Best High-Yield Savings Accounts Of February 2024: Up To 5 50%

The best savings accounts typically don’t charge monthly fees. You make your deposit and watch your balance grow as your money earns interest. To help find the best savings account for your financial goals, shop around and compare APYs and terms from a range of institutions. Keep in mind that some online banks may offer higher rates than brick-and-mortar banks or credit unions.

Therefore, the more you pay out in fees, the less you keep for your annual interest earnings for compounding. Bonds have more risk and take more research than bank deposit accounts. First, you must check how safe a bond is by checking the issuer’s compound interest savings account credit rating. If a bond issuer runs into financial trouble, it might not pay all the interest or even fail to pay you your deposit back. To stay safe, consider bonds from issuers like the U.S. government or very large, established companies.

Interest payouts on high-yield savings accounts typically occur on a monthly basis but may depend on the financial institution. Interest rates vary based on several factors, but it’s not uncommon to find high-yield savings accounts that offer up to 4.00% APY or more. A high-yield savings account may earn as much as 10 times the national average rate from the FDIC on standard savings accounts. Our experts chose BMO Alto because it offers an APY surpassing 5% with no fees or minimum deposit requirements, and the account comes with unlimited transfers and withdrawals. This account is worthy of consideration if you’re looking for a free high-yield savings account that doesn’t penalize excess transactions. Plus, you don’t need to meet any requirements to earn BMO Alto’s 5.10% APY.

  1. Interest compounds daily and is credited to your account monthly.
  2. Of course, there is the risk to consider when investing money—some years, the stock market produces negative returns.
  3. We may receive payment from our affiliates for featured placement of their products or services.
  4. If you’re over the threshold, the entire balance is included in the calculations.

If your bank or credit union fails and that institution is insured, then you can’t lose money in savings up to the allowed limits. Given the rarity of bank failures, there’s very little risk of ever losing money. At a brick-and-mortar bank, you’ll often find savings rates closer to the national average, which is currently 0.47%. The rate at which your interest is compounded can affect how much interest you pay on a loan or credit card as well.

Compound Interest Investments

You could open a compound interest account with a bank, or you could also open a compound interest account with an investment broker. The interest works
in your favor, and you can access the funds in a pinch. We think it’s important for you to understand how we make money. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials. You add money, and the bank agrees to pay you a guaranteed interest rate for a set time.

Money Market Accounts

That’s why we provide features like your Approval Odds and savings estimates. The best way to earn compound interest is by saving or investing your money in a compound interest account or an account that earns compound interest. Assuming your APY remains the same, your savings would grow to $7,454.30, of which $6,500 is what you’ve contributed.

When the federal funds rate adjusts, banks typically follow suit and shift rates for savings and other deposit accounts accordingly. Rate hikes often translate to banks paying higher rates for deposit accounts. Throughout 2023, the national average savings rate steadily increased alongside the federal funds rate—from 0.33% in January to 0.46% in December, according to the FDIC. Compound interest is interest that you earn on past interest/investment earnings. For example, you put $10,000 in a savings account, paying 5% yearly.

Best for No Fees

Suppose you deposit $1,000 into a savings account with a 5% interest rate that compounds annually, and you want to calculate the balance in five years. The Citizens Access Savings account earns a spot on our experts’ list for having no fees or hidden costs. Any balance of at least $0.01 earns a generous 4.50% APY—with no catch.

Customers earn 5.10% APY, with no minimums or activity requirements. Customers need to make a deposit within 15 days of account opening to avoid closure. If you are looking for a fixed rate account, and can set aside funds for a specific time period without making a withdrawal, consider opening a certificate of deposit. The account has no monthly maintenance fees and there is no minimum amount requirement. If you want to earn more, you could put your money into riskier investments like dividend stocks, mutual funds, and REITs. If the investment does well over time, you earn more yearly with compound interest.

When you’re ready to invest for compound interest, you could start with your retirement plan at work if you have one. Investing could help you earn even more interest over time. While a savings account might offer a 4.50% APY, for instance, the stock market could return 10% in a year or more. Of course, there is the risk to consider when investing money—some years, the stock market produces negative returns. Earning a high interest rate is great, but you could end up handing some of your earnings back to the bank if you’re paying steep account fees. For longer-term savings, there are better places than savings accounts to store your money, including Roth or traditional IRAs and CDs.

You earn more because you’re making a return both on your initial deposit as well as past earnings. Over time, your savings grow, and you earn more and more money through compound interest. But if you’re investing in a mutual fund or setting money aside in a high-yield savings account, you’re not locked in for a specific time period. A money market account might be the best compound interest account for someone who wants to grow their savings steadily and securely while maintaining flexible access. Savings accounts, high-yield or otherwise, typically don’t include an ATM or debit card.

You should also keep an eye on market and economic changes. Rates change, which could increase or decrease how much interest you earn per year. You should also check regularly to see if you could get a better deal from another company. With bonds, generally, the riskier the investment, the higher the interest rate. High-yield bonds, or junk bonds, pay a higher face interest rate.

But if you want more bang for your buck, a CD is the better option, and they tend to offer much higher APYs than traditional savings accounts. Score an impressive APY and access your money anytime with a complimentary ATM card and free transfers between direct deposit accounts. After 10 years of compounding, you would have earned a total of $4,918 in interest. Check the account’s fee schedule to determine if you’ll be charged a monthly service fee or other fees.

When comparing savings accounts, there are a few important considerations to determine the best one for your needs. Wealthfront’s cash management account offers a high 5.00% APY, with no monthly fees, unlimited withdrawals and transfers. Western Alliance offers a strong 4.76% APY on its 12-month CD through Raisin.

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