change. If the account has a 1.00% interest rate and the interest compounds annually—that is, the bank pays you interest on your balance once each year—you’ll earn $50 after the first year. The APY will also be 1.00% in this example because your interest didn’t compound multiple times during the year.

If a bank offers a 1.00% interest rate on a savings account, the rate of compounding could affect the APY and your earnings, although the differences may be minor.

“With interest rates so low,” Griffin says, “there is not a dramatic difference in relative small balances in a savings account because of different compounding scenarios.”

However, your earnings can increase over time, especially when the savings account offers a higher interest rate and APY, and you’re regularly depositing money into your account.

“When returns earn returns, your money can really start to grow,” Weston says. “Here’s an example of how compounding works: If I give you a penny every day and promise to double it, at the end of a month you would have (drumroll) over $10 million.”

You likely won’t come across Weston’s deal in the wild (one can dream, right?). But lucky for savers, many banks offers savings accounts with interest that compounds daily or monthly, rather than annually.

How To Use a Savings Account

If your savings account is at a bank other than where you do your primary checking, an important consideration is that moving your money between checking and savings will not be instantaneous.

Transfers between the two will be possible through electronic funds transfers, which can sometimes take place in one day but may take two to four days, depending on the bank and the time of day you initiate the transfer. So a little more advance planning will be necessary whenever you need to withdraw funds from savings.

Also, federal regulation had required all savings accounts to limit withdrawals to six per month. Due to the COVID-19 pandemic, an interim rule was placed that allows institutions to decide if they want to allow more than six transactions per month. While this rule applies to all banks, the fee they impose for excessive withdrawals varies by institution. So be sure you understand the possible fees and the account’s statement cycle.

Read Also: Does Opening a Check Account Affect Credit?

For deposits into your savings account at another bank, this is similarly possible via electronic funds transfer. But some banks will also offer a smartphone app that allows mobile check deposit or the use of an ATM card or mail-in envelopes for check deposits.

Lastly, all FDIC banks, whether brick-and-mortar or Internet-only and all NCUA credit unions, carry U.S. government-backed insurance on up to $250,000 of deposits per individual per institution. If your cash in the bank is well under $250,000, then you have nothing to worry about.

But if you hold more than that amount in the bank, you’ll want to take steps to split the deposits across multiple institutions and/or multiple individuals (such as a spouse) to make sure all of your deposits are insured.