Pros & Cons of High Yield Savings Accounts

by Angie Beckert ; Updated June 29, 2018
Pros & Cons of High Yield Savings Accounts

Banks and consumers often refer to online savings accounts as high yield savings accounts. Online banking provides customers across the nation access to the same high yield rates, regardless of location or membership. For those wary of online banks, physical banks offer traditional options that yield higher interest than a regular savings account, mainly money markets and certificates of deposits.

Online High Yield Saving Accounts

Numerous banks provide high yield savings accounts online that offer higher interest rates than physical bank locations. Bankrate explains that online banks can do this because they save on operating costs that brick and mortar banks incur. You can open up online savings accounts, money market accounts and certificates of deposit through many of these online banks. Occasionally banks that double as credit card providers, such as Capital One, American Express and Discover, offer higher yields than competitors.


Online high yield savings accounts offer higher interest rates, typically without fees. You can easily transfer money between the account and your regular bank account as many times as you want per month. They also do not restrict how often you can transfer or withdraw your money. High yield savings accounts often offer a higher savings rate regardless of the amount you initially deposit, and you are not required to keep minimum balances. Your account receives the same insurance provided by the FDIC to traditional banks.

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Online transfers between your physical checking account and your online savings account take a few days. So if you need money immediately, you may be out of luck. You can’t withdraw money from an ATM or at a physical branch unlike accounts held at brick and mortar banks. If the online bank closes, your money, up to the FDIC limit of $250,000, should be safe, but it may be more complicated to recover as all of your transactions occurred online. Also, if you run into issues, you can’t talk to someone face-to-face to solve the issue, which could reduce the speed of your transactions.

Other Information on Higher Yield Savings Accounts

Accounts such as certificates of deposit provide the highest rate of return regardless of whether you invest online or at a physical bank location. CDs typically offer higher rates than high yield savings accounts or money market accounts because you can’t touch the money for a set amount of time. For savers who need access to savings without penalties in a crunch, opt for higher yield online savings accounts or online money markets.

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