Interest rates for high-yield savings accounts continue to climb, with at least one credit union touting a deposit rate in excess of 6% annual percentage yield, or APY (though admittedly, this has a lot of caveats). What’s more, money pros say the spending climate and action from the Federal Reserve may mean high savings rates are here to stay.?
“Money in high yield savings accounts could outpace inflation seeing as they’re now offering up to 6% for saving while inflation is around 3.7%,” says NerdWallet personal finance writer and expert Elizabeth Ayoola. “This could be a great opportunity for consumers looking for passive income to reap the benefits of ongoing interest rate hikes.” You can see some of the highest-paying savings accounts here.?
Here’s what to know about the high-yield savings accounts with the best annual percentage yield, or APY, in October 2023, and we list some of our top finds below.
Why are rates going up??
The past year of steady interest rate hikes from the Federal Reserve have been the main driver behind the increases for high-yield savings accounts among many banks and credit unions. Because of this action, borrowers have paid the price with higher rates for mortgages, credit cards and auto loans. Savers on the other hand have become the beneficiaries with more attractive rates for banks and credit unions to lure new customers and pay down their own rising debt.
But while banks aren’t obligated to pass along these interest rate increases to savers, many have, especially smaller and mid-sized institutions that compete on rates, says Ted Rossman, senior industry analyst at Bankrate.com.
Why are some banks more poised to increase their rates than others? For one, the largest banks have extensive branch networks and national advertising campaigns, Rossman says, adding that their rates are not likely to move higher because they have all the deposits they need.
“Smaller and mid-sized banks and credit unions, especially online-only institutions, are offering the most attractive savings rates we’ve seen in many years,” Rossman says, adding “instead of earning 0% or 0.01% from the big bank down the street, open a high-yield savings account with a bank such as UFB Direct, Valley Direct or Popular Direct. All have savings accounts with a 5.25% APY.” You can see some of the highest-paying savings accounts here.?
What to look out for before opening an account
Sure, a high APY is great and potentially lucrative, but WalletHub senior analyst Jill Gonzalez says it’s important to pay attention to the restrictions.
“Some banks impose limits on how much of your balance can earn this rate, so make sure you’re well informed before applying,” she suggests. “If you apply through a credit union instead, you might be conditioned to become a member first, which could come with additional costs. The fine print includes other factors as well, such as monthly fees, penalties for early withdrawals, FDIC [Federal Deposit Insurance Corporation] insurance and so on.”
10 of the best-paying high-yield savings account rates of October 2023
All of these accounts are protected by either the FDIC or National Credit Union Administration (NCUA), unless otherwise noted. Because some financial institutions offer better rates than others, it’s critical to read all of the fine print before opening an account to learn about any potential restrictions or hurdles.?
Boeing Employees’ Credit Union (BECU): 6.17% APY
Although this is indeed the highest available rate for a high-yield savings account in October, the 6.17% APY rate on a Member Advantage Savings account comes with a pretty sizable catch: it only applies to the first $500. Balances above that relatively low threshold earn a rate more consistent with the national average at 0.50% APY. You’ll also have to either live, work, worship or go to school in Washington state or other select counties in Oregon and Idaho to qualify for its membership requirements.?
Andrews Federal Credit Union: 5.75% APY
Account balances from $0.01 to $1,000 are eligible for the 5.75% APY, with those above that earning just 0.05% APY. This offer expires on Dec. 31. And to join this credit union, members must work for one of a dozen eligible employer groups based in either Maryland, Washington D.C., Virginia or New Jersey. If you are not employed by one of the listed groups here, Andrews FCU states that you can also qualify through the American Consumer Council.?
CloudBank 24/7: 5.26% APY
The offer from CloudBank 24/7 requires just a minimum $1 deposit. Like with many of the offers available on the Raisin.com platform, there are no maximum deposit limits and your money is insured by the NCUA up to $250,000 per institution.?
Western Alliance Bank: 5.26% APY
Earning this rate only requires a low $1 deposit minimum requirement. Also part of the Raisin.com platform, this account too does not come with any deposit restrictions.
Oregon Community Credit Union: 5.25% APY
While there are no balance requirements to open an account at OCCU, the promoted 5.25% APY is only available for the first $500 deposited in your account. Anything beyond that is subject to lower rates of return. Balances from $500.01 to $2,500 earn between 5.25% and 3.45% APY, while those that exceed $25,000.01 earn between 0.85% and 0.15% APY. The first year of your earnings in this account is also based on a 12-month average, so it may be beneficial to discuss these options with a financial advisor or planner prior to opening an account.
Valley Direct Bank: 5.25% APY
Just make the $0.01 minimum balance requirement, and keep your balance below the maximum $500,000 threshold, and you are set to earn this competitive rate.?
Greenwood Credit Union: 5.25% APY
Greenwood Credit Union is among the most accessible with a low $1 account minimum and high 5.25% APY. This is also a fairly string-free offer with no maximum deposit limit.?
Newtek Bank: 5.25% APY
Much like its offer in September, come with a low $0.01 and you are set to earn a high 5.25% APY offered here. While there are no monthly fees, you are allowed to make six withdrawals from your account per cycle.?
Evergreen Bank Group: 5.25% APY
Make the $100 minimum required balance and you’re set to start earning the 5.25% APY without a maximum deposit limit at Evergreen Bank Group. That said, account balances over $1 million do not earn interest, so this may not work for high-net-worth accounts.
Popular Direct: 5.20% APY
Also with a reasonably low $100 opening balance requirement, the account at Popular Direct comes with a competitive 5.20% APY and no deposit limits. Just maintain a $0.01 balance and you can start earning today. There are no monthly service fees, however shuttering the account within 180 days will incur a $25 early account closing fee.