If you have surplus funds you wish to allocate for unexpected circumstances, a residential purchase down payment, a family vacation, or any other short-term objective, a high-yield savings account is typically the most advantageous option.

In the wake of recent interest rate increases implemented by the Federal Reserve, high-yield savings accounts now offer the most attractive interest rates observed in over a decade. As a prime illustration, American Express National Bank’s High Yield Savings Account currently boasts an impressive 4.25% Annual Percentage Yield (APY), nearly tenfold the national average rate, according to data from the Federal Deposit Insurance Corporation (FDIC).

If you’re seeking a fresh destination to securely store your funds, here’s what you need to know about American Express, its savings account offerings, other high-yield alternatives, and how they fare against competitors in the market.

American Express High Yield Savings Account

Though primarily known for its credit card services, American Express National Bank has recently expanded its offerings to include various savings products such as its High Yield Savings Account, certificates of deposit, and a checking account.

Here’s an overview of what the online bank’s High Yield Savings Account offers:

1. Competitive Annual Percentage Yield (APY)

The Federal Reserve’s multiple rate hikes throughout 2023 have caused interest rates on high-yield savings accounts to fluctuate. As of the latest update, American Express National Bank’s High Yield Savings Account offers a 4.25% APY, which significantly surpasses the interest rates provided by traditional savings accounts.

This rate applies to all account balances without any tiered limits, although there is a $5 million cap per account. Interest is compounded daily and credited monthly. Note that interest earned is taxable, and the bank will issue a 1099-INT form for earnings of $10 or more per year. Regardless of whether you receive this form, all interest income must be reported on your tax return.

2. No Monthly Fees or Minimum Deposit Requirements

Setting up a High Yield Savings Account with American Express National Bank doesn’t require a minimum deposit or balance, and the bank does not charge monthly maintenance fees. However, detailed information on other potential fees is not provided.

3. Option for Joint Accounts

American Express allows you to open a savings account individually or jointly, which is advantageous for those wishing to share an account with a partner or family member, a feature not commonly offered by all banks.

4. Account Funding

To fund a new High Yield Savings Account, you can link it to another bank account or send a check to American Express Bank. Initial linking of an external account may take up to two business days, but subsequent transfers generally complete within 24 hours. Future deposits can be made by mailing a check or transferring funds through your Amex or external bank account. Unfortunately, mobile check deposits are not supported via the Amex mobile app.

5. Access to Funds

You can withdraw funds from your American Express savings account by transferring them to your checking account with Amex or to an external account. The bank allows up to nine withdrawals per month, which is more lenient than the typical limit of six but still restrictive. Note that the account does not come with a debit card, ATM card, or paper checks for direct withdrawals.

6. Customer Service

As an online-only bank, American Express does not offer physical branches for in-person service. Nevertheless, it provides 24/7 customer support, ensuring assistance is available anytime, unlike some other digital banks.

7. FDIC Insurance

American Express National Bank is FDIC insured, meaning deposits are protected up to $250,000 per depositor per account in case the bank fails. This insurance is a standard feature of most high-yield savings accounts.

Benefits and Drawbacks of American Express High Yield Savings

Choosing a savings account involves weighing both its advantages and disadvantages to find the best match for your needs. Here are the key points to consider.

Benefits:

• Competitive Interest Rates: Although it won’t entirely counteract inflation, a High Yield Savings account offers a significantly higher annual percentage yield (APY) compared to traditional savings accounts.

• Ease of Access: With no requirements for a minimum balance or initial deposit, this account is accessible to anyone looking to save money.

• Excellent Customer Support: American Express is highly rated for customer satisfaction with its credit card services, and this quality extends to its banking products as well.

Drawbacks:

• Not the Highest APY Available: If your goal is to earn the maximum possible interest, other banks offer higher APYs.

• No Cash or Mobile Deposit Options: To add funds to your savings account, you’ll need to transfer money from another account or mail a check. Cash deposits are not possible due to the lack of physical branches or ATM access.

• Restricted Access: Without an ATM card, direct cash withdrawals are not possible. To access your money, you must transfer it to another bank account, which can take several days to complete.