Here's Why You Need to Open a High-Yield Savings Account ASAP

There’s never really a bad time to have money in the bank — but right now is surely one of the best times. Thanks to a series of 11 federal funds rate hikes by the Federal Reserve, we’re currently seeing higher interest rates on certificates of deposit (CDs), money market accounts, and savings accounts.

In fact, the current average rate for savings accounts is 0.45%. In March 2022, when the Fed started raising rates, that figure was just 0.06%.

But don’t assume that opening a savings account right now means settling for just 0.45% APY on your cash — instead, you can easily find high-yield savings accounts (HYSA) at online banks paying 10 times that or more. Here’s why you should open one of these accounts sooner rather than later.

Rate cuts are coming

The clock is ticking on 4% to 5% savings account rates thanks to impending actions by the Federal Reserve. The central bank is in charge of our monetary policy, and it pushed the federal funds rate to its current high level between 2022 and 2023 as a response to sky-high inflation in the wake of the COVID-19 pandemic. The Fed’s target is 2% inflation, and we were well above that.

Our Picks for the Best High-Yield Savings Accounts of 2024

American Express® High Yield Savings APY 4.25% Rate info Circle with letter I in it. 4.25% annual percentage yield as of August 2, 2024 Member FDIC.	APY 4.25% Rate info Circle with letter I in it. 4.25% annual percentage yield as of August 2, 2024	Min. to earn $1
UFB Portfolio Savings Account APY 5.15% Rate info Circle with letter I in it. To ensure you keep getting the highest rate at UFB, you’ll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts. Member FDIC.	APY 5.15% Rate info Circle with letter I in it. To ensure you keep getting the highest rate at UFB, you’ll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts.	Min. to earn $0
Western Alliance Bank High-Yield Savings Premier APY 5.31% Rate info Circle with letter I in it. 5.31% annual percentage yield (APY) is accurate as of 7/11/2024 and subject to change at the Bank’s discretion. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Member FDIC.	APY 5.31% Rate info Circle with letter I in it. 5.31% annual percentage yield (APY) is accurate as of 7/11/2024 and subject to change at the Bank’s discretion. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	Min. to earn $500 to open, $0.01 for max APY

Thankfully, inflation has slowly come back under control, and per the last Consumer Price Index Summary report, it actually fell 0.1% over the previous year in June 2024.

This is good news, and as a result, the Federal Reserve is now seriously eyeing rate cuts beginning this fall. Once the Fed starts bringing down the federal funds rate, we will likely see corresponding drops in interest rates on credit cards, loans, and deposit bank accounts (such as savings and CDs), as the two are linked.

The APY on your high-yield savings account won’t just slam back to Earth; rather, rates will drop gradually. And your rate will still surely be higher than all the big-bank savings accounts that pay just 0.01% APY. But you can kiss those 4% to 5% rates goodbye — so now is the time to open a HYSA if you haven’t already.

Why are HYSAs worth it?

Aside from those high rates, here are a few other reasons why I love high-yield savings accounts — and you should, too:

• No fees: Since HYSAs are generally offered by online-only banks, you likely won’t have to pay any fees to maintain the account. Unlike brick-and-mortar banks, online banks don’t have branches, which lowers their overhead costs. They can then pass that savings on to you.
• Easy to open: You can open an online savings account in just a few minutes. You only need your personal information and to link an outside bank account to fund your new savings account.
• Excellent mobile apps: Online banks might not have branches, but they do have the latest and greatest in financial technology. You’ll often find amazing mobile apps offered by these banks, so you can deposit checks, check your balance, and more from anywhere you have cell service.
• Nifty savings tools: Some banks offer neat extras in their savings accounts, such as opportunities to “round up” small amounts of cash and send it to your savings account. But my favorite HYSA feature by far is savings buckets. These let you save for separate goals in the same account — and at the same interest rate.

There’s never been a better time to jump on the high-yield savings account bandwagon. You likely just have a few months left to benefit from earning 4% to 5% on your savings — so open an account ASAP.

These savings accounts are FDIC insured and could earn you 14x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 14x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.