Are you earning pennies when you could be earning dollars? The best high yield savings accounts today offer APYs as high as 5.00% from institutions like Varo Bank, compared to the national average of just 0.38% for traditional savings accounts. That’s more than 13 times the standard rate!
In fact, while the average savings account APY sits at a mere 0.42% as of May 2025, we’ve found several high yield savings account rates that dramatically outperform this benchmark. What is a high yield savings account exactly? It’s a financial product that pays significantly higher interest rates than conventional savings options, with today’s top performers including Axos Bank (4.66% APY) and LendingClub (4.40% APY). Additionally, these accounts typically offer an easy, low-risk way to grow your money through compounding interest.
In this guide, we’ll reveal the best high yield savings accounts of 2025, explain how they work, and share the hidden secrets to securing accounts with the highest possible returns. Furthermore, we’ll help you understand why online-only banks traditionally offer better APYs than brick-and-mortar institutions and what factors you should consider before opening an account.
Best High-Yield Savings Accounts of June 2025
Looking for places to park your cash with maximum returns? June 2025 brings exciting opportunities with several high-yield savings accounts offering rates that dramatically outperform traditional options. Let’s dive into the top contenders that deserve your attention this month.
1. Varo Bank – 5.00% APY
Varo Bank leads the pack with an impressive 5.00% APY on balances up to $5,000. To qualify for this industry-leading rate, you’ll need to receive direct deposits totaling at least $1,000 each month and maintain positive balances in all your Varo accounts. Any amount exceeding the $5,000 threshold earns a still-competitive 2.50% APY. Varo requires no minimum balance and charges zero monthly fees, making it accessible to savers at all levels.
2. Axos Bank – 4.66% APY
Following closely behind, Axos Bank offers a substantial 4.66% APY through their ONE Savings account. This rate applies to all balance tiers from $0 to over $3,000,000. However, to secure this elevated rate, you’ll need either $1,500 in monthly qualifying direct deposits or $5,000 in monthly qualifying deposits that aren’t direct deposits. Without meeting these requirements, you’ll earn the standard rate of 1.00% APY.
3. Bread Savings – 4.30% APY
Bread Savings delivers a solid 4.30% APY on their high-yield savings account. You’ll need just $100 minimum to open an account, yet there’s no monthly maintenance fee to worry about. Interest compounds daily and is credited to your account monthly, helping your money grow more efficiently. An added bonus: Bread Savings provides free incoming wire transfers and unlimited mobile check deposits.
4. LendingClub – 4.40% APY
LendingClub’s LevelUp Savings account shines with a 4.40% APY when you deposit at least $250 monthly. If you miss this threshold, you’ll still earn a respectable 3.40% APY. With no account fees, no minimum opening deposit, and FDIC insurance up to $250,000, LendingClub makes saving both profitable and secure. For perspective, an $8,000 balance earning 4.40% APY would generate about $352 in interest over one year.
5. Discover Bank – 3.60% APY
Discover offers a 3.60% APY on all balances in their Online Savings Account. This rate applies regardless of your balance tier. Discover doesn’t require a minimum deposit to open an account and charges no monthly maintenance fees. Along with competitive rates, they provide 24/7 customer support by phone, making it easier to manage your savings whenever questions arise.
6. SoFi – 3.80% APY
SoFi’s high-yield savings option provides a competitive 3.80% APY. Their account is actually a combination checking and savings account, with the savings portion earning the advertised rate. There are no minimum deposit requirements, no monthly maintenance fees, and no minimum balance requirements to earn the stated APY. This makes SoFi particularly suitable for those who prefer an integrated banking approach.
7. Barclays – 3.90% APY
Barclays Online Savings offers a noteworthy 3.90% APY. This rate is more than five times the national average for savings deposit products. Barclays requires no minimum deposit to open an account and sets a maximum account balance of $1,000,000 per account. For savers with larger balances, their Tiered Savings account provides up to 4.10% APY on balances greater than $250,000.
8. American Express – 3.60% APY
American Express rounds out our list with a competitive 3.60% APY on their High Yield Savings Account. This account comes with no minimum deposit requirements and no monthly fees. Interest compounds daily and is deposited into your account monthly. As a member FDIC institution, each depositor is insured to at least $250,000 per depositor, per insured bank, per ownership category.
What is a High-Yield Savings Account?
Ever wondered what makes “high-yield” savings accounts so special? A high-yield savings account (HYSA) is essentially a savings account that earns a significantly higher interest rate than traditional savings options. While the national average for traditional savings accounts sits at a mere 0.43%, many high-yield accounts offer rates over 4%—making them up to ten times more rewarding than conventional alternatives.
Definition and how it differs from traditional savings
The primary distinction between high-yield and traditional savings accounts lies in their interest rates. HYSAs operate exactly like traditional savings accounts with similar features: deposit insurance, access to your money when needed, and the security of a savings vehicle. Yet they deliver substantially better returns on your deposits.
Both account types allow deposits and withdrawals, but the dramatic difference in earning potential makes high-yield accounts the clear winner for savers. If you deposited $10,000 in a high-yield account with 4.5% APY, you’d earn approximately $450 in interest over one year. The same amount in a traditional account paying 0.59% APY would generate only about $59—a difference of nearly $400.
Like traditional accounts, high-yield savings accounts are protected by federal deposit insurance—either through the FDIC or NCUA—for up to $250,000 per depositor. This insurance ensures your money remains safe even if the financial institution fails.
Why online banks offer better rates
Online banks typically offer substantially higher APYs since they operate without the overhead costs of maintaining physical branches. Without expenses for brick-and-mortar locations, these institutions pass those savings directly to customers through higher interest rates.
Moreover, online banks must compete more aggressively for your business. Since they represent only about 5% of nationwide deposits, they use attractive rates to draw customers away from established institutions. Research shows online banks also tend to increase their APYs by greater amounts when the Fed hikes rates.
How APY is calculated
APY (Annual Percentage Yield) represents the total amount of interest you’ll earn in one year, including compound interest. Unlike simple interest calculations, APY considers the compounding effect of previously earned interest generating future returns.
The formula for calculating APY is (1 + r/n)^n – 1, where “r” is the interest rate and “n” is the number of compounding periods. For instance, with a 5% interest rate compounding monthly, the calculation would be: APY = (1 + .05/12)^12 – 1 APY = 5.12%
Compounding frequency matters—interest may compound daily, monthly, or yearly depending on the account. Generally, more frequent compounding results in slightly higher effective yields.
APYs on savings accounts typically fluctuate based on the Federal Reserve’s benchmark interest rate. Consequently, your return can increase or decrease over time as economic conditions change.
How Do High-Yield Savings Accounts Work?
The magic behind high-yield savings accounts lies in how they grow your money over time. Unlike standard accounts, these financial powerhouses use specific mechanisms to maximize your earnings.
Understanding compound interest
Compound interest is the cornerstone of high-yield savings accounts. Initially, you earn interest solely on your principal deposit. Subsequently, you start earning interest on both your principal and previously earned interest. This creates a snowball effect that accelerates growth over time.
For example, if you deposit $1,000 in an account with 4% APY that compounds annually, you’d have $1,040 after one year. During the second year, you’d earn interest on $1,040 instead of just your original $1,000, giving you $1,081.60. The compounding formula is P(1 + r/n)^nt, where P is principal, r is interest rate, n is compounding frequency, and t is time in years.
The compounding frequency significantly impacts your returns. An account with a 5% interest rate compounding annually would have an APY of 5%, yet the same rate compounding daily would yield 5.13% APY. Obviously, more frequent compounding leads to faster growth of your savings.
How often interest is paid
Although banks might calculate interest daily, they typically credit it to your account monthly, quarterly, or annually. This is an important distinction—interest must be credited before it begins earning additional interest.
Most high-yield savings accounts compound interest daily, which maximizes your earnings. Upon receiving a deposit, the best accounts start calculating interest that same day rather than imposing waiting periods.
Rate variability and what affects it
High-yield savings account rates are variable, meaning they can change at any time without notice. These fluctuations primarily follow the Federal Reserve’s benchmark interest rate.
During economic downturns, the Fed often lowers rates to encourage borrowing and spending, which typically results in decreased savings rates. Conversely, in a strong economy, the Fed might raise rates to stabilize borrowing, leading to more attractive savings yields.
Banks may also adjust their rates based on their own needs. When financial institutions want to attract more deposits to fund loans or investments, they might offer higher APYs. Likewise, competition among banks can drive rates upward as they vie for customers.
Despite these fluctuations, high-yield accounts consistently outperform traditional savings options throughout economic cycles.
Key Factors to Compare When Choosing an Account
When comparing high-yield savings accounts, several key factors deserve your attention beyond just the advertised rate. Understanding these elements helps ensure you select an account that truly maximizes your returns while meeting your specific needs.
APY vs. interest rate
Though often used interchangeably, APY and interest rate represent different concepts. APY (Annual Percentage Yield) shows your total annual return including compound interest, whereas interest rate is simply the percentage earned without accounting for compounding. For example, a 4% interest rate compounding monthly would effectively yield approximately 4.07% APY. Always prioritize accounts with higher APYs over higher simple interest rates, as APY provides a more accurate picture of your actual earnings.
Minimum balance requirements
Many top high-yield accounts require no minimum balance to open or maintain. American Express High Yield Savings and Discover Online Savings both offer competitive rates with no minimum deposit requirements. This accessibility makes these accounts ideal for savers just starting their financial journey. Nevertheless, some banks offer tiered rates where higher balances unlock better APYs—worth considering if you have substantial savings.
Monthly fees and how to avoid them
Monthly maintenance fees can quickly erode your interest earnings. Fortunately, most competitive high-yield savings accounts charge no monthly fees whatsoever. Discover even eliminates fees for excessive withdrawals, insufficient funds, and account closures. Before opening any account, carefully review the fee schedule to avoid unexpected charges.
Mobile app and online access
Given that many high-yield accounts operate primarily online, robust digital tools become essential. Look for features like real-time balance updates, easy transfers between accounts, customizable security settings, and bill payment capabilities. The best apps offer biometric authentication options including fingerprint or facial recognition for enhanced security plus convenience.
FDIC or NCUA insurance
Perhaps most importantly, verify your deposits are federally protected. FDIC insurance covers up to $250,000 per depositor per bank per ownership category, while NCUA provides identical coverage limits for credit unions. This protection ensures your money remains safe even if the financial institution fails—no depositor has ever lost a penny of FDIC-insured funds.
Hidden Secrets to Getting the Best 5.00% APY
Ready to maximize your savings potential? The difference between earning 3.60% and 5.00% APY might seem small, but it adds up dramatically over time. Here’s how to secure those elusive top-tier rates that most banks don’t advertise upfront.
Look for promotional or tiered rates
Many institutions offer escalating interest rates based on deposit size. Barclays Tiered Savings, for instance, provides 4.10% APY on balances exceeding $250,000, compared to 3.90% APY for smaller deposits. Indeed, 31 of the top 50 easy-access accounts now come with special conditions that unlock better returns. Some banks advertise short-term bonuses that temporarily boost your APY—these have increased from five to nine between May and October, with average bonuses jumping from 1.12% to 1.67%.
Use direct deposit to unlock higher APYs
Direct deposit requirements have become the golden key to premium rates. Varo offers 5.00% APY, but only when you receive monthly direct deposits totaling $1,000 or more. Beyond higher interest, direct deposit creates automated savings habits and promotes financial discipline by prioritizing saving before spending. The automation alone can accelerate your timeline toward financial goals.
Avoid accounts with balance caps
Watch out for maximum balance thresholds. Varo’s impressive 5.00% APY applies only to the first $5,000—anything above earns substantially less at 2.50% APY. Prior to opening an account, verify whether the advertised rate applies to your entire balance or just a portion.
Check for hidden withdrawal limits
Many banks still maintain the six-withdrawal monthly limit despite federal regulations no longer requiring it. Exceeding these limits typically triggers fees between $5-$15 per transaction. Even worse, some institutions automatically convert your savings account to a checking account (with lower interest rates) if you consistently exceed withdrawal limits.
Watch for rate drops after sign-up
Banks often slash rates after promotional periods end. Paragon’s Double Access Saver offered 5.25% in October but drops dramatically to 1.5% after just two withdrawals. Therefore, always read the fine print about how long your rate lasts and what conditions maintain it.
Conclusion
Final Thoughts on High-Yield Savings Accounts
High-yield savings accounts undoubtedly offer a powerful way to grow your money while maintaining safety and liquidity. The difference between earning 0.43% at a traditional bank versus 5.00% at Varo Bank translates to significant real dollars over time. For instance, a $10,000 deposit would earn approximately $500 annually at 5.00% APY compared to just $43 at the national average rate.
Despite fluctuating economic conditions, these accounts consistently outperform traditional options throughout various market cycles. Therefore, they deserve serious consideration as part of your financial strategy, especially during times of rising interest rates.
Before choosing an account, carefully review all requirements and conditions. Although the highest advertised rates appear attractive, you must verify whether you can reasonably meet direct deposit thresholds, balance requirements, or other qualifying criteria. Additionally, watch for promotional rates that might decrease after an introductory period ends.
We recommend comparing at least three different high-yield options before making your decision. Specifically, look beyond the headline APY to examine fees, accessibility features, compounding frequency, and deposit insurance. Your ideal account should balance competitive rates with practical usability for your specific situation.
Finally, remember that your savings strategy might benefit from spreading funds across multiple accounts. This approach allows you to take advantage of different promotional offers while staying below FDIC insurance limits for larger balances.
