If you’re looking to find a great high-yield savings account, but want to avoid any pesky fees, you’re in luck. Many savings accounts let you avoid monthly fees while still earning a high rate of return, in many cases over 4%. With a no-fee high-yield savings account, you’ll have the benefit of a high APY, but won’t have to cut into your earnings by offsetting any additional monthly fees.
When the Federal Reserve began its interest-rate hiking campaign in March 2022 in an attempt to combat high inflation, savings rates also rose. However, as the Fed began holding rates steady, savings rates started to inch down. And since the Fed cut rates for the first time in four years at its latest meeting, rates have fallen further and will fall more throughout the year. Therefore, it's smart to take advantage of rates while they remain high.
The best no-fee high-yield savings rates
We've looked at the current APY rates for no-fee high-yield savings accounts and listed some of the best-earning accounts below, several of which can be found via Raisin.
Newtek Bank
APY: 5.25%
Western Alliance Bank
APY: 4.46%
Bread Savings
APY: 4.75%
Bask Bank
APY: 4.65%
TAB Bank
APY: 4.52%
Laurel Road
APY: 4.50%
Betterment
APY: 4.25%
CIT Bank
APY: 4.55%
Paprika Capital Bank
APY: 4.36%
By using our tool, in partnership with Bankrate, you can further search for some of the best high-yield savings accounts available.
Opening a no-fee high-yield savings account
Before you open a no-fee high-yield account, there are a few things to keep in mind.
Look out for hidden fees: While some banks readily list the associated fees and charges that come with an account, others don’t. To be sure you’re actually opening a fee-free account, you may have to call your bank’s customer service line or do some research online before opening your account.
Make sure your money is safe: Another important thing to consider when opening any form of savings account is to make sure your money is FDIC insured, so you know it’ll be safe in the event the bank fails. The FDIC protects up to $250,000 in individual deposit accounts and up to $250,000 for each person’s share of joint accounts.
Compare high-yield rates: It’s a good idea to shop around for savings accounts to ensure you get the best rates. Usually, online banks offer more generous APYs on savings accounts, so changing from your traditional savings account at a brick-and-mortar bank to one online could be a good choice.
Avoid teaser rates: Teaser rates are promotional rates that banks use to attract new customers, but these are typically short-lived.
Rates are variable: Since interest rates on no-fee high-yield savings accounts are variable, the APY on the account can decrease from what it was when you first opened the account. If you’re anxious to lock in rates for a set period, you may want to consider browsing no-penalty CD rates instead. Interest rates on CDs are fixed, so if rates do drop, your earnings won’t be affected. Plus, if you decide you need access to your cash before the CD’s maturity date, there’s no penalty for pulling it out if it’s saved in a no-penalty CD.
Pros and cons of no-fee high-yield savings accounts
Pros
- Higher APYs: Since high-yield savings accounts have higher APYs than traditional savings accounts, you’ll accrue more interest over time. Plus, interest in these accounts is compounded daily.
- Safety: Many high-yield accounts are FDIC or NCUA insured, meaning that if something were to happen to the bank (or credit union) your account is with, your money will still be safe.
- Accessibility: While there are sometimes limitations to the number of free withdrawals you can make from a savings account, your money is still readily accessible whenever needed.
- No minimum deposit requirements and/or fees: Many high-yield savings accounts charge a monthly fee and/or require a minimum deposit to earn the advertised APY, but no-fee accounts won't.
Cons
- Harder to access than traditional savings accounts: If you have a savings account that's with a different bank than your checking account, you may have to wait a few days for funds to transfer from one to the other. Plus, you won’t be able to easily view account details for both accounts in one place.
- Not suited for long-term goals: If you’re looking to save for long-term goals, like retirement, other investments, like stocks, are usually a better choice for your money. The rate of inflation can be higher than what you accrue in interest.
- Variable interest rates: Since interest rates are variable, the APY on the account can decrease from the rate it was when you opened the account.
- Online banks: Since most high-yield accounts are offered by online banks, you likely won’t have branch access, so contacting customer service can be more challenging.
Bottom line
If you're not saving your cash in a high-yield savings account, you're missing out on easy money. Many high-yield savings accounts offer impressive APYs that can help you bolster your savings with no effort at all. And if you opt for a no-fee account, you won't have to worry about paying any monthly service charges that can eat into the interest you've earned.
