Compare the top free, high-interest savings accounts

When you’re saving up for a goal, you don’t want to end up losing any of it to fees. Most banks offer free everyday savings accounts, but they don’t always come with strong rates. To grow your nest egg most efficiently, focus on accounts offering no fees for the strongest rates you’re eligible for.

Editor's pick: Barclays Online Savings Account

• Competitive interest rate
• No monthly fees
• No minimum balances to open

Editor's pick: Barclays Online Savings Account

Earn 20x the national savings account average with no fees or minimums.

• Tools to help you save
• Secure, 24/7 online access to your funds

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Compare free savings accounts

What is a high-interest savings account?

A high-interest savings account is designed to help you save efficiently with the power of compound interest. You might see it marketed as a high-yield savings account.

Think of compounding as a way of earning interest on your interest. A savings account with ongoing compound interest applies interest to the interest that you’re already paid.

A high-yield savings account typically offers a higher interest rate than simple everyday savings accounts. But to get the most competitive rate you’re eligible for, you often need to meet specific conditions, like high account minimums. If you can find a high-interest account that doesn’t charge a maintenance fee, that’s even more money in your pocket.

How can a bank charge low or no monthly fees on a high-interest savings account?

High-interest savings accounts are designed to put your money to work. Sure, any fee you have to pay to the bank makes it harder to save.

But your bank is a business. When you deposit your money into any interest-bearing account, you’re effectively lending money to the bank. Your bank pools your money with other members’ and lends it out to borrowers, charging them interest.

The high daily minimums required by some high-yield accounts are a benefit to your bank that they’re willing to waive fees for. If you’re getting a high interest rate, no fee and a low minimum, it could mean you’re dealing with an online bank or an online division of a traditional bank that has slashed its overhead costs and is passing those savings on to you. Also, some high-interest savings accounts require a linked checking account, which can require monthly maintenance fees.

Overall, if you have the means to maintain a high-yield savings account, it benefits both you and the bank.

What other fees do I need to look out for?

Savings accounts are designed to help you save money, but as mentioned, you won’t be able to avoid all fees. Depending on your bank, you could face:

• Transfer fees. Your bank may charge you to transfer money to an account at another bank.
• Overdraft fees. If a transaction drops your balance below $0, you could be charged a fee.
• Paper statement fees. Unless you sign up for digital statements, your bank may charge a small fee to mail them.
• Transaction penalties. Federal law limits the activity you can have in your savings account to six transactions per month. If you exceed that limit, you face fees and even the closing of your account.

Potential fees with linked checking

When comparing high-interest savings accounts, make sure you understand the fees that may come with the checking account you link it to:

• Monthly service fees. Fees can be as $25 per month, but some accounts waive it if you deposit a specific amount of money into your account monthly. Make sure you can realistically meet any conditions before signing on.
• Local ATM fees. If you make frequent withdraws, you’ll want to choose an account with a large ATM network. Many big-name banks like Citi and Capital One don’t charge ATM fees.
• Overseas ATM fees. If you travel a lot for business or pleasure, learn how much you might pay at international ATMs. Some banks, like Bank of America, have large global ATM networks that can help you save.
• International transaction fees. Charges could be as high as 5% of each transaction you use your card for overseas. Look for a linked checking account that charges low or no international transaction fees.

What are other ways to compare high-interest savings accounts?

When weighing the benefits of a high-interest savings account, look at such factors beyond fees:

• Interest rates. High-interest savings account often come with strong rates, helping you save by accumulating more interest.
• Signup bonuses. Some banks offer introductory bonus rates, extra features, free gifts or other rewards for opening an account with them. Carefully read the conditions of the perk so that you don’t miss out.
• Account access. Consider whether your bank offers a mobile app or an extensive network of ATMs and branches for easy access to your money.

How is interest taxed on a free savings account?

Interest counts as taxable income, which means you’ll need to file a 1099-INT with your annual tax returns. You won’t pay tax on the balance in your account — only on the interest you earned in that year. For example, if your income is taxed at 25% and you earn $200 in interest, you’ll pay $50 in taxes.

Learn more about income tax and savings accounts.

Bottom line

High-interest savings accounts are a solid option for growing your money at stronger interest rates than your standard savings account. You might even be eligible for a signup bonus or introductory interest rate to further boost your savings.

But watch for fees and balance requirements — otherwise, you could end up losing money that could be put to better use.

Frequently asked questions

• Are online savings accounts a good idea?

  Yes, if you’re comfortable online and value high interest. Many high-yield savings accounts are offered by digital banks that don’t support a network of local branches. These banks pay less in overhead fees for branches and employees, passing the savings along to you in the form of high interest rates.

• Do free savings accounts come with ATM cards?

  It depends on the bank and account. Some banks offer free ATM cards with your account, whereas others require you to link your account to a checking account to gain access to its ATM network.

• Are high-interest savings accounts protected by the FDIC?

  Yes. Your balance is protected by the federal government for up to $250,000 across all accounts at one bank or other financial institution.

• Should I avoid a high-interest savings account with a fee?

  Not necessarily. If the high-yield account you’re interested in has a fee, read the fine print to see if there’s a way for you to avoid it. Many banks and credit unions waive fees if, say, you maintain a specific minimum balance each month. Even if the fees are unavoidable, you might find that features or interest rates outweigh the extra cost.