Best High Interest Savings Accounts of 2022

Victoria Daniel

A savings account is a great way to save for emergencies, a big purchase, or help your money grow. We’ve evaluated savings account from perks, fees, minimum balances, accessibility to money, interest rates, and overall quality.  

Earn 17x higher than the national average

$0

Min. To Earn APY

1.20%

Est. APY

Overview

This savings builder account is unique where you need to deposit $100 a month to get the highest APY. If you don't deposit $100+ a month, then you need to maintain $25,000 in the account. If you don't do either, you won't receive the higher end APY.

What we like

  • No monthly fees
  • FDIC Insured
  • No minimum balance fees
  • Online banking

What we don't

  • Minimum opening deposit
  • No ATM access
  • Tiered APY

No monthly, minimum, and overdraft fees

$0

Min. To Earn APY

0.61%

Est. APY

Overview

This savings account will provide a flat APY regardless of your balance, and you won't worry about monthly fees. A great perk with this account is you can request a free ATM card.

What we like

  • No monthly fees
  • Interest compounded daily
  • Free ATM card

What we don't

  • No physical branch
  • No sign up bonus

Track your savings through online banking or the mobile app

$0

Min. To Earn APY

1.25%

Est. APY

Overview

Quontic Bank high yield savings account provides you with the opportunity to accrue interest at a rate 15x higher than the national average. Interest compounds daily and is paid into your account every month.

What we like

  • Mobile and online banking
  • Competitive interest rate
  • No monthly service fees
  • Interest compounded daily

What we don't

  • Limited access to physical branches
  • No sign up bonus
  • $100 minimum deposit requirement

Provides access to money management tools

$0

Min. To Earn APY

0.03%

Est. APY

Overview

First Citizen Bank savings account is an online account that charges no monthly fees, but you need to make a minimum deposit of $50 to open this account.

What we like

  • Mobile and online banking
  • Money management tools
  • No monthly service fees
  • ATM card available
  • FDIC Insured

What we don't

  • Limited no-fee withdrawals
  • High wire transfer fee

Why get a savings account?

A savings account typically offers higher interest rates than a checking account. The money in a savings account, while liquid, should be viewed as long-term or an emergency fund. Whereas in a checking account, the money is used consistently for daily purchases. Savings accounts may help with budgeting and wealth building.  

Anyone who has a lot of money sitting in a traditional savings account and is willing to do a bit of work to get a higher return on their money should consider a high interest savings account. These accounts tend to offer more than 10 times the interest rate of traditional savings accounts, which means your money will grow faster.

How often do savings account rates change?

The Federal Reserve is the central bank of the United States, and it determines, among other things, interest rates. When the Fed raises rates, banks, in turn, raise savings and CD rates.

The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System that meets eight times a year to determine monetary policy. The FOMC targets the federal funds rate and may also set targets for other interest rates, such as the discount rate.

Banks set their deposit account rates in response to overall market conditions, including interest rates set by the Federal Reserve. Those market conditions are affected by multiple factors, not just monetary policy. The nation’s largest banks generally pay less than smaller banks and credit unions on savings accounts and CDs.

How much should you be saving in a high interest savings account?

It’s difficult to know exactly how much money you should save in a high-interest savings account. Everyone’s situation is different, and there are many factors to consider before deciding exactly how much money you should save.

Your situation – and your savings goals – will dictate just how much you should be saving in an account like this. Here are some considerations:

  • How long you’ll need to save, and whether you have any other savings accounts or investments
  • The interest rate on the account, and whether the account has any fees or penalties for making withdrawals before a certain period of time
  • Whether you have an emergency fund set up, and whether it’s sufficient to cover your expenses for three to six months if needed

To get started, we suggest calculating how much money you need to save right now to meet all of your short-term goals (three years or less). Then consider how much more money you’ll need over the next few years to meet your goals.

When it comes to saving for long-term goals (10+ years), a high-interest savings account may not be best suited for this purpose. That’s because interest rates are currently low, and these accounts typically have a balance cap which means after you reach this limit, you won’t earn interests.

Is money safe in a savings account?

All financial institutions are required to be insured through FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration). These organizations do have limits and will insure up to $250,000 per account, per person, per bank.

Savings accounts can be either at a bank or a credit union, and they’re protected by the Federal Deposit Insurance Corporation (FDIC) by up to $250,000 per depositor.

The FDIC is an independent agency of the U.S. government that protects against the loss of deposits if an FDIC-insured bank or savings association fails.

This means that your money is safe in a savings account at an FDIC-insured bank, as long as you’re within the insurance limit. If you have more than $250,000 in savings accounts or want to protect other assets and investments, consider opening another account at a different institution so your money is spread out across multiple places and won’t exceed FDIC limits in any one place.

What monthly fees do savings account have?

Savings accounts may require minimum balances, or banks charge a maintenance fee. These fees are not usually high but are monthly and can add up quickly. Having a checking account and a direct deposit into savings each month usually waves these fees.

The fees that you need to watch out for are:

  • Out-of-Network ATM fees: This fee is charged when you use another bank’s ATM to withdraw money from your account. You can avoid this fee by using your bank’s ATM or paying with your debit card at the register instead of using the ATM.
  • Minimum balance fees: This fee is charged when you fall below the minimum balance required for your savings account. The banks want you to keep a high balance in your account, so they charge this fee if you fall below their threshold. Some banks will waive this fee if you set up a direct deposit or maintain a certain balance. Most online banks do not have this fee, so it is better to use an online bank than a brick-and-mortar bank.

Is savings account interest taxable?

The interest earned on many savings accounts is taxable at the federal level unless they are tax-deferred or tax-exempt. This applies to savings accounts, certificates of deposit (CDs), and money market accounts.

If you have a savings account through a broker or financial advisor, you may receive a 1099 tax form at the end of the year showing how much interest you earned during the previous year. If you do not, you should keep track of all interest earned in your account each month to declare it when filing your taxes.

State taxes vary by state. Some states will tax your savings account interest; others do not. You may need to contact your state’s revenue department for information regarding state taxes on interest from savings accounts.

How to choose the best savings account?

Grand openings of new banks usually offer a variety of promotions to bring in new customers. These are great opportunities to find low fees and higher interest rates with a cash promotion for depositing a certain amount. Choosing the best savings account boils down to the following:

  • Interest rate: The interest rate on your savings account will determine how fast your money grows. When shopping for a savings account, compare the interest rates offered by several banks to find the most competitive one.
  • Bonus offers: Many banks offer introductory promotion offers for new customers. The most common offer is an initial bonus interest rate for a specific period. However, different banks have different criteria for receiving these offers, so read the terms and conditions carefully before signing up.
  • Fees: It does not matter how great your bank’s promotion offers are if their fees are too high for your budget. You can compare the fee structures among different banks and choose one that suits your requirements and budget. Many banks offer free accounts with zero fees and no monthly maintenance charges.
  • Transfer limits: If you want to take money out of your high-interest savings account, make sure there aren’t any limits as to how much you can withdraw at a time or how many times you can transfer money per month.
  • Accessibility: Check that your account allows you to access your money when you need it. Some high-interest accounts have restricted access and some don’t allow withdrawals at all.