What Is a High-Yield Savings Account? How It Works and When to Use One
What a high-yield savings account is, how its rates work, how it compares with regular savings, money market accounts and CDs, and what to check first.
Updated
Online Banks
Higher rates and fewer fees — with a few trade-offs to understand.
Advertiser disclosure: Fountain Finances may earn a commission when you apply through links marked “Affiliate link.” That never changes which products we include or how we describe them. Products without an affiliate relationship are listed on equal terms. How we make money.
How online banks work
Online banks operate primarily through websites and mobile apps rather than branches. Without the expense of a large branch network, many pass the savings to customers through higher savings rates, fewer fees and lower minimums. Account opening, deposits (by mobile check capture or transfer), bill pay and customer service all happen digitally or by phone.
Pros and cons
| Pros | Cons |
|---|---|
| Often higher APYs on savings and CDs | No or limited in-person service |
| Fewer monthly and minimum-balance fees | Cash deposits can be difficult |
| Strong mobile apps and fast account opening | External transfers can take 1–3 business days |
| Large fee-free ATM networks or fee reimbursements at some banks | Fewer services such as safe deposit boxes |
Confirm insurance before you deposit
Look for the bank’s legal name — which may differ from its brand name — and check it using the FDIC’s BankFind or the NCUA’s credit union locator. For fintech apps, read the disclosures explaining which partner bank holds deposits and how pass-through insurance applies.
A common setup
Many people keep a checking account at a local bank or credit union for cash and in-person needs, and hold savings at an online bank that pays a higher rate. Compare options on our high-yield savings, checking and CD comparisons.
Frequently asked questions
Are online banks safe?
Online banks that are FDIC members offer the same deposit insurance as traditional banks. Verify a bank’s charter and insurance status with the FDIC’s BankFind tool before opening an account.
What is the difference between an online bank and a fintech app?
An online bank holds its own bank charter. Many fintech apps are technology companies that partner with chartered banks to hold your deposits. Deposit insurance may apply at the partner bank, but only if certain conditions are met.
How do I deposit cash at an online bank?
Options vary: some online banks accept cash at partner ATMs or retail locations, while others do not accept cash at all. If you handle cash often, keep a local account or confirm the options first.
Part of our Banking & Savings hub and our complete personal finance guide. Read our editorial standards.
Online Banks guides
All guides →Checking vs. Savings Account: Differences and How to Use Both
Checking vs. savings accounts compared: how each works, interest, fees, access and insurance, plus a simple system for using both to manage money.
Updated
How Does a CD Work? Certificates of Deposit Explained
How certificates of deposit work: fixed rates and terms, early withdrawal penalties, maturity, CD ladders and how CDs compare with high-yield savings.
Updated