Some online banks that typically offer competitive high-yield savings account rates may not offer many of the usual services of a brick-and-mortar institution, like checking accounts, ATM cards or traditional deposits.
This lower overhead lets online banks offer some unique perks, like waiving common fees and, sometimes, no minimum deposit requirements.Īs attractive as these perks can be, they may also be accompanied by a few key drawbacks. Typically, high-yield savings account rates are offered by online banks that operate without brick-and-mortar locations or the physical staff required to maintain them.
They are oriented for long term savings, allow for regular deposits, and withdrawals, but may have monthly withdrawal limits, and are protected up to $250,000 at FDIC insured banks.Īside from their higher interest rates, high-yield savings accounts can sometimes come with a few other differences. How does a high-yield savings account work? High-yield savings accounts, in most other respects, work just like your usual savings account. A high-yield savings account may offer a higher rate of return than a traditional savings account, with an annual percentage yield (APY) often several times higher than usual.
