{"id":14986,"date":"2026-01-22T09:39:00","date_gmt":"2026-01-22T15:39:00","guid":{"rendered":"https:\/\/www.discover.com\/online-banking\/banking-topics\/?p=14986"},"modified":"2026-02-18T09:46:01","modified_gmt":"2026-02-18T15:46:01","slug":"what-is-a-high-interest-rate-savings-account","status":"publish","type":"post","link":"https:\/\/www.discover.com\/online-banking\/banking-topics\/what-is-a-high-interest-rate-savings-account\/","title":{"rendered":"What is a high interest rate savings account?"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [{\n    \"@type\": \"Question\",\n    \"name\": \"What is a high-yield savings account?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"It\u2019s a bank account with a higher interest rate than the national average. High-yield savings accounts are commonly offered by online banks, traditional brick-and-mortar banks, and credit unions.\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"Why do banks offer high-yield savings accounts?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"High-yield savings accounts are often offered by online banks since they have less overhead than brick-and-mortar banks, says Chanelle Bessette, a banking expert at NerdWallet. That means they usually have lower costs and can pass along the resulting savings to consumers by offering higher interest rates.\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"Why open a high-yield savings account?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"Earn higher interest rates, Digitally access funds, Keep savings separate\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"How do high-yield savings accounts work?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"With a high-yield savings account, you earn a certain percentage of interest on your money, known as annual percentage yield (APY). The higher the APY, the more interest you\u2019ll receive. Banks typically pay out that interest monthly, Bessette says. \nHigh-yield savings accounts allow you to grow your money through compound interest, she adds. With compound interest, you earn interest on both your principal\u2014in other words, your bank balance\u2014and the interest you receive. For example, say you have $3,000 in a high-yield savings account with a 3% APY. After the first year, you\u2019ll receive $90 in interest calculated on that $3,000 balance. In the second year, though, your interest payment will be based on your new balance: $3,090 (assuming you didn\u2019t deposit or withdraw any funds). That means you\u2019ll get $92.70 in interest for that second year, to bring your balance to $3,182.70. As you can see, the interest adds up over time, and the effect of compounding amplifies as your balance gets larger.\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"Are high-yield savings accounts FDIC-insured?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"The Federal Deposit Insurance Corporation (FDIC), a government agency, insures depositors to at least $250,000 or the maximum allowed by law if an FDIC-insured bank fails. Since this insurance protects your money, you may be wondering, are high-yield savings accounts FDIC-insured? The good news: Typically, high-yield savings accounts are FDIC-insured, but it depends on your bank, Bessette says. (Discover is an FDIC member.)\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"Are high-yield savings accounts safe?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"If your high-yield savings account is held at an FDIC-insured bank, you can have confidence that it\u2019s safe from the bank\u2019s side. But the safety of your account isn\u2019t just in the hands of the bank. \u201cUltimately, a lot of banking safety comes down to what you as a consumer are doing to protect your money,\u201d Bessette says. To protect your bank account from fraud, make sure you protect your passwords, avoid clicking on suspicious links, and keep from logging into your bank account on open Wi-Fi networks.\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"Are high-yield savings accounts worth it?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"If you find a savings account with a high interest rate, it\u2019s a great tool to have in your financial toolbox. It typically costs nothing to open a high-yield savings account, and the money you put into it will only grow over time. High-yield savings accounts are \u201cthe best option for immediately accessible money that, ideally, you\u2019re earning a good interest rate on,\u201d Bessette says.\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"How do I pick a high-yield savings account?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"When it comes to how to pick a high-yield savings account, interest rates are a key consideration. Bessette recommends comparing the rates offered by different banks, as well as comparing features like if a bank offers an easy-to-use mobile app and 24\/7 customer service. \u201cIt's a consumer's market right now,\u201d Bessette says. \u201cThere are so many options, so comparison shopping is really important, as is making sure that you're getting the best deal for you and that you're working with a bank that meets your needs.\u201d\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"How can I open a high-yield savings account online?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"1. Fill out the application, 2. Set up login information, 3. Set up login information\"\n    }\n  }]\n}\n<\/script>\n\n\n\n<p>There are plenty of places to put your savings: in an envelope, in the stock market, in a <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/should-i-choose-a-checking-account-or-savings-account\/\" target=\"_blank\" rel=\"noreferrer noopener\">checking or savings account<\/a>. Each of these options has its pros and cons.&nbsp;<\/p>\n\n\n\n<p>So just what is a high interest rate savings account? It\u2019s a bank account with a higher interest rate than the national average. High interest rate savings accounts are commonly offered by online banks, traditional brick-and-mortar banks, and credit unions.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Sound like a savings option that could work for you? Read on to learn more about high interest rate savings accounts.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-do-banks-offer-high-interest-rate-savings-accounts\">Why do banks offer high interest rate savings accounts?<\/h2>\n\n\n\n<p>High interest rate savings accounts are often offered by online banks since they have less overhead than brick-and-mortar banks, says Chanelle Bessette, a personal finance writer at NerdWallet. That means they usually have lower costs and can pass along the resulting savings to consumers by offering higher interest rates.&nbsp;<\/p>\n\n\n\n<p>\u201cUltimately what they&#8217;re trying to do is be competitive, keep customer retention going, and make sure that they&#8217;re creating the environment that customers want from their bank,\u201d says Bessette. When a bank has more customers, it has more access to funds, making it easier to offer loans that then produce income for the bank, she adds.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-open-a-high-interest-rate-savings-account\">Why open a high interest rate savings account?<\/h2>\n\n\n\n<p>Wondering why you\u2019d want to open a high interest rate savings account? Here are a few reasons:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Earn higher interest rates<\/h3>\n\n\n\n<p>High interest rate savings accounts typically offer higher interest rates than you\u2019d get if you kept your money in a regular savings account.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1100\" height=\"451\" src=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/Hitting-the-Books-Again-Heres-How-to-Financially-Prepare-for-Grad-School_7_03-INARTICLE.jpg\" alt=\"A man and woman sit at a kitchen counter with arms crossed, looking at paperwork.\" class=\"wp-image-22963\" srcset=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/Hitting-the-Books-Again-Heres-How-to-Financially-Prepare-for-Grad-School_7_03-INARTICLE.jpg 1100w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/Hitting-the-Books-Again-Heres-How-to-Financially-Prepare-for-Grad-School_7_03-INARTICLE-300x123.jpg 300w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/Hitting-the-Books-Again-Heres-How-to-Financially-Prepare-for-Grad-School_7_03-INARTICLE-780x320.jpg 780w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/Hitting-the-Books-Again-Heres-How-to-Financially-Prepare-for-Grad-School_7_03-INARTICLE-768x315.jpg 768w\" sizes=\"auto, (max-width: 1100px) 100vw, 1100px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Digitally access funds<\/h3>\n\n\n\n<p>Among the many <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/why-open-a-savings-account\/\" target=\"_blank\" rel=\"noreferrer noopener\">reasons to open a savings account<\/a>, another benefit is having access to your funds digitally. It\u2019s easier to send and receive money, create multiple savings accounts for specific savings goals, and take advantage of the budgeting and <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/how-to-get-the-most-out-of-mobile-banking\/\" target=\"_blank\" rel=\"noreferrer noopener\">mobile banking features<\/a> your bank offers.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Keep savings separate<\/h3>\n\n\n\n<p>It\u2019s a savvy move to keep your savings separate from the money you use for everyday expenses, Bessette says. Separating the funds can keep your savings goals on track, since it\u2019s easier to set savings goals and see your progress when the money is in a separate account. Having <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/multiple-savings-accounts-save-more\/\" target=\"_blank\" rel=\"noreferrer noopener\">multiple savings accounts<\/a> can also help you track your progress toward different savings goals.&nbsp;<\/p>\n\n\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-do-high-interest-rate-savings-accounts-work\">How do high interest rate savings accounts work?<\/h2>\n\n\n\n<p>With a high interest rate savings account, you earn a certain percentage of interest on your money, known as annual percentage yield (APY). The higher the APY, the more interest you\u2019ll receive. Banks typically pay out that interest monthly, Bessette says.&nbsp;<\/p>\n\n\n\n<p>High interest rate savings accounts allow you to grow your money through compound interest, she adds. With compound interest, you earn interest on both your principal\u2014in other words, your bank balance\u2014and the interest you receive. For example, say you have $3,000 in a high interest rate savings account with a 3% APY. After the first year, you\u2019ll receive $90 in interest calculated on that $3,000 balance. In the second year, though, your interest payment will be based on your new balance: $3,090 (assuming you didn\u2019t deposit or withdraw any funds). That means you\u2019ll get $92.70 in interest for that second year, to bring your balance to $3,182.70. As you can see, the interest adds up over time, and the effect of compounding amplifies as your balance gets larger.&nbsp;<\/p>\n\n\n\n<p>Your bank sets its compounding schedule\u2014it can be daily, monthly, quarterly, or annually. The more often the interest compounds, the more interest you earn.<\/p>\n\n\n\n<\/div>\n\n\n<div class=\"mx-auto block-quote block-quote--5back bg-fixed bg-center bg-no-repeat bg-cover z-0\">\n    <div class=\"block-quote__glow\"><\/div>\n    <blockquote class=\"post--constrain-large\">\n        <p>\u201c[High interest rate savings accounts are] the best option for immediately accessible money that, ideally, you\u2019re earning a good interest rate on.\u201d<\/p>\n                    <footer class=\"block-quote__source\">Chanelle Bessette, NerdWallet<\/footer>\n            <\/blockquote>\n<\/div>\n\n\n    <div class=\"post__content\">\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-are-high-interest-rate-savings-accounts-fdic-insured\">Are high interest rate savings accounts FDIC-insured?<\/h2>\n\n\n\n<p>The <a href=\"https:\/\/www.fdic.gov\/\" target=\"_blank\" rel=\"noreferrer noopener\">Federal Deposit Insurance Corporation<\/a> (FDIC), a government agency, insures depositors up to $250,000 per depositor, per account ownership category, in the unlikely event of a bank failure. Since this insurance protects your money, you may be wondering, are high interest rate savings accounts FDIC-insured? The good news: Typically, high interest rate savings accounts are FDIC-insured, but it depends on your bank, Bessette says.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-are-high-interest-rate-savings-accounts-safe\">Are high interest rate savings accounts safe?<\/h2>\n\n\n\n<p>If your high interest rate savings account is held at an FDIC-insured bank, you can have confidence that it\u2019s safe. According to Bessette, one of the best things you can do as a consumer to protect your money is to ensure your bank is FDIC insured. Additionally, to <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/protect-your-bank-account\/\" target=\"_blank\" rel=\"noreferrer noopener\">protect your bank account from fraud<\/a>, make sure you protect your passwords, avoid clicking on suspicious links, and keep from logging into your bank account on open Wi-Fi networks.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-are-high-interest-rate-savings-accounts-worth-it\">Are high interest rate savings accounts worth it?<\/h2>\n\n\n\n<p>You have a lot of options for your money, so are high interest rate savings accounts worth it? If you find a savings account with a high interest rate, it\u2019s a great tool to have in your financial toolbox. It typically costs nothing to open a high interest rate savings account, and the money you put into it will only grow over time. High interest rate savings accounts are \u201cthe best option for immediately accessible money that, ideally, you\u2019re earning a good interest rate on,\u201d Bessette says.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-do-i-pick-a-high-interest-rate-savings-account\">How do I pick a high interest rate savings account?<\/h2>\n\n\n\n<p>When it comes to how to pick a high interest rate savings account, interest rates are a key consideration. Bessette recommends comparing the rates offered by different banks, as well as comparing features like if a bank offers an easy-to-use mobile app and real customer service from real people. \u201cIt&#8217;s a consumer&#8217;s market right now,\u201d Bessette says. \u201cThere are so many options, so comparison shopping is really important, as is making sure that you&#8217;re getting the best deal for you and that you&#8217;re working with a bank that meets your needs.\u201d&nbsp;<\/p>\n\n\n\n<p>You should also research a bank\u2019s monthly fees, including any minimum balance requirements or overdraft fees, when trying to pick a high interest rate savings account. Finally, do some independent research on the bank through external review sites to make sure the bank is FDIC insured.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-much-should-i-put-in-a-high-interest-rate-savings-account\">How much should I put in a high interest rate savings account?<\/h2>\n\n\n\n<p>There\u2019s no one-size-fits-all answer for how much to put in a high interest rate savings account. It depends on what you\u2019re saving for and your financial situation.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"2560\" height=\"1056\" src=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855.jpg\" alt=\"A family of four smiles while sitting in a hammock, with grass in the background.\" class=\"wp-image-22965\" srcset=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855.jpg 2560w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855-300x124.jpg 300w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855-780x322.jpg 780w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855-768x317.jpg 768w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855-1536x634.jpg 1536w, https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2026\/01\/High-yield-savings-account_2-InArticle-scaled-e1678207593855-2048x845.jpg 2048w\" sizes=\"auto, (max-width: 2560px) 100vw, 2560px\" \/><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>For example, a high interest rate savings account can be an ideal place to stash your <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/why-you-need-an-emergency-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">emergency fund<\/a>. As you <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/how-to-manage-your-first-salary\/\" target=\"_blank\" rel=\"noreferrer noopener\">manage your salary<\/a> and grow your savings, you should get a good idea of how big an emergency fund you need. The general rule is three to six months of expenses, but \u201cit really depends on what you\u2019re comfortable with and what your spending habits are like,\u201d Bessette says.&nbsp;<\/p>\n\n\n\n<p>You can also use your high interest rate savings account for specific financial goals, which might include saving for a trip, car, or down payment on a house. \u201cThose kinds of goals are going to be very specific to you,\u201d Bessette says. \u201cBut savings accounts are a really great place to put your money, no matter what amount you\u2019re thinking about.\u201d&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-can-i-open-a-high-interest-rate-savings-account-online\">How can I open a high interest rate savings account online?<\/h2>\n\n\n\n<p>Now that we\u2019ve discussed what a high interest rate savings account is, you may be wondering how to open a high interest rate savings account. Luckily, it\u2019s a pretty straightforward process, and you can&nbsp;<a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/how-to-open-an-online-savings-account\/\" target=\"_blank\" rel=\"noreferrer noopener\">open a high interest rate savings account online<\/a> in just a few steps. These are the big ones:&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Fill out the application<\/h3>\n\n\n\n<p>As you apply online to open your account, you may need to provide personal identifying and contact information, as well as proof of identity.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Set up login information<\/h3>\n\n\n\n<p>Create a username and password to access your account. To keep your personal information secure, choose a password with a combination of letters, numbers, and special characters that you don\u2019t use for other accounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Fund the account<\/h3>\n\n\n\n<p>If the account has a minimum deposit requirement, you\u2019ll need to deposit at least that much money. Depending on your bank\u2019s requirements, you may be able to do this by initiating a bank transfer, depositing a check, or using a wire transfer.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-ready-to-grow-your-money-with-a-high-interest-rate-savings-account\">Ready to grow your money with a high interest rate savings account?<\/h2>\n\n\n\n<p>A high interest rate savings account keeps your money safe, easily accessible, and earning interest. And as <a href=\"https:\/\/www.discover.com\/online-banking\/banking-topics\/federal-reserve-interest-rate-increase-savings-account\/\" target=\"_blank\" rel=\"noreferrer noopener\">interest rates rise<\/a>, this type of account may hedge against inflation. Bessette recommends that people keep high interest rate savings accounts as a way to earn money even when the economy is not as kind to their budgets.<\/p>\n\n\n\n<p>If your money is sitting in your checking account or a savings account with a low annual percentage yield (APY), you may want to consider moving your savings into a high interest rate savings account, where it can grow with a higher APY.&nbsp;<\/p>\n\n\n\n<p class=\"disclaimer\">Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.<\/p>\n\n\n\n<p class=\"disclaimer\">The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.<\/p>\n\n\n\n<p class=\"disclaimer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Want to learn about high interest rate savings accounts? Get started here. <\/p>\n","protected":false},"author":15,"featured_media":15093,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[76,77],"tags":[117,111,131,72,130,32,128,39],"class_list":["post-14986","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking101","category-online-savings-account","tag-compound-interest","tag-financial-plan","tag-high-interest-rate-accounts","tag-interest-rates","tag-long-term-saving","tag-online-savings-account","tag-opening-an-account","tag-saving"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/14986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/comments?post=14986"}],"version-history":[{"count":26,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/14986\/revisions"}],"predecessor-version":[{"id":22966,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/14986\/revisions\/22966"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media\/15093"}],"wp:attachment":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media?parent=14986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/categories?post=14986"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/tags?post=14986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}