Glossary
High-yield savings account
A high-yield savings account is an insured savings account that pays well above the national average APY, usually at online banks, while keeping your money available to withdraw.
Rates are variable and can change at any time. Deposits at FDIC-insured banks are insured up to $250,000 per depositor, per bank, per ownership category. Interest is taxed as ordinary income each year.
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Related terms
- APY (annual percentage yield)The percentage a deposit earns in a year, counting compounding: the figure banks must quote for savings accounts, money market accounts and CDs.
- Money market accountAn insured bank or credit union savings account that often pays a higher rate than basic savings and may come with checks or a debit card.
- FDIC insuranceFDIC insurance protects deposits at insured banks up to $250,000 per depositor, per bank, for each ownership category, if the bank fails; credit unions have the same cover from the NCUA.
Sources: FDIC: Deposit insurance · IRS: Topic 403, Interest received