To open a high-yield savings account: compare APYs at online banks and credit unions, gather your Social Security number and government-issued ID, complete the application online, fund the account with an initial deposit via ACH transfer, and verify your linked bank account.
High-yield savings accounts pay significantly more interest than standard savings accounts at traditional brick-and-mortar banks. Most are offered by online banks and credit unions that pass on lower overhead costs as higher APYs. Because these accounts are FDIC-insured up to $250,000 per depositor per institution (or NCUA-insured at credit unions), the primary variable is the interest rate â not safety.
APY (annual percentage yield) is the most important number to compare â it reflects compounding and lets you compare rates on an apples-to-apples basis. Beyond APY, check: minimum opening deposit, minimum balance to avoid fees, monthly maintenance fees (many online high-yield accounts have none), and whether the APY is a promotional rate that reverts after an introductory period. The CFPB's savings account explainer describes what to look for when evaluating deposit accounts.
Most high-yield savings accounts can be opened entirely online in 10â15 minutes. The institution will run a soft identity check (typically ChexSystems, not a credit pull) to verify your information. Once approved, link your existing bank account and initiate an ACH transfer to fund the new account. Verify any micro-deposits if required. The FDIC's guidance on deposit insurance confirms that individual accounts at FDIC-insured banks are protected up to $250,000.
High-yield savings APYs are variable â the bank can change the rate at any time. Review your rate quarterly and compare against alternatives. Many people keep their primary checking account at one institution and their high-yield savings at another, linking them for easy transfers. The CFPB notes that savings account interest is taxable income, reported on a 1099-INT if it exceeds $10 in a calendar year.