When saving for a rainy day or a major purchase like a home or car, you might consider opening a high-yield savings account (HYSA). These accounts operate almost identically to traditional savings accounts, except for one major detail: the interest they earn.
Many high-yield savings accounts earn 10 times or more interest than a typical savings account. And while opening a high-interest savings account should feel familiar to you if you've opened a savings or checking account before, informing yourself can make the process go even more smoothly. Here are the types of institutions that offer HYSAs — and what you'll need to open an account and start earning on your savings.
Compare your options
The easiest way to open a high-yield savings account may be to open one where you have an existing bank account. However, that may not be the best option. When it comes to HYSAs, online banks and neobanks often offer much higher interest rates than brick-and-mortar banks or credit unions.
As a starting point, check your options with the bank or credit union where you already have an account. Then you can broaden your search to outside banks, most of which post details about current high-yield offerings on their websites.
Consider these features when comparing and contrasting HYSAs:
Annual percentage yield (APY): The APY shows the total return you'll get from an HYSA in a year and is usually the most important feature of a high-yield savings account. APY is the yearly rate of return on your money — the money you deposit into your account and the interest it earns — and includes compound interest. The interest can compound daily, monthly, or even yearly.
Note that the APY on your account can change and usually fluctuates with prevailing interest rates. Those rates depend on the economy's health and the actions of the US central bank, the Federal Reserve. When the economy is more robust, the Federal Reserve raises interest rates, when it's weaker, the Fed lowers rates, and banks often follow suit. You may also earn a higher APY with larger deposits.
Fees: Some banks charge fees to open an HYSA or maintain your account monthly. Be sure to ask a bank representative to read the fine print on your account terms to determine the fees.
Minimum opening deposit: Some banks require a minimum deposit to open an HYSA. This deposit amount could be as low as $25 or as high as $5,000.
Once you've chosen a financial institution where you want to open a high-yield savings account, you're ready to start the application process.
Round up your documents
Just like opening a traditional savings or checking account, you'll need to provide the bank with certain personal and financial information.
Most require you to provide the following to open an HYSA:
A government ID with your legal name and birth date — such as a driver's license, a state ID, a military ID, a passport, a permanent residency card, or a consular ID
Your Social Security number or Individual Taxpayer Identification Number (ITIN)
Your address (including a previous address if you've lived in your home for a shorter period)
Your home phone number
An email address
Debit card information, a money order, or the routing and account numbers for a separate bank account if you need a deposit to open the account
Fill out the application
Depending on the bank or your personal preference, you may be able to fill out the application online, in person, or by phone. If you'd prefer to open the account in person, you can make an appointment online or by phone at a local bank branch, if one is available.
To fill out the application online, you'll need to create a login and then provide information such as your name, birth date, Social Security number, address, phone number, email address, citizenship status, employment status, and potentially the name of your employer.
In some cases, you may have to fax or email additional information, such as a copy of your driver's license. In addition, if the bank has a physical location, you might have to come into the bank to finish opening your account. You might also have to fill out a bank signature card and mail it back before using the account.
Once you've completed the application and met the minimum deposit requirements, if any, the bank will activate your account. Some accounts are ready for use within minutes of approval, while others will take a day or even longer.
Fund your account
Some banks require you to make an initial deposit before you can start using your high-yield savings account. Typically, the easiest ways to fund your HYSA include depositing a check from a separate checking account using your bank's mobile app, mailing a check to the bank, or setting up a transfer from a separate savings or checking account. To set up a transfer, you'll need to provide the routing and account number of the account where you want to pull the money. You might also need to verify your login information to this outside account.
Set up online features
Once your account is approved — which you may learn about online, by email, or by mail — you can download your bank's mobile app and set up any additional online banking services. Those services can include:
Transfer accounts: If you haven't already, you may want to link external checking or savings accounts to your high-yield savings account and set up recurring transfers from that account. You should be able to add these accounts online by providing the routing and account numbers.
E-statements: If you don't want to receive paper statements mailed to your home, you can enroll through the bank's website or app to receive online statements.
Alerts: You can set up account alerts — usually through email, text, or app notifications — to alert you when you make deposits, transfers, or your account balance changes.
Beneficiaries: If you didn't name a beneficiary when you applied for the account, it's a good idea to do so as soon as possible. You'll need to know your beneficiary's Social Security number to add them to the account. Many banks allow you to do this online, but for others, you'll have to call them.
Opening a high-yield savings account is relatively simple, and adding one to your portfolio is a good way to maximize your savings. If you want a safe place to put some extra cash and limit your exposure to riskier investments, a high-interest savings account is a good option to consider.
