DISCLAIMER: This article is for informational purposes only and does not constitute professional financial advice. Interest rates on high-yield savings accounts are variable and subject to change at any time without notice. The rates mentioned in this article were accurate as of January 2026 but may have changed since publication. Always verify current rates directly with financial institutions before opening an account. FDIC insurance limits and account terms vary by institution. Consider consulting a licensed financial advisor for personalized guidance based on your individual financial situation.
Your emergency fund shouldn’t just sit there. With rates up to 5% APY, you could earn hundreds more this year—here’s how. If your emergency fund is sitting in a regular checking or savings account earning 0.39% interest (the national average), you’re leaving money on the table.
As of January 2026, the best high-yield savings accounts are offering up to 5.00% APY—that’s nearly 13 times the national average.
Here’s what that means in real dollars: $10,000 sitting in a regular savings account at 0.39% earns you about $39 per year. That same $10,000 in a high-yield savings account at 4.5% APY earns you $450 per year.
That’s an extra $411 for doing absolutely nothing except moving your money.
Here’s everything you need to know about high-yield savings accounts in 2026—and how to choose the right one for your emergency fund.
What Is a High-Yield Savings Account?
A high-yield savings account (HYSA) works exactly like a regular savings account—except it pays significantly more interest on your balance.
How much more? HYSAs offer rates around 10 times higher than the national average savings account rate.
Where they come from: Most high-yield accounts are offered by online-only banks that don’t have the overhead costs of maintaining physical branches, so they pass those savings on to customers in the form of higher interest rates.
Key Features:
- FDIC-insured (at banks) or NCUA-insured (at credit unions) up to $250,000 per depositor, per institution
- Variable interest rates (can change at any time)
- Easy access to your money (unlike CDs which lock funds away)
- Compound interest (you earn interest on your interest)
- Usually no monthly fees
- Often no minimum balance requirements
Best High-Yield Savings Accounts for January 2026
According to Fortune’s partnership with Curinos, here are the top HYSAs as of January 2026:
1. Varo Money – Up to 5.00% APY
Requirements: Must have at least $1,000 in monthly direct deposits and maintain a positive balance to earn the high APY. Rate applies to balances up to $5,000.
Best for: People with regular direct deposit who want the highest possible rate on smaller emergency fund balances
2. Newtek Bank – Up to 4.35% APY
Requirements: Generally straightforward with no major hoops to jump through
Best for: Savers who want a competitive rate without complex requirements
3. Axos Bank – Up to 4.31% APY
Requirements: Part of the Axos ONE checking and savings bundle; must meet account requirements
Best for: People who want bundled checking and savings at the same institution
4. American Express High Yield Savings – ~4.20% APY
Requirements: No minimum balance, no monthly fees
Best for: Brand recognition, straightforward account with no complications
5. Marcus by Goldman Sachs – ~4.10% APY
Requirements: No minimum deposit, no monthly fees, no transaction fees
Best for: Hands-off savers who want simplicity and a trusted name
6. Ally Bank – ~3.80% APY
Requirements: No minimum balance, 24/7 customer service
Best for: People who value customer service and want access to other banking products (checking, CDs, etc.)
7. SoFi – Up to 4.00% APY (promotional)
Requirements: For a limited time, new customers can earn up to 4.00% APY by meeting certain requirements; otherwise, 3.30% APY on savings
Best for: New customers looking to maximize promotional rates; combines checking and savings
Note: Rates as of January 2026 and subject to change. Always verify current rates before opening an account.
How Much More Will You Actually Earn?
Let’s look at real numbers. Here’s what you’d earn on $5,000 sitting untouched for one year (assuming rates stay consistent):
- Traditional savings at 0.40% APY: $20 in interest
- High-yield savings at 5.00% APY: $250 in interest
- Difference: $230 extra in your pocket
Now scale that up:
- $10,000 at 5.00% APY: $500/year
- $20,000 at 5.00% APY: $1,000/year
- $30,000 at 5.00% APY: $1,500/year
That’s potentially hundreds or even thousands of dollars per year just for switching where your emergency fund sits.
Will Rates Keep Dropping?
Probably.
The Federal Reserve cut interest rates three times in late 2025, and there’s talk of at least one more cut in 2026.
When the Fed cuts rates, banks typically lower the APYs they offer on savings accounts. Rates in early 2026 are already down modestly from mid-2025, when top rates were more consistently in the mid-4% to 5%+ range.
What this means for you: Now is the time to act. Open a high-yield account while rates are still elevated.
Even if rates drop further, you’ll still be earning significantly more than in a traditional savings account.
Why Use a HYSA for Your Emergency Fund
The Case For:
1. Higher returns – Earn 10x+ more than traditional savings
2. Compound interest – You earn interest on both principal and accumulated interest, helping your balance grow faster
3. Safety – FDIC/NCUA insured up to $250,000. Unlike stocks, your balance doesn’t fluctuate with the market
4. Accessibility – Can withdraw money anytime you need it (perfect for emergencies). Most accounts allow unlimited deposits and up to 6 withdrawals per month
5. No risk – Your principal is guaranteed; you can’t lose money
6. Low/no fees – Most HYSAs have no monthly maintenance fees or minimum balance requirements
The Case Against:
1. Variable rates – Your APY can go up or down at any time without notice
2. Inflation risk – If inflation runs ahead of your APY, your purchasing power decreases
3. Transfer delays – If your HYSA is at a different bank than your checking account, transfers can take 2-3 business days
4. Not for long-term goals – For retirement or 20+ year goals, investments (stocks, bonds, index funds) typically outperform savings accounts
5. Online-only – Most high-yield accounts are online-only with no physical branches
How to Choose the Right HYSA
When comparing accounts, prioritize:
1. Competitive APY
Look for rates in the 4-5% range. Anything above 4% is excellent as of January 2026.
2. No (or Low) Fees
Avoid accounts with monthly maintenance fees. These eat into your earnings.
3. No (or Low) Minimum Balance Requirements
Many top HYSAs have $0 minimum balance requirements, which is ideal if you’re just starting to build your emergency fund.
4. Easy Access to Funds
Check:
- How quickly can you transfer money out?
- Are there withdrawal limits?
- Can you link to your primary checking account easily?
5. FDIC or NCUA Insurance
Always verify your account is insured up to $250,000.
6. Customer Service
Since most HYSAs are online-only, check if they offer:
- 24/7 customer support
- Phone, chat, and email options
- Mobile app with good reviews
How to Open a High-Yield Savings Account
It’s quick and straightforward:
Step 1: Compare Accounts
Use the list above or check sites like Bankrate, NerdWallet, or Fortune for current rates.
Step 2: Gather Information
You’ll need:
- Social Security number
- Driver’s license or state ID
- Contact information
- Bank account information (to link for transfers)
Step 3: Apply Online
Most applications take 10-15 minutes and include:
- Personal information
- Employment information
- Funding source
Step 4: Fund Your Account
Transfer money from your current bank account. Most HYSAs allow:
- ACH transfer (free, takes 2-3 business days)
- Wire transfer (may have fees, arrives same day)
- Mobile check deposit
Step 5: Set It and (Mostly) Forget It
Your interest compounds automatically. Check in periodically to monitor your rate—if it drops significantly below competitors, consider switching.
Common Questions
Do I have to pay taxes on HYSA interest?
Yes. Interest earned is taxable income. You’ll receive a Form 1099-INT if you earn more than $10 in interest during the year.
How often does interest compound?
Most HYSAs compound interest daily or monthly. Daily compounding means faster growth.
Can I have multiple HYSAs?
Absolutely. Some people use different accounts for different savings goals (emergency fund, vacation fund, down payment fund).
What if I need to withdraw money more than 6 times per month?
Some banks charge excessive transaction fees (around $10 per transaction over 6). Check your specific account terms.
Should I switch banks if rates drop?
It depends. If your rate drops significantly below competitors (like 0.5% or more), it might be worth switching. But don’t chase rates constantly—the difference between 4.1% and 4.3% isn’t huge on smaller balances.
How is this different from a CD?
CDs typically offer higher rates but lock your money away for a set term (3 months to 5+ years). Early withdrawal = penalties. HYSAs let you access money anytime. For emergency funds, HYSAs are better because you need that money to be available.
How Much Should You Keep in Your Emergency Fund?
Financial advisors typically recommend:
- 3-6 months of expenses for most people
- 6-12 months if you’re self-employed, single-income household, or work in an unstable industry
- 3 months minimum if you’re just starting out
Calculate your monthly essentials:
- Rent/mortgage
- Utilities
- Groceries
- Insurance
- Minimum debt payments
- Transportation
Multiply by 3-6 months. That’s your target emergency fund.
Key Takeaways
- High-yield savings accounts offer up to 5% APY vs. 0.39% national average
- Top options: Varo (5%), Newtek (4.35%), Axos (4.31%), AmEx (4.2%)
- Real difference: $10,000 at 5% earns $500/year vs. $39 in regular savings
- Rates are declining as Fed cuts continue—open account now
- FDIC insured up to $250,000—your money is safe
- Perfect for emergency funds—accessible, safe, earning solid returns
- Most have no fees or minimum balance requirements
- Interest is taxable—you’ll receive 1099-INT if earning $10+
- Not for long-term goals—use investments for retirement
- Can switch banks if rates drop significantly
- Opening is easy—10-15 minutes online
- Target emergency fund: 3-6 months of expenses
The Bottom Line
Your emergency fund is insurance. You hope you never need it, but when you do, you’ll be grateful it’s there.
And while it sits there waiting for an emergency, it might as well be earning as much interest as possible.
With high-yield savings accounts offering rates up to 5% APY, there’s no reason to leave your money in a traditional savings account earning pennies.
Action step: Open a high-yield savings account this week. It takes 15 minutes and could earn you hundreds of dollars this year.
