Best High Yield Savings Accounts 2025: Build Your Emergency Fund
One of the hardest things to dig yourself out of financially is high interest debt (most commonly credit card debt). And the best way to protect yourself from it? Building an emergency fund you can dip into in a … you guessed it… emergency situation. But it’s not just for emergencies, it’s a building block for basic financial stability.
In this deep dive, you’ll find:
- Why you need to build an emergency fund
- How High Yield Savings Accounts work
- How to open a High Yield Savings Account
- How much should your High Yield Savings Account have
<div class="frich-tip">Want to start investing? Start with this emergency fund how-to guide to build your savings cushion the smart way.</div>
<div class="frich-tip">Want to change careers? Prep for uncertainty by building an emergency fund first, and work on perfecting your LinkedIn profile with this guide.</div>
So long story short, no matter what your financial goals are, you should start by building an emergency fund.
But there’s a second part to this — never ever should you keep your emergency savings in your checking account. Why?
It’s too easy to access this money in a non-emergency situation so you might end up spending your emergency money on a certified non-emergency like another round of drinks on a Friday night.
You’re losing money.
Wait what? How am I losing money?
<div class="frich-tip">Because of inflation, your money quietly shrinks over time. Learn more in our inflation and savings explainer.</div>
But the simple math is that if you save $1,000 and then leave it in a checking account, with a 3% inflation rate, after one year, your $1,000 will be able to buy you only $970 worth of goods. This might not seem like that much but imagine if this starts happening to your savings meant for a down payment. 3% adds up to a lot more.
But there’s another simple hack that makes you lose out on free money if you leave it in a checking account. Most checking accounts pay little to no interest for the money you keep there. Meaning you don’t really get any financial benefits for keeping your hard-earned money with, let’s say, Bank of America.
But if you transfer your savings to a High Yield Savings Account (HYSA), your money will literally earn more money by just sitting there. So the bank pays you to not touch your money. Pretty great incentive, right? :)
Most HYSAs have similar interest rates and they vary based on what the Fed says. Today, they range from 4–5%. So let’s take a look at what would happen to your $1,000 over time in a checking account vs a HYSA:
Now imagine if you added $1,000 every year:
Pretty huge difference, right? And the craziest part is that both of these cost you the same amount of money each year. In each scenario you’re putting aside $1,000 a year.
Key Benefits of a High-Yield Savings Account
- Most HYSAs are FDIC insured, meaning that your money is insured by the government in case something happens with the financial institution. Make sure to confirm that the account you choose is FDIC insured.
- HYSAs have a higher interest rate, meaning you can earn money by literally doing nothing
- While your money isn’t in your checking account (a major pro since it’s not as easy to accidentally overspend), you have access to transfer money from your emergency fund at all times
How Much Should You Save in a HYSA?
This really depends on each person! But here are a couple of things to keep in mind:
- Rule of thumb – have 3–6 months of bare minimum saved
Take the time to calculate how much your bare minimum life costs. This would include non-negotiables like your rent/mortgage, debt payments, health insurance, groceries, utility bills, transportation costs.
<div class="frich-tip">Frich tip: Here are cheap phone plans that actually deliver & will cut your monthly costs.</div>
- What’s your current employment status?
If you have a high-risk job (freelancer or self-employed), you should consider saving 6 months of emergency expenses. But if you’re in a stable job and have a partner or family to lean on, 3 months might be enough.
- How high is your risk tolerance?
Having an emergency fund is all about peace of mind.
<div class="frich-tip">For long-term planning, check out our breakdown of top financial goals for young adults.</div>
How to Open a High Yield Savings Account
It’s really easy! There are plenty of options & most of them are quite similar. You want to look for:
- A high interest rate (though it fluctuates based on the Fed)
- No monthly cost or penalties for withdrawals
- No minimum balance requirement (especially if you’re starting from zero!)
Frich’s Favorite HYSA Accounts
If you're looking for a sign-up bonus: SoFi
- 3.80% APY
- No monthly fees
- Up to $300 sign-up bonus
If you have more than $5K in your savings: CIT Bank
- 4.10% APY on balances of $5,000 and more
- 0.25% APY on balances between $1,000 and $5,000
If you're looking for highest APY: Betterment
- 4.50% APY
- Minimum $10 deposit to earn APY
- No monthly fees
If you already have savings: BrioDirect
- 4.30% APY
- $5,000 minimum deposit to open an account
- No account fees
Step-by-Step: Opening Your HYSA
- Pick your favorite from above (or any other one you prefer!)
- Apply online — quick & simple applications typically require your name, DOB, SSN, ID, and address
- Submit your application & wait for the approval
- Transfer money from your checking account to your new high-yield savings account
- Consider setting up a monthly transfer so you don’t forget to fund your account regularly.
Frequently Asked Questions
When should I put money in a HYSA?
Use it to build your emergency fund (3–6 months of bare-minimum expenses) and for short-term savings goals (like a vacation or a couch).
Are HYSAs safe?
Yes — if they’re FDIC insured. Always confirm your bank is FDIC insured (coverage up to $250,000 per depositor).
How often does the APY change for HYSAs?
It can change at any time, but most changes are influenced by the Federal Reserve.
Can I withdraw my money easily?
Yes! But:
- Online transfers take 1–3 business days
- Some banks limit to 6 withdrawals per month
- No ATM access for most HYSAs
Do I have to pay taxes on the interest I earn?
Yes — the IRS considers it ordinary income.
<div class="frich-tip">Here’s our full guide to how to file taxes on HYSA interest.</div>
TL;DR
A HYSA is the no-brainer first step to financial peace of mind. Your emergency fund should live there — not in your checking account. It’s free money. It’s safer. And it helps future you stay debt-free.
