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High-yield savings accounts can be great for both short- and long-term financial goals. As the name implies, they typically offer higher interest rates than traditional savings accounts. That can allow your money to grow at a faster clip. Some high-yield savings accounts may charge fees or impose minimum balance requirements, though most don't. Every financial institution is different. Reading the fine print and shopping around can help you better understand your options.
Do High-Yield Savings Accounts Have Fees?
Some high-yield savings accounts do charge fees, though it isn't the norm. Fees may include:
- Monthly maintenance fees: Think of this as a service fee that's deducted from your account. Some high-yield savings accounts have maintenance fees as high as $25 per month.
- Overdraft penalties: You may be hit with overdraft fees if your account balance dips below zero. That could happen through an ATM withdrawal or when scheduling an electronic transfer or bill payment. Overdraft fees are usually around $30 per transaction.
- Minimum balance fees: Some high-yield savings accounts have minimum balance requirements. Failing to meet them could trigger a fee or reduce your annual percentage yield (APY). This is how much your balance stands to earn over the course of a year.
- Out-of-network ATM fees: Your bank or credit union may prefer that you use in-network ATMs. If not, you might be hit with a fee—usually to the tune of $2 to $5 plus a percentage of what you withdraw. The ATM operator could also charge an additional fee.
- Inactivity fees: You may be slapped with an inactivity fee if you haven't added or withdrawn money in at least six months. It can vary, but this fee generally ranges anywhere from $5 to $20.
- Returned item fee: If you cash a check in your savings account and it doesn't clear, your financial institution might charge you a returned item fee. It usually ranges from $5 to $19.
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How Often Can You Withdraw Money From a High-Yield Savings Account?
It's relatively easy to withdraw money from high-yield savings accounts. They're known for their liquidity, which makes them an ideal place to keep your emergency fund. You can tap your funds in the following ways:
- Electronically transferring money from a high-yield savings account into another account
- Paying bills out of a high-yield savings account
- Taking money out of a high-yield savings account through an ATM or bank teller
Financial institutions once limited consumers to six free electronic transfers and withdrawals per month. This rule has been suspended since 2020, though some have kept it in place. That means you might run into fees if you dip into your account too often.
How to Avoid High-Yield Savings Account Fees
No two financial institutions are the same, but you may be able to dodge fees by taking the following steps:
- Look for a low-fee high-yield savings account
- Pay attention to minimum account balance requirements
- Avoid frequent withdrawals
- Keep your account adequately funded to avoid overdraft fees
- Make regular deposits
Is a High-Yield Savings Account Worth It?
High-yield savings accounts are worthwhile places to store your cash reserves. They're insured by the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Association (NCUA) for up to $250,000 per depositor and ownership category. They also tend to offer competitive interest rates. Some high-yield savings accounts are currently offering 5.00%. That's much higher than the average rate on a traditional savings account, which is just 0.42%, according to the FDIC.
You can use a high-yield savings account to save for all sorts of financial goals—from buying a home to saving for your next financial curveball. When comparing your options, zero in on fees, minimum balance requirements and ATM accessibility. Just be sure to diversify your financial portfolio. Keeping too much of your wealth in savings could mean missing out on better investment returns elsewhere.
The Bottom Line
Some high-yield savings accounts do charge fees, but every financial institution is different. It's best to shop around and compare what's out there. When done right, a high-yield savings account can allow you to earn interest without sacrificing convenience (or money).
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