PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiIHNyYz1odHRwczovL3N0YXRpYy5teWZpbmFuY2UuY29tL3dpZGdldC9teUZpbmFuY2Vfdmlld3BvcnRfZGV0ZWN0aW9uLmpzIC8+PHNjcmlwdCBhc3luYyB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPm15ZmlXYXRjaFdpZGdldCgnbXlmaVdpZGdldF8wJyk7PC9zY3JpcHQ+Lauren Williamson is the Financial and Home Services Editor for the Hearst E-Commerce team. She previously served as Senior Editor at Chicago magazine, where she led coverage of real estate and business, and before that reported on regulatory law and financial reform for a magazine geared toward in-house attorneys. You can reach her at lauren.williamson@hearst.com.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.Sixty-five percent of Americans who earn more than $150,000 have opened a high-yield savings account, according to a recent survey by Forbes Advisor. And with good reason: Interest rates on high-yield savings accounts have been skyrocketing this year, with a number of accounts offering APYs upward of 4% and a handful even topping 5%. (APY stands for annual percentage yield, which is how much your money will grow over the course of a year, counting compound interest.)Indeed, 41% of survey respondents said they opened a high-yield savings account to take advantage of those higher rates, which have been fueled by more than a year of rate hikes by the Federal Reserve. The Fed doesn’t set interest rates on consumer financial products, but when it raises the federal funds rate, interest rates on savings accounts typically bump up too.The average interest rate on savings accounts was 0.52% for the week of July 17, according to Bankrate. But if you’re willing to compare rates among multiple banks — and especially if you’re willing to consider an online bank — it’s possible to find rates that are much higher. Let’s break it down. What is a high-yield savings account?A high-yield savings account is a type of bank account that earns better interest rates than traditional savings accounts. It can be a good option for growing your liquid savings because:It’s relatively risk-free: As long as you open the account with a federally insured bank or credit union, your deposits will be protected up to $250,000.Your money is accessible when you need it: Unlike a CD, high-yield savings accounts don’t lock you into a specific term. You can withdraw money to pay for short-term savings goals, such as a vacation or a down payment on a car. (Two caveats: Some savings accounts limit you to fewer than six withdrawals a month and may also have minimum balance requirements.)High-yield savings accounts are typically offered by online banks, which don’t have the overhead associated with large brick-and-mortar banks. They pass that savings onto customers in the form of better interest rates. They also use higher rates to attract customers. In turn, they use their deposits to help fund loans such as mortgages — and banks make their money from the interest customers pay on those loans.Even a small increase in interest can amount to much larger growth in your savings over the course of a year. Imagine you just got a $5,000 windfall. If you deposit it in an average savings account with a 0.52% APY, you will earn $26 in interest in one year. Put that same $5,000 in an account with a 5% APY and you’ll end up with an extra $256 in your savings.The interest on high-yield savings accounts is variable, which means it can go down just as easily as it goes up. High-yield CDs, on the other hand, offer a fixed rate. Many are also offering great returns right now, with some 1-year CDs promising a APY of 5% or greater. If you can afford to lock away your money for a year, they can be an important part of a healthy financial plan.How to open a high-yield savings account onlineOf people who have not opened a high-yield savings account, Forbes Advisor found that 24% thought that the process would be complex or take too long. Meanwhile, 23% were wary of putting their savings in an online bank. Opening a high-yield savings account is actually a relatively simple, secure process. It generally takes around 10-15 minutes and in some cases can be easier than opening an account at a physical bank since you can do it from the comfort of home. And as long as the bank is federally insured, your money is just as safe as it would be at a traditional bank.Here’s how you open a high-yield savings account online:Do your research: Compare offers from multiple banks. APY is important, but so are other factors, such as minimum opening deposits, minimum balance requirements, and monthly fees. The good news is that a number of banks are offering 4% APY or greater right now, along with no minimum deposit requirements or monthly fees. Select a bank: Once you find an offer you like, double check that the bank or credit union is insured — for banks, by the Federal Deposit Insurance Corp., and for credit unions, by the National Credit Union Administration. Federal insurance protects up to $250,000 of your money per account. Check into the ATM network, too: Some online banks offer few or no ATMs. However, many will reimburse you for any fees you pay at other banks’ ATMs.Fill out the application: You’ll typically need to provide your name, address, date of birth, social security number and/or driver’s license number, and account information from an existing checking or savings account so you can make your first deposit. (Since you’re entering such personal info, be sure to double check that you’re on the actual bank’s website and not an imposter site.)Wait for the account to be approved: Some banks approve applications for new online accounts almost immediately, but others may take a little longer. Deposit money: You’ll want to meet any minimum deposit requirements with that first transfer. If you plan on keeping your other accounts open, you're done! However, if you plan on closing another account, make sure you reroute any automatic bill payments or deposits to your new account. (You’ll generally want to keep both accounts open for at least a month to make sure that all those transfers are set up correctly.)Pros and cons of high-yield savings accountsWhile a high-yield savings account can be a great way to grow your money, it’s not for every single situation. These are a few other factors to consider if you’re thinking of opening a high-yield savings account.ProsHigher interest rates than traditional savings accountsEasy to withdraw moneyLow-risk way to grow your savings, if bank is insuredMany options with no fees or minimum balance requirementsVariable interest can continue to rise if the market trends upConsMoney won’t grow as much long-term as it would in the stock marketLacks convenience features like check-writing capabilitiesSome accounts limit you to six or fewer withdrawals a monthInterest can go down as easily as it goes up, since it’s not locked inLimited or nonexistent ATM network for online banksWill interest rates on high-yield savings accounts increase in 2023?After hiking the federal funds rate one more time in July, the Fed is expected to halt its rate-hiking campaign for this inflationary cycle. A rate cut, however, is unlikely in 2023, according to the investment service Vanguard. So what’s all that mean for you? There’s a possibility that interest rates on high-yield savings accounts will continue to rise, at least for the next few months. They could begin cooling later in the year, but the economy is always full of surprises — so it’s impossible to say for sure. The best course of action right now is to compare offers while rates are up and consider adding a high-yield savings account to your portfolio.Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was first published on SFGate.com and reviewed by Jill Slattery, who serves as VP of Content for the Hearst E-Commerce team. Email her at jill.slattery@hearst.com.