11 Best Savings Accounts of December 2021

What do the best savings accounts have in common?

The best savings account interest rates are around 0.50%. At a brick-and-mortar bank, you'll often find savings rates closer to the national average, which is currently 0.06%.

If you have a $5,000 savings balance, choosing an account that pays 0.50% will earn you about $25 in a year, while an account paying you the average would earn less than $5. The difference increases the more you deposit and the longer you keep it in the account.

Why should I care about the best savings account rates?

If you have money left in your checking account each month — or you can adjust your budget so that you do — you should have a savings account with a high rate. (Again, think around 0.50%.) It's always helpful to have money set aside for emergencies, and it'll earn you much more in an account that pays one of the best savings account rates than in a checking account.

Just make sure you can keep enough in your savings account to avoid monthly fees. Most online savings accounts don't charge these, but many traditional accounts do.

What monthly fees do savings accounts usually have?

The best savings accounts typically don’t charge monthly fees. You make your deposit and watch your balance grow as your money earns interest.

» Find out how your savings could add up with NerdWallet’s compound interest calculator.

Why are all of NerdWallet's picks for best savings accounts online?

It's easy to find a savings account at your local bank, but if you want to earn a high rate and pay the lowest fees, you should consider storing your savings online. Without the added expenses of large branch networks, online banks and nonbank providers are able to offer more favorable returns than national brick-and-mortar banks.

» Learn more about NerdWallet's favorite high-yield online savings accounts.

Is my money safe in a savings account?

Yes. Unlike investment accounts, savings accounts are guaranteed not to lose money — provided your money is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. Whatever you put in an FDIC- or NCUA-insured account will stay there, unless your account charges fees (and, of course, unless you withdraw money).

Do the best savings account interest rates change over time?

Yes, rates are variable and can change over time. If you are looking for a fixed rate account, and can set aside funds for a specific time period without making a withdrawal, consider opening a certificate of deposit. NerdWallet's list of best CD rates features top options.

How often do interest rates change?

Financial institutions generally don’t change savings rates on an hourly, daily or even monthly basis. In fact, under normal circumstances, it’s common to see APYs remain the same for several months.

It’s important to note, however, that rates are variable and theoretically can change at any time. In addition, many providers will change their rates based on what their competitors are doing. You will often see groups of providers increase or decrease their APYs at around the same time, especially if the Federal Reserve recently hiked or cut rates, as with the emergency rate cuts of March 2020 in response to the coronavirus pandemic.

To get the best yield for your money, it’s a good idea to check out the best savings rates on a regular basis — at least once a month.

» Find high rates across checking, savings and other accounts in NerdWallet's list of high-interest accounts.

Savings account terms you need to know:

Savings account: A deposit account from a financial institution that earns interest.

Interest: Money a financial institution pays into an account over time.

Compound interest: Compound interest is the interest you earn on both your original money and on the interest you keep accumulating. In an account that pays compound interest, the return is added to the original principal at the end of every compounding period, typically daily or monthly. Each time interest is calculated and added to the account, the larger balance earns more interest.

Annual percentage yield: The annual percentage yield, or APY, is the amount of interest an account earns in a year. The calculation is based on the account’s interest rate and the number of times interest is paid during the year.

» Read more about 10 essential banking terms you need to know.

How can I earn high interest rates besides a savings account?

Here are a few options:

Money market accounts: These accounts are a type of savings account, but they might have higher minimum balances and offer perks such as check-writing, which not all savings accounts do.

Certificates of deposit: These accounts lock your balance away for a specified period of time — often between one year and five years — in exchange for a higher interest rate. But if you withdraw any money during the term, you'll typically have to pay a penalty. CDs are also covered by FDIC insurance.

Mutual funds: If you have a 401(k) through your job or an individual retirement account, or IRA, odds are you are putting some of your money in mutual funds. These are a type of investment that holds a little bit of many different types of stocks. Mutual funds are not covered by FDIC or NCUA insurance, and you can lose money on them — but you'll also typically earn a higher rate of return than you would on a savings account. They're best for long-term savings goals, such as retirement.

» Find out more about your savings account options.

Is savings account interest taxable?

Yes. Technically, all savings account interest is taxable, but your provider probably won't send you a form reporting it unless you've earned more than $10. So if you have a high-yield savings account, you're much more likely to pay taxes on your interest. You'll pay at your normal tax rate.

More top choices for the best savings accounts

When you're shopping for the account that fits you best, these options are worth a look.

• Alliant Credit Union, 0.55% savings APY with no minimum to open account (see full review), funds insured by the NCUA.

• Ally, 0.50% savings APY with no minimum to open account (see full review), Member FDIC.

• Capital One 360, 0.40% savings APY with no minimum to open account (read full review), Member FDIC.

• Vio Bank, 0.51% savings APY with $100 minimum to open account (read full review), Member FDIC.

• Sallie Mae Bank, 0.70% savings APY with no minimum to open account (read full review), Member FDIC.

• TAB Bank, 0.50% savings APY with no minimum to open account (read full review), Member FDIC.