Logo

5 Reasons a High-Yield Savings Account Is Worth It

3 min read
5 reasons a high-yield savings account is worth it

It might seem like all savings accounts are the same, but a closer look reveals otherwise. Different accounts come with different rates, features, and requirements, and comparing options is essential for finding the best place to stash your cash. One type of account worth considering is a high-yield savings account—a deposit account that offers a higher-than-average annual percentage yield (APY).

Benefits of a High-Yield Savings Account

High-yield savings accounts offer valuable features and earn higher interest than regular savings accounts. Here’s what to know about the benefits of high-yield savings accounts, and a few of the minor drawbacks.

1. Higher APY

High-yield savings accounts are generally known to have a significantly higher APY than regular savings accounts. For instance, you might see a standard savings account with 0.30% APY and a high-yield savings account with an APY over 4.00%.

While rates vary and can change over time, online banks with few overhead costs tend to offer the highest APYs, and the interest earnings can add up. For example, assuming interest compounds monthly, if you kept $10,000 in a high-yield account with a 3.00% rate, your balance would grow to $10,304 after one year. By contrast, you would have only earned $30 on that same $10,000 if you had kept it in a standard savings account earning only 0.30% APY.

2. Simplified Saving

In addition to earning more in interest, a high-yield savings account can help you organize your finances. You might use a high-yield savings account to build an emergency fund or save for a specific goal, like a home down payment or vacation, keeping the money for everyday spending and monthly bills in a separate checking account. Having different accounts for different purposes can make it easier to see what you’re spending and how well you’re tracking toward your savings goals.

Because high-yield savings accounts offer such generous APYs, you may also find you’re able to reach your goals more quickly than you would with a regular saving account. This is useful whether you’re building an emergency fund, saving for a down payment, or planning a dream vacation.

3. Easy Access to Your Money

High-yield savings accounts also offer easy access to your money. You’ll generally be able to log into an online dashboard to track your balance, transfer cash, pay bills, and view your current APY. Depending on your bank, you may also be able to access your account and complete transactions via an ATM, local branch, or mobile app.

4. Flexibility

When it comes to making deposits or withdrawals, high-yield savings accounts offer flexibility. For example, high-yield savings accounts generally allow you to deposit and withdraw funds as often as you like—unlike CDs which typically charge an early withdrawal penalty fee if you need to tap those funds before the maturity date. Keep in mind, some banks offering high-yield savings accounts may impose withdrawal limits and fees, while others may not.

5. Deposit Insurance

When you deposit money into a high-yield savings account at a bank or credit union, your balance is generally insured to up to the maximum amount allowed of $250,000 for each ownership category by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). This insurance protects you in the event your bank or credit union fails, providing peace of mind your money is safe up to the insured limits.

Drawbacks of a High-Yield Savings Account

While high-yield savings accounts have several advantages (especially in a rising rate environment), there are a few things to be aware of such as:

  • Withdrawal limits: Certain banks and credit unions may limit the number of withdrawals you can make in a month. It’s common for monthly savings account withdrawals to be limited to six.

  • Possible fees: Fees may also apply to a high-yield savings account, though not always. Common fees include monthly service fees, overdraft or insufficient funds fees, and fees for exceeding monthly withdrawal limits.

  • APY fluctuations: Individual banks and credit unions set their own savings rates, which can change over time. So, the APY you earn upon account opening could increase or decrease depending on market conditions and other factors as you hold the account.

  • Not ideal for long-term savings: High-yield savings accounts are best for short- to medium-term savings goals or emergency funds. Generally, investment accounts like 401(k)s and Roth IRAs are good for long-term savings as they may offer higher returns over time.

  • Slightly less convenient: If you happen to open a high-yield savings account at a different institution than the account you use to pay your bills from (e.g., a checking account), you’ll need to remember to make transfers or set them up automatically. This may create a short delay of about a day or two if you need to move money quickly.

The Bottom Line

A high-yield savings account can be a good option if you want to earn a higher interest rate on your deposits and keep your money accessible while benefiting from deposit insurance. This type of account may also help you achieve your savings goals more quickly than a traditional savings account.

If you’re currently comparing your options, consider a high-yield savings account from LendingClub Bank. This account offers a higher APY, no monthly service fees, and other valuable perks.

You May Also Like

Related Resource Center
Find out how your savings stack up against other people your age—and what you can do to grow your savings at any stage of life.
Sep 18, 2023
10 min read
Understanding Average American-s Savings by Age
Discovering the right source of passive income for you depends on your assets, skills, and interests. Knowing where to start can be a major hurdle. Here are five solid ideas to spark your thinking.
Aug 1, 2023
7 min read
Woman working from her living room desk using camera equipment hooked up to her laptop and iPad.
What happens when you take money out of a CD before the maturity date? Here's everything you need to know, including how CD early withdrawal penalties are calculated, how to avoid these fees, and when incurring them might be a good idea.
Jul 11, 2023
6 min read
Couple sitting on couch looking worryingly at laptop, holding phone and papers, chins resting on hands
The FDIC and the SPIC are independent entities created by Congress to protect consumers. When considering where to hold cash, consider the pros and cons of these insurance protections in deciding between a bank or a brokerage firm.
Jun 20, 2023
6 min read
Illustration of man holding up an umbrella against red lightening bolts to protect his money underneath
How do NCUA insurance (for credit unions) and FDIC insurance (for banks) compare, and how do they work? Is one considered more safe than the other? Here's everything you need to know.
Jun 6, 2023
6 min read
Illustration of a bank and a credit union equally balanced on a scale
Related Impact
From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.
Nov 13, 2022
2 min read
blog header stackit 765x430 v1-1
Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals.
Oct 2, 2022
5 min read
LendingClub Rewards Checking Nationally Certified as Trusted, Afforda
Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.
Apr 19, 2022
2 min read
Illustration of large number 4 and letter M made up of colorful, tiny illustrations of ethnically diverse people
In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 
Mar 6, 2022
less than a minute read
Blog-post
LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  
Jan 2, 2022
2 min read
Man in blue button up shirt and glasses smiling
Related FAQ's
We offer several ways for you to make your monthly auto loan payment, so you can choose the method that works best for you. A statement will be mailed to you every month that shows the payment amount and due date.
Nov 29, 2023
less than a minute read
LendingClub provides a year-end statement that summarizes your account activity, including how much interest you’ve earned and information regarding Notes tied to loans that have been charged off.
Jun 7, 2023
less than a minute read
In some cases, we may need to confirm your employment before your application can be finalized. The fastest way to confirm your employment is to provide your work email address.
Jun 7, 2023
less than a minute read
To process your application, we may need to confirm your income matches what was on your application.
Jun 7, 2023
less than a minute read
The payment transaction type (signature-based or other) is ultimately decided by the merchant and is based on how the transaction is transmitted at the time of processing.
Jun 7, 2023
2 min read
Related Glossary
{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.
Sep 6, 2023
4 min read
{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 
Mar 21, 2023
4 min read
{noun} The total annual cost to borrow money, including fees, expressed as a percentage.
Mar 21, 2023
3 min read
A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.
Feb 7, 2023
3 min read
{noun} An interest rate that remains the same for a set time, usually for the life of the loan.
Feb 4, 2023
3 min read
Change Your Money, Change Your Life
Join our monthly newsletter for tools, tips, and insights to improve your financial health.
  

LendingClub Bank and its affiliates (collectively, "LendingClub") do not offer legal, financial, or other professional advice. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice. LendingClub is not affiliated with or making any representation as to the company(ies), services, and/or products referenced. LendingClub is not responsible for the content of third-party website(s), and links to those sites should not be viewed as an endorsement. By clicking links to third-party website(s), users are leaving LendingClub’s website. LendingClub does not represent any third party, including any website user, who enters into a transaction as a result of visiting a third-party website. Privacy and security policies of third-party websites may differ from those of the LendingClub website.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $19,584 for a term of 36 months, with an interest rate of 10.29% and a 6.00% origination fee of $1,190 for an APR of 14.60%. In this example, the borrower will receive $18,663 and will make 36 monthly payments of $643. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states.

For Personal Loans, APR ranges from 9.57% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2024 and are subject to change without notice.

Checking a rate through us generates a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. APR and other credit terms depend upon credit score and other key financing characteristics, including but not limited to the amount financed, loan term length, and credit usage and history.  

Unless otherwise specified, all credit and deposit products are provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Credit products are subject to credit approval and may be subject to sufficient investor commitment. ​Deposit accounts are subject to approval. Only deposit products are FDIC insured.

“LendingClub” and the “LC” symbol are trademarks of LendingClub Bank.

© 2024 LendingClub Bank. All rights reserved.