Savings accounts can be a great place to stash cash you’ll need for a large future purchase or to simply weather any financial emergencies that arise. But if you choose the wrong savings account, you won’t earn anything after inflation and possible fees—and could even lose money.

The solution? Instead of opening whatever savings account your current bank is offering, take a look at high-yield savings accounts and open the best-paying one that meets your needs. Here’s a step-by-step guide on how to do it.

Key Takeaways

  • Many savings accounts pay rates that don’t keep up with inflation, but high-yield savings accounts can pay an interest rate that is 20 to 25 times the national average.
  • Chances are high that you can earn much more on your savings by opening an account at a different institution than where you do your primary banking.
  • Online-only banks tend to dominate our weekly ranking of the top national savings accounts, since they don’t carry the overhead expense of running physical branches.
  • Opening a high-yield savings account can usually be done online in about 10 minutes.
  • Though a savings account’s interest rate should be a top consideration in choosing where to open an account, fees and requirements are equally important to consider.

1. Shop for the Top Rates

If you hold your checking account at a major brick-and-mortar bank, odds are high that the savings account rate it pays is not especially competitive. In fact, it might even be laughable for how insignificant it is. But with the advent of the internet, hundreds of bank and credit union options are now available to you. If you’re looking to outpace inflation with your savings, moving to a high-yield savings account that is separate from your primary bank might be necessary. 

That said, you may already bank at a top-paying institution. So the smartest first step is always to check what you can earn on a savings account at your existing bank or credit union. With this information in hand, you can comparison shop to find out how much more you might be able to earn on your savings elsewhere.

The next step is to assess the marketplace for how much the best high-yield savings accounts currently pay. Investopedia makes this easy for you with our constantly updated guide to the top national savings account rates. Every week, our experts scour the rates of hundreds of banks and credit unions to rank which accounts are paying the highest APY right now.

You may notice that many of the top rates are offered by online banks. This is because internet-only banks don’t carry the overhead costs of building, operating, and staffing physical branches, and can draw from customers nationwide. Consequently, they often pay the most competitive deposit rates in the country.

If you have a strong preference to go with a brick-and-mortar institution, your best bet for finding the top available local rate is to call around or research online among the banks and credit unions that operate branches in your community.

2. Choose the Institution That’s Best for You

After you’ve identified the rates you can find from the top-paying savings account institutions, it’s time to make the right choice for you. If you’re lucky enough to find that the savings rate at your existing bank or credit union competes nicely among the country’s best rates, then by all means log into your institution’s website and open a new savings account there. You’ll enjoy the convenience of one online login for both your checking and savings accounts, as well as instantaneous transfers between the two accounts. Opening the account will also be significantly streamlined since the bank already has you verified in their system.

If you’re like most rate shoppers, though, you’ll find that you can earn quite a bit more by opening a savings account at a new institution. In fact, some of the top national rates are 20 to 25 times higher than the national average.

If a top rate on your contenders list is from a credit union, you’ll want to make sure you can meet their eligibility requirements, since banking at a credit union requires you to first become a member of the institution. Any credit union appearing on Investopedia’s ranking of the top savings accounts has been identified as one accepting members nationwide. However, some involve a cost to join. We provide basic details on membership cost for credit unions in our list, but you can almost always find this information on any credit union’s website.  

The last step in deciding which top-paying institution is best for you is to note any fees and account requirements. Is the quoted interest rate a promotion that will sunset on a certain date? Is there a minimum balance requirement you’ll need to keep in the account? Does the advertised interest rate only apply to balances above or below certain minimum and maximum balances? Are there any unavoidable fees for the account? Checking the answers to these questions should help you narrow the list of top-paying accounts down to one or two that seem best for you.

3. Complete the Account Application

Once you’ve decided which institution to use for your new high-yield savings account, it’s time to complete the required application. Most likely, you will do this online, and in most cases it should only take 10 minutes or so. You will need to provide the institution with your full name, address, telephone number, email address, and Social Security Number (SSN) since your interest earnings will be taxable income. You will also need to provide detailed information from your driver’s license and/or a photo of the license. (If you don’t have a driver’s license, a passport or other government-issued photo ID can generally meet this requirement.)

You’ll also need to decide whether you want to open this account as a single individual or jointly with another person, such as your spouse. If you opt for a joint account, you will need to provide all the same information for the second applicant as you provided for yourself.

At some point in the application, you’ll likely be asked a series of multiple-choice questions about your background, such as past addresses and past or current employers and debts, all of which are designed to verify that you are who you say you are. Upon successfully answering the questions, your application will generally be approved.

If the account you’re opening is at a physical bank in your community, you’ll have the option of instead opening the account by visiting a branch. But even with local institutions, online account opening may be an option on their website. Not only will this save you a trip to the branch, but it will also most likely be a faster process than you’ll experience in person with a banker.

4. Fund Your New Account

Some institutions require you to set up an electronic transfer of funds from an outside account into your new account immediately during the application process, to fund the minimum initial deposit. Others either won’t have a minimum deposit amount or will allow you to open the account first and fund it later. 

A transfer from another bank is the most common means of funding a new savings account, but some institutions will offer you the option of sending a paper check, doing a mobile deposit of a check, or even using a credit card to pay the initial deposit. Beware of the credit card method, as some card issuers consider this a cash advance, which will carry hefty interest charges beginning the moment you make the transaction.

Whether you do it during the application process or later, funding your new account from an existing bank account will usually require you to provide the institution’s routing number and your account number. The online application may also ask for your login credentials to that bank, so that it can instantly verify the account. If not, it may send two trial deposits to the account you’re linking, which you can use to verify the account over the next couple of days.

5. Enroll in Online Banking and Download the App

Once your new account is opened, you’ll want to enroll in online banking for that institution. Sometimes you’ll be able to do that right away after completing your online application. For other banks and credit unions, you may have to wait a few days until you get an email or letter with account information you’ll need for online enrollment.

Once you’re set up to check your account online, be sure to note your username and password in a secure place or using password storage software. You can then move on to setting up the bank’s app on your smartphone or tablet. Downloading the app will be free, but once you open it, you’ll need to enter your username and password in order to interact with your accounts.

6. Establish Beneficiaries

If it was not part of the application process, it’s recommended to login to your account and designate one or more beneficiaries, who will inherit the balance of your account should something happen to you, or to both you and any joint account holder. Almost all accounts allow for establishing a primary beneficiary, and many also accommodate the designation of secondary beneficiaries, who will inherit the account balance should the primary beneficiary no longer be living. A typical scenario is to designate one’s spouse as the primary beneficiary (if they are not jointly named on the account) and one’s children as the secondary beneficiaries. But whom you choose as beneficiaries for this account is up to you and your personal situation.

7. Turn On Alerts and e-Statements

While logged into online banking, you’ll also want to review your choices for account alerts that can be set or turned off, such as alerts when a deposit or withdrawal over a certain amount posts, or when your account balance is below a designated threshold. You can often also choose whether you want any active alerts sent to you by email, by text, or via notifications from the app.

Also consider whether you’d like to opt for paperless statements. Electronic statements, or e-statements, are often recommended as a more secure protection against identity theft than receiving statements in the mail. But the choice is usually up to you. Note, however, that some accounts, especially from online-only banks, may require that you opt into e-statements, or may charge you a monthly fee if you request paper statements.

8. Link Any Additional Transfer Accounts

Chances are you have already linked one external bank account to this new savings account, when you set up a transfer of your initial deposit. But with most institutions, you can link multiple external bank accounts. This can be useful if you bank at more than one other institution, or often transfer funds to accounts held by your children.

As soon as you think of other accounts you may want to link for transfers, start the process right away. If you wait, you may later find yourself needing to access your funds, discovering your savings account isn’t linked yet, and having to wait two days before transferring is permitted.

9. Follow Your Account’s Rules

Lastly, you’ll want to be very sure you understand all the rules and requirements of your account, so you can use it effectively with zero or few fees going forward. In addition to the federal requirement that you not exceed six withdrawals from the account each statement cycle, note whether or not you have to carry a minimum balance in the account. If so, be sure to keep your balance above that minimum.

Also look at any other instances that can trigger a fee. Some accounts are simply free with minimal requirements, while others have a more complicated formula for actions you can take to avoid monthly fees, such as setting up a direct deposit, establishing a recurring transfer, or having a linked account at the same institution. Whatever the rules, you won’t maximize your return unless you’re careful to avoid fees to the greatest extent possible.